BOCA RATON, Fla. — —
Struggling to reverse a string of product failures, Kraft Foods turned to an outside firm in 2010 to study its launch initiatives.
The firm's conclusion? "Kraft is where good ideas go to die," recalled Barry Calpino, Kraft vice president of breakthrough innovation, at a gathering Tuesday for the Consumer Analysts Group of New York conference.
Calpino said that in 2008, for example, 17 of the company's 19 product launches were considered failures. Sales of such new products as Bagelfuls, frozen bagels stuffed with cream cheese, and Macaroni & Cheese crackers, shaped to look like the noodles, failed to meet benchmarks. Kraft no longer makes either product. The track record for new product launches wasn't much better in 2009, he added.
Small ideas, lack of focus and little investment hobbled development as well as launches, Calpino noted. At the time, he said, innovation was considered a "dead-end job," and employees just accepted that Kraft wasn't good at it.
It's a different story today, he said, as he outlined changes in how the newly independent Kraft Foods Group develops and supports new products. The Northfield-based maker of Kraft Macaroni & Cheese, Planters and Velveeta was spun off from Mondelez International in October.
As a result of that review, Kraft developed an innovation playbook that calls for more investment in fewer, bigger ideas that receive more financial support, rather than what Calpino referred to as "Field of Dreams" approach that amounted to a "build it and they will come" mentality.
In 2009, 6.5 percent of company sales came from new products, whereas 13 percent of sales last year were attributable to new products, according to a company estimate.
Kraft now does more work with its sales team, bringing them into product development so they can better explain each one's significance to retailers, and investing more in each launch.
In 2011, Calpino said, the company focused its efforts on 13 "big bets," including its MiO brand of water flavoring, Velveeta Cheesy Skillet Dinners and Oscar Mayer Selects, a line of higher-quality meat without artificial flavors or preservatives. In so doing, the company raised its average marketing and advertising support for each of these launches roughly fivefold, to about $25 million from about $5 million. MiO, he noted, received more than $50 million in support.
Since their introduction in 2011, MiO, Velveeta Skillets and Oscar Mayer Selects each have become $100 million product platforms, which is an industry sales benchmark for successful product launches.
Calpino said that Kraft is also maintaining focus on its big launches for the first three years of a product's life rather than moving on after the first year. Other initiatives include improving the level of talent within the organization and appealing more to Hispanics in product development and marketing.
Kraft's major 2013 launches include pulled pork under its Oscar Mayer Selects brand and Recipe Makers, a pair of sauce packets to be sold in the pasta and sauce aisle. Consumers add vegetables or protein to the sauces to cook popular dishes like pot roast, sweet and sour chicken, or enchiladas.
One analyst said Kraft is doing a better job at tapping into the nation's changing habits.
"I do think some of the new products are bringing consumers back to certain categories and catering to consumer trends," Morningstar analyst Erin Lash said.
Lash pointed to the trend to making more meals at home and said Kraft has responded well with products like Fresh Take, packets of cheese and seasoned bread crumbs that make easy coatings, and Kraft shredded cheese with a "touch of Philadelphia," for easier melting.
The trick will be whether these new products stay popular, Lash said, "with an even more stretched consumer" as the payroll tax rollback ends and unemployment and gas prices remain high.
While Kraft clearly has high aspirations, the new company was recently caught flat-footed. Kraft's presentation came on the heels of last week's announcement that fourth-quarter sales would be lower than expected after Oscar Mayer cold cuts lost market share to a key competitor, presumably Chicago-based Hillshire Brands.
The company said it expects fourth-quarter net revenue to fall 10.7 percent, to $4.5 billion. The final numbers will be reported before the end of March.
Kraft also raised 2013 per-share earnings guidance by 15 cents, to $2.75 per share.
Shares closed Tuesday at $47.37, up 20 cents.
eyork@tribune.com
Twitter @emilyyork
Kraft learns from product launch failures
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Kraft learns from product launch failures
