New Product Development

1. New Product Development Preparing to Launch

2. NPD Stages – New Retail Product • Steps in the Process: • Idea Generation • Scoping • Business Case Development • Development • Scale-up • Launch • Evaluation

3. NPD Stages – New Retail Product • Steps in the Process: • Idea Generation • Scoping • Business Case Development • Development • Scale-up • Launch • Evaluation

4. Production Costs • Factors to consider: • Raw material costs • Yields – each step in the process • Rework – can you incorporate back in? • #2 Product – with you need to sell for less? • Packaging waste • Labor requirements for each process step • Non-production positions (Human Resources, Accounting, Purchasing, QC)

5. Profit Margin for Products Questions to ask before launching: • How much profit does the retailer need to make on my product? • How much profit does my company need to make on my product?

6. Retailer Margin • Article from Entrepreneur magazine gives good general information on profit and margins. • Bizstats.com gives information on average grocery industry margins.

7. Grocery Product Profit Source: bizstats.com (2007 data)

8. Grocery Product Profit Source: bizstats.com (2007 data)

9. Grocery Product Profit Source: bizstats.com (2007 data)

10. Grocery Product Profit Source: bizstats.com (2007 data)

11. Product Labeling • References: • FSIS Food Standards and Labeling Policy Book: http://www.fsis.usda.gov/OPPDE/larc/Policies/Labeling_Policy_Book_082005.pdf • Title 9 CFR – Animals and Animal Products: http://www.access.gpo.gov/nara/cfr/waisidx_10/9cfrv2_10.html#301 • USDA Labeling Requirements Guide: http://www.fsis.usda.gov/PDF/Labeling_Requirements_Guide.pdf • FSIS Label form: http://www.fsis.usda.gov/Frame/FrameRedirect.asp?main=http://www.fsis.usda.gov/fsisforms/7234-1.pdf

12. Product Labeling All labels must include on Principle Display Panel (PDP): • Product name • Inspection stamp and establishment # • Handling statement (Keep refrigerated, Keep Frozen) • Net weight (for retail products)

13. Product Labeling All labels must include on the Information Panel: • Name of manufacturer or distributor • Ingredient list • Nutritional information Raw products must also include: • Safe Handling Instructions

14. Product Name • Common and usual name for standard products • Product name vs. Fanciful name

15. Product Name • Common and usual name for standard products • Product name vs. Fanciful name Corn Dog

16. Product Name • Common and usual name for standard products • Product name vs. Fanciful name Corn Dog Batter Wrapped Franks on a Stick

17. Product Name • Common and usual name for standard products • Product name vs. Fanciful name • All letters in product name required to be a minimum of 1/3 the height of largest letter

18. Product Name • Common and usual name for standard products • Product name vs. Fanciful name • All letters in product name required to be a minimum of 1/3 the height of largest letter

21. Product Name Qualifying Statements • Liquid smoke, if mixed or injected into product requires “smoke flavoring added” • Artificial colors or flavorings must be noted • Antioxidants (when permitted) must be included as “BHA, BHT added to help protect flavor” • Terms or names of geographical significance must be qualified i.e. Farm-style, Virginia-brand, etc. - except some are generici.e.: Polish sausage Genoa salami

22. Net Weight • on PDP panel • bottom 30%, parallel to base • “net weight” • less than 1 lb must be as ounces (oz.) • between 1 lb and 4 lbs must be dual declaration • oz. (lbs) or lbs. (oz) {i.e. 24 oz. (1 1/2 lbs)} • size of letters determined by size of PDP • Ex. 1/16” high for 5 sq inch panel or less; 1/8” for 5-25 sq inch

23. Ingredient List • “Ingredients:” - followed by a descending list in order of quantity used • “Contains Less than 2% of:…” • “spices” - natural spice designation as a group • onion and garlic must be listed independently • “Flavorings” - spice extractives, liquid smoke, etc. • Products injected brine - can be prefaced with “Cured with:…”

24. Ingredient List • If two meat ingredients such as beef and pork are used and make up at least 70% of the meat while neither is less than 30% they can be listed as “beef and pork” • can then be interchanged within those limits without changing the label • does not apply to poultry

25. Code Dating • Most food products include some type of code date (Use By, Best Purchased By, etc.) • Is a code date required on a product?

26. Code Dating • Most food products include some type of code date (Use By, Best Purchased By, etc.) • Is a code date required on a product? • Code dating is only required on some baby food, infant formula, and poultry products.

27. Code Dating • Poultry products require pack date, but “use by” or “sell by” are acceptable alternatives. • For all products - If used, calendar date must express month, day of month (and year for frozen or shelf stable)

28. Questions?