An introduction to Sustainable New Product Development (S-NPD)

The purpose of this document is to provide introductory guidance for Brand Strategists,
Product Category Managers, and others involved in NPD and reformulation to improve the
sustainability of their products and address consumer expectations on such issues.

It outlines the differences between New Product Development and Sustainable New
Product Development and identifies where Courtauld 2025 sustainability objectives can
be integrated into the NPD process. Further guidance and support is available to
Courtauld 2025 signatories.

What is New Product Development?

New Product Development is the process of bringing a new product to market or reformulating an
existing product. By convention, the focus of New Product Development is on innovations which
affect cost, quality and time, developing new customers and loyalty amongst existing customers.

What is Sustainable New Product Development?

Sustainable New Product Development (S-NPD) is the delivery of product innovation where
additional criteria of sustainability are added at each of the stage gate processes to increase supply
chain resilience and value for the customer.

It presents a huge potential for organisations to increase the resilience of their value chains,
including relationships with customers. It therefore requires the inclusion of an additional set of
‘sustainability’ criteria in existing NPD stage-gate product innovation processes.

Why is there a need for Sustainable New Product Development?

Research from WRAP and other bodies has identified that the food and drink sector faces increasing
challenges to food system resilience such as changing climate and weather patterns, competition for
land, environmental regulations, pests and diseases, inadequate infrastructure and changing global
consumption patterns. Failure to respond to these new challenges will leave businesses exposed to
disruptions or left with business models that are unresponsive to changing societal and consumer
demands.

Mintel (2015) have identified a range of consumer trends which are becoming mainstream across
the UK, Europe and the globe (see section 1.1). Together, these trends represent a pull, a growing
consumer desire for food which is sensitive to environmental and social issues. A food system which
is able to articulate how products have been designed to benefit all involved in the value chain has
the potential to attract new consumers to a category and increase the Customer Lifetime Value,
aligning with business objectives.

The concept of S-NPD entails the integration of not only product but also process design with
ingredient / material selection systems and development of business models to provide products or
services to consumers. It considers approaches for integrating sustainability criteria into existing

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NPD processes in order to meet customer / consumer demands and expectations e.g. enhancing
product storage (e.g. shelf-life), use (e.g. reduced cooking requirement), disposal or recycling.

How does S-NPD differ from NPD?

There is no universally accepted model of New Product Development, and the structure of activity
undertaken varies between organisations. However, many models are based on the work of Booz,
Allen and Hamilton Inc. (1982), which sets out seven stages of New Product Development, and
Cooper (1990), which outlines the concept of stage gates.

Figures 1 and 2 provide an overview of the NPD process based on these two models. The difference
between NPD and S-NPD is highlighted in the green boxes. It is not in the process itself, but in the
issues which are considered at each stage. This is described further in the following sections. The
differences become fewer through the stages of the NPD process.

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 A requirements specification (e.g. category vision) should provide
New a high-level view of what the product should do to meet the
Product perceived market or business need. This should include
Strategy
sustainability criteria linking to hotspots and consumer insights.

Idea
Consideration of how the specification can be
Generation
fulfilled and how well the options developed
meet the specification.
Idea
Screening /
Evaluation
Estimate profitability, sales volume
Business and selling price based on
Analysis benchmarking. Include distinctive
sustainability features.

Development
Test analysis and produce an initial
run to test consumer acceptance.
Beta
(Market)
Testing

Product launch / marketing Commercial

isation

Figure 1: New Product Development Process (after Booz, Allen and Hamilton Inc. 1982)

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 Discovery: Identify and prioritise changes to products which can improve
Ideas sustainability and address consumer expectations on such issues.
Generation

Determine new knowledge needs and how to meet these.

Gate Stage 1: This should include sustainability criteria linking to
1 Scoping hotspots and consumer insights.

Estimate profitability, sales volume

Gate Stage 2: Build and selling price based on
2 Business Case
benchmarking.

Gate Stage 3:
3 Development

Test analysis and produce an initial

Gate Stage 4: Testing
run to test consumer acceptance. and Validation
4

Product launch / marketing Gate Stage 5: Full

5 Launch

Figure 2 Stage Gate Model (after Cooper, 1990)

As with existing NPD practices, S-NPD should deliver commercial benefits and support corporate
reputation. However, it should also go beyond this to increase brand equity through improving a
product’s sustainability credentials in line with identified consumer trends and expectations.

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1. New Product Strategy
In the following sections, we describe how to add sustainability criteria into the main stages of an
NPD process in order to achieve S-NPD.

At the start of a conventional NPD process, a definition of “what good looks like” should be
established by the organisation. This may be described in a New Product Strategy / Requirements
Specification / Category Vision / Product Attributes or similar documentation. This should fully
capture the vision for the category and establish a set of key principles that underpin this vision.
In S-NPD, these principles should also reflect the relevant sustainability commitments from
corporate strategies, plans, goals or targets, such as:

• Corporate-level targets or goals to reduce GHG emissions, waste, energy, water or materials use;
• Corporate sustainability targets that have a link to product performance or attributes (e.g.
recyclability or recycled content of packaging; sustainable sourcing / certification requirements
for raw materials and ingredients).

In addition to the above, and in order to embed sustainability criteria in their supply chain, an
organisation should include sustainable new product design criteria in product and packaging
specifications, design briefs, policies and procurement practices.

1.1. Consumer Pull

The requirements for products and services should recognise innovation which increases the
sustainability of a product or service. S-NPD should align with business requirements. The majority
of food and drink businesses prioritise two economic drivers:

 to foster customer loyalty, and

 to achieve sales volume and growth.

The purpose of any business is to “grow customers”, i.e. to increase their economic value to the
organisation. This can be measured through the Customer Lifetime Value (CLTV). CLTV is an indicator
of the present value of future cash flows attributed to each customer’s purchasing pattern. It helps
to focus on long-term customer equity, rather than simply maximizing short-term sales. This enables
businesses to know how much each customer is worth and how much future cash flow will likely be
(European Commission 2014).

Research by Dixon et al (2010) indicates that delighting customers does not create much more
loyalty, but reducing their efforts does. In short, re-engineering processes in order to create an
almost effort-free customer experience is an important innovation opportunity.

S-NPD should link to these drivers, identifying how improvements to product sustainability can
deliver against these objectives. For example, Mintel (2015) have identified that the top 12 trends
for food and drink in 2016 include Eco is the new reality, Based on a True Story, From The Inside Out
and Alternatives Everywhere. These are described by Mintel as follows:

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Eco Is the New Reality Drought, worries about food waste and other natural phenomena
not only affect the worldwide food and drink supply, but influence
preparation and production. In 2016, sustainability evolves from
being good for the bottom line to being a necessary new product
development consideration for the common good.

Alternatives Everywhere “Veggie burgers and non-dairy milks have escaped the realm of
serving as substitutes primarily for people with dietary concerns,
consumers with allergies and followers of vegetarian or vegan
diets – and now have broader appeal.”
Europe is a hotbed for plant-based protein innovation
Based On A True Story 42% of UK adults aged 16+ say, ‘I would expect food produced by
smaller companies to generally be more ethical.’’ Consumers
have been romanced by product origin, ingredients or inspiration
stories. With similar claims made by legitimately hand-crafted as
well as mass-produced products, this proliferation and occasional
propagation will find both consumers and regulators seeking
products with verified claims.
From The Inside Out Consumers are recognising that diets can connect with the way
they look and feel. This places new emphasis on packaged
products that are formulated to help people’s physical
appearance as well as their personal wellness, creating a market
for products enhanced with everything from collagen to
probiotics.”
Source: Mintel (2015)

Responses to these consumer demands could consider changes to product, process and business
models as part of the S-NPD process.

1.2. Supply Chain Resilience Push

When considering the sustainability impacts of a products or service, a useful way of prioritising
these is to consider the products with the greatest impact for the key criteria (e.g. greenhouse gas
emissions) and then to identify the hotspots within the product life cycle which could be addressed
through design. WRAP’s on-line Knowledge Base contains product life cycle-based environmental
hotspots data and market information for 51 ‘priority’ product groups and key product ingredients,
based on their environmental sustainability impacts and physical materials flows and sales volumes
in the UK economy.

NOTE: other useful WRAP resources include a Raw Material Risk and Opportunities Screening Tool;

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Supply chain resilience can also be addressed in NPD by reference to published analyses of major
issues and opportunities facing the food system. For example, in Food Futures, WRAP identify three
key trends that will shape the food system (outlined below). These link to the issues identified by
Mintel (2015) and address both push and pull for S-NPD. These could inform a category vision for
NPD.

1.2.1. Increasing challenges to food system resilience

The food systems developed in the last century will
not be fit for dealing with the increasing complexity
and volatility of environmental, social and economic
systems. To respond to the challenges outlined
above, future supply chains will need to be FIT for
the future: flexible (F), intelligent (I) and transparent
(T). Flexibility will come from a range of attributes
that encourage resilience, such as diversity.
Intelligence will come from understanding and
managing risks and identifying and prioritising
opportunities. Finally, consumer demand for the
provenance and traceability of ingredients means
that transparency is needed to help uncover hidden
risks that come from complexity, and opportunities
that create incentives that drive the right changes in
supply chains.

1.2.2. An Explosion in Data-Enabled Technology

For the supply chain, technology will be key.
Businesses could use a suite of technologies
and practices to provide products to
consumers in new ways and improving the
efficacy of the supply chain. Industry, and
increasingly consumers, will have accurate
data on where their ingredients and food is
from and how to get the most from it.
Linking the product design to its attributes,
and communicating these as appropriate, is a
key distinction in S-NPD.

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 1.2.3. The Alignment of Public Health and Environmental Sustainability
Agendas
Not all opportunities are technology-based; lifestyles
choices have a role to play. Consumers will help set
the pace of change as they seek to have a healthier
and sustainable diet. The future will see individuals
driving the way in which their food is delivered not
just to their door but designed to meet their precise
nutritional and taste requirements. We could even
see the introduction of ‘food for the ages’ - designed
specifically to meet the needs of different age
groups, from growing teenagers to older people.

By capitalising on the three trends and embedding the recommendations from the ‘Food Futures’
report, NPD can take a business unusual approach to the challenges and become more flexible,
intelligent and transparent, ‘FIT’, to meet the 21st century demands. The primary demand will be to
feed the growing population, which is why one of the recommendations in the report is to drive
down farm-to-fork food waste.

2. Discovery, Idea Generation and Evaluation

2.1. The Product / Service Innovation Roadmap
At the ideas generation and evaluation stages, consideration should be given to how the
specification can be fulfilled and how well the options developed meet the vision / specification. This
should include the sustainability criteria, and identify how the solutions either improve supply chain
resilience or align with consumer demand. Inspiration may be sought from identifying innovation in
related and unrelated products and services, identifying a gap in the market based on sustainability
criteria, or identifying an opportunity for reformulation which enhances performance against
sustainability criteria.

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3. Business Analysis
At this stage the estimated profitability, sales volume and selling price should be identified based on
benchmarking. It is important that the benchmarking considers any distinctive aspects incorporated
in the previous stages, such as improvements in sustainability performance alongside other NPD
criteria (e.g. potential to grow a category / improve customer loyalty).

The benchmarking process is described in figure 3. There are usually two elements to benchmarking
in NPD:

1. Benchmarking the performance of a new product or service concept against an existing

product or service; and
2. Benchmarking the new product or service concept against the market (selected competitor
products and services).

Figure 3 Benchmarking Process

Some sustainability benchmarking information comes from the visual assessment (e.g. ingredients
lists, country of origin information, cooking and storage instructions, on-pack sustainability
communications or eco-labels); whilst some is drawn from the findings from the hotspots analysis
(e.g. information on energy, water and materials use; estimated wastage rates; etc.).

Sustainability benchmarking in the S-NPD process needs to remain fairly flexible according to the
availability of product or service-specific information or the availability of proxy data or information
for similar products and services. In hospitality and food service this may need to include
consideration of both product(s) (menus) and services / facilities. The figure below provides some
ideas for the range of sustainability benchmarks that could be used. The selection of benchmarks will
often need to be done on a case-by-case basis.

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4. Development Beta Testing and Commercialisation / Full Launch
Testing and commercialisation should include consideration of sustainability aspects as appropriate.
Customer Panels may be used to test consumers’ awareness, concern and acceptance of
sustainability criteria. Once a product or service has been launched you should revisit your
benchmarks to determine whether the performance benchmarks and attributes were met; and
capture any learning from the design and development process that is useful to your future projects.

5. Conclusions
Issues of sustainability can be readily incorporated into existing NPD processes, and address not only
supply chain resilience but also consumer demand. With Courtauld 2025 signatories, WRAP will
develop a range of supporting tools and techniques as appropriate to help embed these issues into
signatories’ processes, supporting delivery of the objectives of Courtauld 2025 and wider
sustainability issues.

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6. Examples of S-NPD
Changes in Ingredients / Product
In Germany a 2014 Mintel Survey found almost 1 in 5
respondents aged 16 - 24 purchase meat alternative products,
compared to 1 in 10 of the general population. Rugenwalder
Muehler, a sausage company, launched a vegetarian range in
December 2014, with a target of this accounting for 30% of
sales by 2020. It accounted for 30% of sales within a year.
Changes in Process
Sun Chips California factory uses solar energy to power the
production of the crisps. Sun Chips sales increased by 17.6% in
the year following the ‘sun-powered’ re-launch

Changes in Packaging
Functional packaging - vacuum packed meat with an extended
shelf life and enhanced quality. Other options include
controlled permeability, oxygen scavenging and antimicrobial
nanoparticles.
Shopping Experience
Danish supermarket Bilka introduced changes to the layouts
that meant that consumers were nudged to buy healthier. This
led to increases in customer satisfaction rates as measured by
the supermarket, hypothesised as a consequence of enabling
the customers to follow their ambitions, which created a
better shopping experience. Measured against an original
baseline, the experiment utilizing availability and the right
information at the right time brought about an average sales
increase of 83% for vegetables and an increase of 100% for
healthy snacks
Catering / Hospitality
Sodexo are piloting a set of 10 sustainable meals. The project
is part of Sodexo’s partnership with WWF on LiveWell, which
aims to encourage businesses and policy-makers to facilitate
the adoption of diets which are both healthy and sustainable.

Changes in portion / pack size

Changes to the portion and pack size, such as half loaves,
resealable containers and measuring guidance, can help to
minimise food waste whilst meeting customer demands.

Making better use of resources

Yeo Valley launched left-yeovers in 2015, a variant of yoghurt
made from ingredient leftovers such as unused carrot juice,
orange juice and figs from the manufacturer’s freezers.
Changes can also be made to support customers in recycling
packaging / unavoidable food waste at end of life.

Picture sources: http://www.ruegenwalder.de/; http://www.sunchips.com; http://www.krukow.net

http://www.wwf.org.uk; WRAP
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References

Booz, Allen and Hamilton, Inc. (1982) New Product Management for the 1980’s. New York: Booz
Allen and Hamilton, Inc., 1982.

Cooper, R. (1990) Stage-gate systems: A new tool for managing new products; Business Horizons 33
(3): 44–55. doi:10.1016/0007-6813(90)90040-i.

Dixon, M., Freeman, K., and Toman, N.(2010) Stop Trying To Delight Your Customers, Harvard
Business Review July –August 2010 https://hbr.org/2010/07/stop-trying-to-delight-your-customers

European Commission (2014) Report of the Expert Group on Retail Innovation

Sectorhttps://ec.europa.eu/research/innovation-
union/pdf/Report_from_EG_on_Retail_Sector_Innovation_A4_FINAL_2.pdf#view=fit&pagemode=no
ne

Mintel (2015) Global Food and Drink Trends 2016. Mintel;http://www.mintel.com/global-food-and-

drink-trends-2016

WRAP (2015) Food Futureshttp://www.wrap.org.uk/content/food-futures

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