35th Annual R&D Survey: ‘How do I know you’re organic?’

Nutrition sells

Whole grains and fruits and vegetables got a big boost from the 2005 Dietary Guidelines for Americans. Partly because of the push from ingredient companies, whole grains and phytochemicals from soy, cocoa, tomatoes and other foods are being promoted as both components of a healthy diet and as curatives for some diseases.

Major companies bought in and created or reformulated products with nutrient possibilities. At this past May’s Food Marketing Institute (FMI) Supermarket Show, Kraft introduced a number of whole-grain options (DiGiorno Harvest Wheat Crust Pizza and four varieties of whole-grain cookies and crackers from Nabisco) as well as new South Beach Diet products. The South Beach line, by the way, broke $170 million in sales in 2005 and is expanding with 20 new products in 2006.

“The consumer is at the core of all our new product innovations at Kraft,” explains Brian Driscoll, senior vice president of customer development organization for Kraft North America Commercial. “By leveraging our proprietary technologies and the scale of our company, we are developing great foods and beverages that help consumers around the world eat and live better.”

Teams and activities

 

Despite the changes brought by these two trends, product development teams don’t look too different than they did a year ago when we did our last R&D survey. Nearly all companies surveyed report using formal to informal teams, and all those teams certainly include key personnel from the R&D department.

Slightly fewer teams include marketing personnel than last year (75 percent this year, compared to 94 percent last year), possibly explained by a few companies that added development titles in R&D that were marketing titles last year. Manufacturing included personnel on 83 percent of this year’s teams, compared to 98 percent of last year’s teams, possibly caused by more outsourcing of manufacturing.

Interestingly, suppliers were included in one way or another on the teams of all respondents to our survey. And the intimate use of multiple suppliers doubled — but companies using multiple suppliers on teams were more likely to be in the organic or nutritional foods arenas.

Fewer teams seem to be meeting in person as teams move to teleconferencing, and several firms reported that suppliers are invited to join conference calls on an as-needed basis.

The portfolio of activities within teams covers a wide variety of projects. The traditional answers (new product development, product refinement, cost-cutting) all remain, but package development seems to have dropped off. Prototyping has crept upward.

Gil Leveille, an R&D consultant who has worked with Cargill, McNeill and presently with Wrigley after a career in academia, sees more companies interested in basic research, although some are doing the work in-house and others are looking elsewhere. “From a 30,000 foot view, food companies are looking to academic institutions  and government laboratories for some of the most basic work, then customizing it for their use,” says Leveille. “Generally, other countries do this better than we do, and there is more direct interaction between the public and private sectors, especially in Europe and parts of Asia. I’d like to see more of this, and I think we will.”

He also sees ingredient suppliers, in particular, making R&D and marketing work closely together to provide precisely what food processors need.

In talking to the R&D people, a fair amount of new product activity results in an organic version of an existing product? New? That depends on your point of view.

We saw product development cycles shorten considerably last year over our 2004 survey, but there was minimal movement this year. Team leaders note that projects most often get finished within even a three-month deadline when there’s existing research and information and if they get a heads-up on the project before the assignment. The short-term projects that dragged on were those that team members felt had unclear direction and measures of success. It seems those projects that were discussed around the water fountain were finished quickly, while those that were a big secret before assignment tended not to fare so well.

The usual reasons for failure to complete projects on time were lack of available ingredients, changing regulatory opinion and problems with processes. But several team leaders reported that projects were pulled or redefined, that shifting upper management caused changing priorities and that they had been concerned about the projects to begin with. When asked if upper management knew of their concerns, at least one team manager noted that the manager was new, and the team leader was afraid to express a negative opinion.

An eye on trends

 

This work doesn’t go on in a vacuum. R&D departments watch consumer trends, with health and nutrition ones at the top of the list. What do they do with the observations? Generally, the research team studies the kinds of information they will need to provide input to products assigned to them, both for new products, and for modifications.