This Is Why Food Brands Develop Products Consumers Don't Like

The food industry is massive, amounting to US$9.43T of revenue in 2023, and is expected to grow annually by +6.21%.

While the market is massive and promises growth, there is an underlying issue that producers are facing. Producers still know too little about what consumers want and are unable to determine how the market is changing.

While companies know what consumers bought over retail, do they know what they did with the products they bought? More importantly, why did they choose to do so?

Guessing the answers to those two critical questions can be very costly and the consequences can impact the future of those brands for a long time.

According to Kearney's research, more than half (52 percent) of all consumer packaged goods (CPG) companies will either shrink in size or grow below the market average over the next five years.

Food and beverage brand leaders need to establish cultures of fast decision-making but, for the most part, are unaware of how to do that. Let’s start by answering how not to do it.

Food and beverage brands have too much data that is not helpful, and it can actually be confusing. Harvard Business School professor, Clayton Christensen, notes that each year 30,000 new consumer products are launched and many of them fail.

This high failure rate could be attributed to the fact that the launched products are not in demand from the retailer’s perspective. Retailers see the products as slow sellers or, in some cases, non-sellers.

According to FAO, one-third of all food produced is lost or wasted. Around 1.3 billion tonnes of food wastage results in a cost to the global economy of close to $940 billion each year. Food waste has a greater global impact than the total emissions from flying (1.9%), plastic production (3.8%), and oil extraction (3.8%).

When planning new products, companies often start by segmenting their markets and positioning their merchandise according to potential gaps or opportunities that they identify.

This segmentation process involves dividing the market into product categories, such as function or price, or dividing the customer base into target demographics, like age, gender, education, or income level.

"Most organizations are already organized around product categories or customer categories," Christensen says, "and therefore people only see opportunities within this little frame that they've stuck you in. So you have to think inside of a category as opposed to getting out. You've just got to make the decision to divorce yourself from the constraints that are arbitrarily created by the design of the old org chart."

The solution to some of the above problems is that food and beverage brands have to be as close as possible to every moment of consumption by their consumers. They need to stop trying to ask the consumers about their needs or motivations and start observing their behavior.

They need access to real-time data in a format that is easily digestible and that will help them tell the story in and to the organization. They need actionable insights that will eventually lead them to reduce the risk of failure and maximize success.

This post was contributed by Leor Eliashiv, a Senior Account Executive at Tastewise.

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