38th Annual R&D Survey: Surprise! More New Product Development

But as for identifying new product ideas, internal research and focus groups still rule at 85 percent (though down from 92 percent last year). Suppliers again showed their muscle coming in No. 2 with 42 percent, and nearly one-fourth — 24 percent — turn to an external product-development company. 

Coming down the pipeline

The “big, big issues” for the coming years — chasing consumer trends, healthier/better-for-you foods, modification/reformulation, regulatory issues, etc. — showed few changes over last year’s answers, but the changes were telling ones and appear closely related to the economy.

“Going green” fell from 33 to 24 percent; “going global” from 21 to a mere 8 percent. Modification/reformulation (includes reformulation for health) fell somewhat, from 44 to 37 percent and line extension from 26 to 19 percent. Outsourcing, too, became less of an issue, dipping from 13 to less than 9 percent. And focusing on consumers trends is suddenly, albeit not surprisingly, more important. That figure jumped from under 39 percent to over 51 percent. This was the highest score for any of the above issues.

The increased urgency of minding the consumer is supported by comments such as:

We are trying to figure out what the consumer really wants before they know they want it or need it” (from a senior product developer working at a large, multinational company on the East Coast).
• (We’re) improving existing products to meet consumer requirements” (a grain products miller and manufacturer based in the U.K.).
• (We plan to) focus on development of customer-requested new products” (from a snack product manufacturer for a $50 million company).
• And the more proactive (not to mention aggressive) comment from a small manufacturer of further-processed foods, “(We’re focusing on) changing consumer lifestyle.

Look to the Future

Although for 2009 issues of sustainability (green production, green packaging, fair trade, etc.) lost half its ground, dropping in importance from 22 to 11 percent, whether the change in number was because last year’s increase in “going green” took care of the need is hard to say. We can only hope so: Sustainability will still prove to be a driving trend in the near future and beyond. Early on, it was another economic sensibility that had a tough time getting out of academia. But once the concepts started to snowball, processors realized sustainability and ecologic responsibility make fiscal sense too. If it (waste) is “out of the pipe” it’s “out of the pocket.”

In spite of these shifts, making healthier/better-for-you foods and beverages, or modifying or reformulating for same, certainly follows consumer trends.

With layoffs at the forefront of so much economic news, it’s surprising the topic did not come up as much as we thought it would. But labor issues weren’t altogether absent, nor the damage that rash decisions can bring. “Our company has let a significant number of workers go without replacing the knowledge base,” says one understandably anonymous respondent from a half-billion dollar, global fruit and fruit-beverage corporation.

Following mention of the company’s “aggressive” restructuring plan and the “high percentage of staff laid off,” the writer notes the company is “bringing in people from non-food industries — for example, the head of Quality Control! — who don't understand the industry and so make poor decisions.” The result: “A huge knowledge gap, lots of pain and suffering, upper management disconnected from the educated workers, all accompanied by a ‘fire the messenger’ attitude.”

What the next few years will bring for the food industry is hard to gauge. The financial situation is going to get worse before it gets better, according to all wonks. But the economy-defying basic principle of “people gotta eat” is likely to continue to balance that out. All signs indicate this is a perfect time for food and beverage companies to put more money and effort into R&D and come up with the next generation of enticing and healthful foods and drinks.