Product Development is alive and well
I started my food career in product development and there really is a buzz when you see a product you have been involved in developing for sale in a supermarket or in a quick serve business. Some of the products I was involved with are still for sale today. In fact for sentimental reasons, I picked up a packet of crisps from the supermatket this week that are flavoured as one of the products I helped to develop.
The interesting thing about product development is the huge number of projects which involve hours and days of work, which do not end up for sale. A lot of money is spent doing PD and it is only the projects with the greatest likelihood of good sales which make it through the process. If a company does it well and is more than a bit lucky, the products released will go on, like some that I was involved with, to be stayers and long term money earners.
Product Development is essential to all businesses. It expands product ranges and keeps customers comning back for more. It is intended to ultimately increase sales and profits. The crisps I bought this week are a simple example for why businesses do PD. There are old favourites in the crisps, eg; Salt and vinegar, plain, Chicken and BBQ, but in a world where we are wanting to eat healthier, these companies have to keep coming up with new flavours and products to keep up sales and to generate new customers.
It involves many steps and a lot of people, from the designers, to the packaging experts, to those doing taste panels, shelf life and other testing, engineers, scientists and then the marketing and sales team. At any point the project could be stopped or changed.
Innovation is the key, in terms of new products, packaging, processes, ingredients and equipment. Doing it well will make money and grow the business, even if it costs a lot to achieve it, and may well set the business up as a market leader. Being a market leader has a huge amount of value to a company.
A recent survey by UBS and the Australian Food and Grocery Council (AFGC)found that those companies supplying the supermarkets have product development as a top priority.
A new joint survey from UBS and the has found Australian supermarket suppliers are investing in new product development as a top priority.
AFGC Chief Executive Officer, Gary Dawson, said; “The survey reflects the difficult domestic trading conditions, with a modest outlook for both sales and profit growth for Australia’s food and grocery manufacturing suppliers. It confirms retailer profit margins in Australia are compressing but they remain well above international peers. For suppliers the opposite is true – after years of declining profit share there has been some claw back of margin in the last twelve months, but profitability of Australian suppliers remains well below international peers.”