Why new functional products fail

Relying too much on a health benefit to differentiate a new food or beverage is the most common reason for failure in functional foods and beverages, reveals a new report from New Nutrition Business. “Surprisingly often, companies make the health benefit the sole point of difference for the product, undervaluing key factors such as convenience. When a product is essentially a me-too, with a health benefit attached, it¹s inviting failure,” says Julian Mellentin, director of New Nutrition Business.

Among the 12 key reasons for failure illustrated by the 22 case studies in this report are: overestimating the potential market; targeting the mass market too early, instead of starting in a niche and growing from there; a perceived mismatch between the product and the benefit (such as fish oil in yogurt).

Why study failures? American billionaire investor Warren Buffett, speaking at a Coca-Cola shareholders’ conference, said: “I like to study failure. The smartest people know that studying the failures of others teaches us how to succeed,” adds Mellentin. “Examining the most common mistakes that companies make enables others to avoid them ­ and increases their chances of success.”