Suppliers will stop introducing new products in the UK and go in search of more lucrative and sustainable markets if retailers continue to demand heavy investment at launch, Unilever UK chairman David Lewis claimed this week.

Addressing this week's IGD Convention, Lewis said suppliers were being forced to spend the majority of a new product's marketing budget at launch stage, in the form of cut-price deals and bogofs.

But cut-price deals devalued a product, he said, as a consumer would baulk at paying full price when the promotion ended.

Unilever research showed there was no relationship between price and the success of the launch, he added. If a new product were truly innovative, consumers would buy it at full price.

"If you sell a product at half price you don't build a sustainable brand and, in the attempt to promote innovation, we shorten the life of the product," he claimed. "We make it disappear into the innovation trap. And the UK may no longer be the first port of call for innovation. It's becoming a very expensive market to expose innovative new products in."

It was time for suppliers to stand up to retailers and demand a more long-term investment strategy to sustain new products, Lewis said. "When we have real innovation that has real benefits, we want a sustainable launch, and it will take brave conversations between myself and my customers to persuade them we should have demand-driven growth, not sales-driven growth."

One supplier present said Lewis had got it right, but questioned whether it would be possible to force change. "Heavily promoted launches are the wrong way of taking a new product to market if the consumer assumes that is its value," he said. "But there are only a few big brands that have the ability to control their own destiny, and it will be a test of the power of the brand to see if the changes can be brought about."'Alarming' price hikes feared

The price of ingredients will increase further over the next five years, delegates attending the IGD Covention 2007 believe. The 600-strong audience was asked to vote on crucial issues affecting the food and drink industry.

When asked to predict what would happen to the price of product ingredients over the next five years, 96% of respondents said prices would increase, with 52% predicting a 'moderate increase' and 44% an 'alarming increase'.

When asked which issue was causing the biggest headache, 41% of delegates said rising input costs, with skills shortages getting 22% of the vote.

Most delegates thought the current focus on sustainability was positive, with 76% considering it an opportunity for companies to make a worthwhile difference to society. Nearly one third of delegates said reducing packaging was their company's highest priority in terms of sustainability, while 13% pointed to energy efficiency and 11% to carbon emissions.