TraceGains debuts 2025 R&D and product innovation report

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TraceGains debuts 2025 R&D and product innovation report

29 Jul 2025

Lily Cota

Lily Cota is a writer, editor and photographer from Kansas City, Missouri. She graduated from Missouri State University with a Bachelor of Science in English and a minor in Photography. When she’s not writing, you can find her reading fantasy novels, thrifting, trying out local coffee shops and spending time with her nieces.

WESTMINSTER, CO — TraceGains, a provider of compliance, quality and innovation solutions for the food and beverage (F&B) industry, released its 2025 report, “R&D and Product Innovation in the Food and Beverage Industry.”

TraceGains conducted an online survey of 188 food and beverage leaders at small and large food brands worldwide. The report’s findings reveal that while innovation investment is rising rapidly — with 80% of brands planning to boost new product development (NPD) spend this year — only 2% say their product development processes are fully digitized.

The updated 2025 report builds on TraceGains 2024 report, showing 76% of brands planned to increase innovation investment. That number increased to 80% this year, with over half of the respondents planning to raise budgets by more than 10%.

“We’re pleased with the results of this year’s report showing genuine excitement around AI and digital transformation,” said Paul Bradley, senior director of product marketing at TraceGains. “The downside is that progress is being throttled by outdated workflows and a lack of automation. Amid intense pressure to compete by offering healthier, more sustainable products, the majority of brands still operate in the stone age, managing product development with emails, spreadsheets and paper files.”

Key takeaways from the report include:

Manual Processes Undermine Modernization

Despite growing investment in AI and digital tools, most F&B brands remain heavily reliant on manual processes, which contributes to slowed innovation and increased risk.

Only 2% of brands have fully digitized and automated their NPD workflows, with 83% still using manual tools like spreadsheets, paper documents or email to manage NPD.

More than half (54%) don’t use a Product Lifecycle Management system at all, slowing speed to market, increasing compliance risk and hindering cross-functional collaboration.

AI Gains Ground, But Hesitation Remains

Increasingly, baking companies are implementing AI in product innovation, but many brands are still in the early stages of experimentation.

Up from 10% in 2024, 16% of brands are “all in” on using AI to power NPD. Another 45% are experimenting, and one-third (32%) remain skeptical, down from 44% in 2024.

Mid-sized companies are leading adoption, while smaller and larger firms show more hesitation.

Roughly a quarter (24%) of respondents cited market trends and consumer insights as their top driver for AI.

Innovation Investment Clashes with Cost and Supply Pressures

Cost pressures and supply chain instability are forcing many brands to slow or scale back on their investments in innovation.

Macroeconomic conditions topped respondents’ lists of innovation barriers, with nearly 70% of brands citing it as their main hindrance.

More than half (53%) say production costs such as labor are a major concern, and 50% are still struggling to secure key ingredients and materials in an uncertain supply chain.

The Future is Healthier and More Sustainable

Brands are maintaining their focus on better-for-you and sustainable innovation. Healthier, clean-label food is becoming a top priority, noted by 68% of respondents.

Sustainable packaging and personalized nutrition are also key areas of interest.

48% of brands are working to improve supply chain traceability.

39% are sourcing more sustainable ingredients.

41% say environmental goals are influencing packaging decisions.

For more information, read the full report.

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