getting fresh: Recession inspires R&D
Is the recession stifling new product innovation?At first glance, my answer would be yes. I mean, given the constraints of lackluster sales and increased ingredient, logistics, packaging material and labor costs, how many companies are willing to channel scarce resources toward new product development, particularly when the success ration happens to be so poor?
And yet, I’m still receiving news about a variety of new product launches on a daily basis. The just recently held Winter Fancy Food show premiered a slew of new chocolate items, I’m told, reinforcing the notion that everyone still loves good chocolate.
And, according to Jack Neff’s article inAdvertising Age on January 12, it appears that recessions regularly stimulate creativity and lasting change. Citing anAdvertising AgeWhite Paper, “Downtime Opportunities,” he points out that “the recessions of the ‘30s, ‘70s and ‘80s spawned the most successful innovations of the 20th century, including soap operas, synthetic laundry detergent, the personal computer and MTV.” Still, the question remains whether marketers are brave enough to keep the new products coming.I think they are, particularly the midsize confectioners, because it’s imperative to do so.
Take my most recent visit to Sconza Candy Co., a mid-tier wholesaler specializing in panned confections that also makes all-natural and organic items. Having just completed their most audacious move of their 70 years of existence -- Sconza Candy Co. acquired a former 300,000-sq.-ft. Hershey facility in Oakdale, Calif., last year and started operating the plant just two months ago -- the company remains committed to new product launches.
As Jim Sconza, president of the company, points out, they now have the room to do so, abandoning their 400 sq. ft. of R&D space for an area that is four times as large. And as Greg Cater, vice president of sales and marketing, notes, with the extra room comes control. No longer does the R&D crew have to stop working with chocolate during the summer because the air conditioning gave out, he explains.
And there’s no shortage of ideas. Cater goes on to say, “It’s just a matter of choosing the right product.”
Does that mean we should expect a plethora of new product introductions from Sconza now that they have the means to execute them? Well, let’s just say they’re in the pipeline. The more important question is, will there be any takers?
Given that Sconza sells its branded products through alternative channels, I’m inclined to say yes, since those are the retailers most willing to bring consumers variety.
Recently, editors at BNP Media were asked to respond to a questionnaire from Joan Schneider, who’s working with us to launch a new book on new product development. Warren Thayer, editorial director ofRefrigerated and Frozen Food Retailer, made several key observations regarding today’s retail landscape. I thought I’d share them with you.
As he writes, “There’s a real shortage of ‘feet on the street’ at retail, to do shelf re-sets (a big, labor-intensive deal when a new product has to be cut in at all stores chain-wide before an FSI drops or advertising begins) and keep new items in stock.
“Vendors have cut way back on in-store personnel, as have brokers, and retailers can’t afford to add more head count themselves,” Thayer says. “This is a very serious problem, and it has a negative effect on new product introductions and shelf execution. (Imagine a free standing insert drop in a Sunday paper, and the advertised new product is on shelf in only 100 of 240 stores in a key market, for example. Trust me, it happens.)
“During this recession, the expense and risk of new product launches is having a dampening effect on true innovation,” he continues. “Couple this with the growth of private label and the tendency of retailers to cut back on SKU counts, and it’s pretty close to the perfect storm for national brands.
“Countering this somewhat is the trend by some smaller chains to cede the “price” battle to Wal-Mart (and Costco/Sam’s/Kroger) and differentiate themselves instead via more service and more variety,” Thayer concludes. “This ‘variety’ issue is a godsend to the local brands and second-tier brands. It’s what keeps this segment’s new product programs alive.”
Hence, folks like Sconza.
By the way, I probably owe Warren a column or a cocktail after lifting many of his remarks. But it’s all in the family.
Also, our feature on Sconza Candy Co. will appear in the February issue ofCandy Industry. I think you’ll enjoy the read.
Marabel Farms opens warehouse facility in California
U.S.-based Marabel Farms, a producer, supplier and processor of cocoa beans from the Dominican Republic, has opened a new warehouse facility in Arcadia, Calif. The new facility was opened to expand the company’s service base to chocolate manufacturers and processing plants in the United States.“In the past, we sold our beans to exporters and middlemen,” explains Vaagn Arakelyan, president of Marabel Farms. “If your cocoa beans came from the northern region of the Dominican Republic, chances are your shipment contained some or all of our beans. However, now we are bringing them directly to chocolate companies and processing plants to ensure consistent quality and timely delivery.
“Owning our own farms and opening offices and warehouse facilities in the United States gives us a chance to better meet client needs and have product ready at all times, not only in the Dominican Republic, but also in the United States, which can be delivered to a client within one week,” he adds.
For more information, visitwww.marabelfarms.com.
Norman Love Confections receives recognition for chocolates
Based on a survey byRobb Report magazine readers, Norman Love Confections was selected as a 2009 Reader’s Choice in the chocolate category.Robb Report is in its 32nd year reporting on issues and trends in the “luxury lifestyle” market.Additionally, on Jan. 17, 2009, the Fine Chocolate Industry Association featured Norman Love at its first annual Fine Chocolate Recognition of Excellence Ceremony. Love was recognized for Innovation in Fine Chocolate Product Presentation.
Fort Myers, Fla.-based Norman Love Confections makes high quality chocolates, which do not contain preservatives or artificial ingredients.
For more information, visitwww.normanloveconfections.com.
Standard Candy to close plant
Standard Candy Co., the producer ofGoo Goo Clustersand natural and organic products, announced its plans to close its Eastman, Ga. manufacturing plant by early April. Operations at the Georgia plant will be relocated to the company’s headquarters in Nashville, Tenn. Full-time employees are being offered positions in Nashville, along with a cost-of-living pay adjustment and relocation package. Employees that choose not to move will receive a severance package.“The Eastman plant was built in the 1950s and is in need of major upgrades,” explains James W. Spradley Jr., CEO of Standard Candy Company. “We worked with engineers and architects to evaluate the feasibility of continuing to operate two facilities, and ultimately decided it was in the best interest of the company to consolidate our operations to one location. We believe this is the best overall decision for Standard. We look forward to a bright future for our company as a result.”
For more information, visitwww.googoo.com.
Richard Krause
NECCO announces new senior management team
In December 2007, an affiliate of American Capital, Ltd. purchased NECCO with intentions to increase the company’s innovation and branding initiatives. These goals led NECCO to appoint a new senior management team. Leading the team is newly promoted president and CEO Richard S. Krause. Previous CEO Domenic M. Antonellis has been promoted to Chairman of the Board.Krause was hired as COO at NECCO in August 2008. He worked with Antonellis in a transitional role until his promotion this month. Krause previously served as president and CEO of Elan Nutrition, Inc., a manufacturer and marketer of functional nutrition bars. He also gained more than 25 years of experience in manufacturing and marketing from working at Newell Rubbermaid, Procter & Gamble and ConAgra Foods.
“Dom is a legend in the candy industry,” Krause says. “We all have immense respect for him and what he did with this company. As chairman of the board, he will help guide us as we continue to take business to the next level and grow and develop brands.”
Additionally, David North, CFO, and Jacqueline Hague, vice president of marketing, will join NECCO veterans Hans Becher, vice president of sales; Jeffrey Green, vice president of innovation; and Bill Leva, vice president of operations, as part of the new senior management team.
One of the team’s major goals is to kick up its marketing efforts. This includes marketing its natural products better.
“A lot of our products already are all natural, we just haven’t done a good enough job of explaining that to the consumer,” Krause says. With its new marketing team, the company plans to introduce new natural products and better market its already natural items.
For more information, visitwww.necco.com.
sweet of the week: Navitas Naturals Cacao Power
Novato, Calif.-based Navitas Naturals recently introducedCacao PowerSweet Raw Chocolate Nibs, a treat that can eaten alone or used in a recipe. Organic cacao beans from Peru are partially fermented, processed, peeled and partially ground to form the nibs. They then are blended with organic cacao paste and organic sugar cane juice. The end product features ingredients that are certified organic, kosher, vegan and raw. According to the company, raw cacao offers benefits such as antioxidants, magnesium, iron, potassium, vitamin C, proteins, beta-carotene and alkaloids.Navitas NaturalsCacao Power has a suggested retail price of $6.99 for a 4-oz. bag or $12.99 for an 8-oz. bag, and are available at Whole Foods Markets and online at www.amazon.com. For cacao recipes and more information aboutCacao Power, visitwww.navitasnaturals.com.
