KANSAS CITY, MO — Cookies and milk. Bread and … well, everything. R&D and commercialization. Some things are better together, and often, having one without the other just doesn’t make sense. When it comes to the development of new products, behind every innovation or variation is a strong R&D-to-commercialization bond built on curiosity, collaboration and communication.
Based on findings from the recent TraceGains survey, “The Official 2024 NPD Report: An R&D Outlook for the Food & Beverage Industry,” companies are in full-scale innovation mode this year. In February, the ingredient marketplace company surveyed 261 food and beverage brands about their new product development initiatives and discovered that 76% of respondents plan to invest in more new product development this year, a 12% increase over 2023.
The survey identified three primary factors driving the surge: competitive pressure (51%), cost reduction (46%) and changing consumer preferences (42%). That consumer preferences and competitive pressure placed in the top three is no surprise.
“Consumers and our retail partners will always be interested in what’s new or different in the marketplace; that hasn’t changed,” said Penny Patterson-Smith, chief innovation officer at Thomasville, GA-based Flowers Foods. “What has changed is that unit growth across many industries and categories has not rebounded since the cost-driven pricing that hit the market during the past few years. Innovation is one of the key levers organizations have to drive growth, and right now, it represents a way to attract consumers and encourage them to put more products and more units into their shopping or virtual carts.”
Viewing product development as a way to reduce the impact of rising manufacturing costs presents a delicate dichotomy: To stay competitive, companies must invest in innovation while wrangling the increasing costs of doing business. The TraceGains survey revealed that labor and production costs are a top issue for 58% of respondents; 53% reported that fluctuating demand and commodity pricing are factors impeding innovation; and 46% said ingredient availability remained a stumbling block.
“More than half identified overall market economics as a top issue as well,” said Paul Bradley, senior director of product marketing at TraceGains. “There’s clearly a sense that we’re in a tough market for innovation. There’s an interplay of commodity costs, energy costs and labor expenses that many brands are working hard to navigate.”
“Based on recent CPI data, consumers are feeling the crunch as well, so this is likely to be a theme for much of 2024,” Bradley added.
Reformulating products using lower-cost ingredients and adapting recipes to work with more efficient processes are two options for reducing costs, and suppliers can often help with both.
“Innovation is one of the key levers organizations have to drive growth, and right now, it represents a way to attract consumers and encourage them to put more products and more units into their shopping or virtual carts.” — Penny Patterson-Smith | chief innovation officer | Flowers Foods
“The most common challenges we are asked to solve are around removing chemical-sounding ingredients from recipes, reducing costs, simplifying bakery operations and helping bakers differentiate their products in the market,” said Joe Layton, VP of R&D at Puratos. “We are often able to solve several of these at once, especially in bread products, where functional ingredients are the biggest cost drivers.”
In terms of identifying — and satisfying — consumer preferences, partnering with external resources can also provide fresh new product inspiration for both established and emerging brands.
“If you’re a heritage brand, it can be challenging to break out of the existing model when you know what works and what runs smoothly,” said Lianna Lee, a senior food scientist with JPG Resources, a consultancy focused on innovation, strategy and execution in the CPG food and beverage space.
Industry experts beyond the bakery walls often possess a breadth of knowledge about current and future food trends and consumer behaviors. For example, Ardent Mills recently launched “Trend to Table,” a comprehensive analysis of more than 10,000 US consumer survey results focused on what drives consumer decision-making regarding the food they eat.
“Using data and key insights from the report, we can help bakers better understand consumer behaviors and how they can evolve their brand to meet those expectations with our ingredient portfolio,” said Michael Rhoads, senior R&D dough systems specialist for Ardent Mills. “We also develop recipes that highlight how our customers can utilize our ingredients to respond to these trends.”
Similarly, Puratos’ in-depth “Taste Tomorrow” consumer research provides bakers with insights that can help spark new product development, which the ingredient company can help transition from concept to store shelf.
This story has been adapted from Commercial Baking’s 2024 New Products Annual. Read the full story in the digital edition.
