Supermarkets put blue-sky projects on ice as the recession deepens

Scores of blue-sky new product development (NPD) projects have been put on ice as supermarkets have re-aligned strategies to focus on quicker wins, development chefs have claimed.

One supermarket source said: "The recession has had a massive impact on our development priorities. I've heard the phrase 'great product but not right to launch now - let's bank the concept for better economic times' so many times'."

Meanwhile, retailer gross margin aspirations were still "on the increase at a time when many manufacturers are in a loss-making situation", she said. "The only way to ensure demands are met is to value engineer with cheaper ingredients. We have seen a reduction in premium range NPD and increased activity on lines to give great value. We are undertaking no developments at all on organic products."

Many firms had panicked as the recession started to bite, added Chris Lightfoot, who runs a product development consultancy: "You could definitely feel the innovation development funnel starting to dry up."

While many brands were "not taking their foot off the gas", own-label suppliers were increasingly "resurrecting banked ideas or value engineering existing products", said another chef. Sales of premium own-label had dipped 1% in the 12 weeks to December 29, "but they haven't fallen off a cliff", said Nielsen Group. However, healthy own-label slumped 9%, compared to a 33% surge in value own-label and 5% growth in standard own-label.