2012 R&D Survey: Exciting New Products – With a Side of Cost Control

'New product development' is still the top R&D priority, but processors are creating brand extensions, cleaning up current ingredient statements and keeping an eye on costs.

By Dave Fusaro, Editor in Chief

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Last year at this time, when your collective interest in truly new product development fell a scant 2 percentage points, we raised a caution flag. What do we say now when this year's R&D Survey portends a 7-point drop, the third consecutive decline?

On the positive side, "brand-new product development" (as we worded the answer) remains your top priority in 2012. And 40 percent is still a respectable number of respondents to be pursuing that – greater than the one-third who gave it top priority back in our 2008 survey (although the question was worded very differently).

"The focus for the year is brand-new product development -- this is because consumers are always looking for something new," says a woman at an overseas beer company. "Exciting, authentic products will surely get the limelight in the marketplace. But for the process of development, the R&D budget has to be sufficient, as sources of information and experiments are costly."

We'll get to the budget in a minute.

But clearly moving up the chart  are "product line extensions" (up 9 points to place second) and " ‘cleaning up' current products" (up 5 points) – mostly at the expense of "existing product improvement (not including ‘cleaning up')" and – somewhat surprisingly – "cost control" – down only 1 point. And maybe that's incongruous.

Countering that previous statement come several comments from respondents indicating "Cost reduction drives all initiatives" (from a man at an Ohio frozen food company) and "Taking cost out is paramount – the rest are completely subordinate" (from a Minnesota dry mix developer). "Really looking to keeping our costs at an even par with last year in light of overall rising costs. Want to keep the price we charge our customer stable this year," wrote another. And there are some contradictory numbers coming from another question, which we'll deal with in just a few lines.

Top Issues in R&D
 2012 R&D Efforts

But countering those counters is a positive note from an anonymous product developer: "Innovation is what keeps you ahead."

Before we get too deeply into this survey, we want to tell you the background numbers. This report is based on 409 responses, up from 349 last year, among Food Processing readers who indicated they had product development responsibilities. The web-based survey was taken in March.

Priorities for the year
Despite cost control dropping as a top project priority, it still ranks No. 1 as a factor permeating your jobs. It got 90 first-place votes, 23 percent of those cast, exactly even with where it was last year.

"Cleaning up labels," a new choice, came in second. "Organic/natural" scored about what it did last year. "Authenticity," another new choice, came in a close fourth, but actually had more first-place votes than organic/natural. "Anything that can help reduce obesity," another new one, scored surprisingly low.

"Cleaning the label and more natural ingredients will be key for existing products; cost savings is second priority," said one Minnesota product developer. Another adds: "Making labels cleaner is here to stay and is not a trend." "Headlines about the merits of sustainability and organics as drivers have proven to be just that, headlines, and devoid of real meaning," wrote a consultant to product developers. "Safety and quality and convenience are keys."

Some other comments from those first few questions:

"Balancing healthy options, sustainability and cost will be the focus of the coming year's R&D."

"Anything to increase productivity and ensure a sustainable, safe product." "Cost reduction drives all initiatives." "Creating ‘value' is the top priority (cost)."

"Market is still unpredictable. Cost control is biggest factor." "Addressing traceability throughout the supply chain is also of major importance." But we also acknowledge this comment from Logan Julstrom, senior food technologist at dairy processor Kemps: "These are a forced ranking -- we have several that share top priority."

Looking further down the road, we asked: "What are the big, big issues your team will face in the coming years – not just this year but 2-3 years down the road?" Keeping in mind respondents could vote for more than one item, 54 percent specified "healthier/better-for-you foods" … just ahead of "following consumer trends" … just ahead of regulatory issues.

Those were the answers we specified. As for write-in "others," gluten-free came up quite a few times, as did working on Global Food Safety Initiative certifications and new thermal processing technologies.

Last year, we thought the 2010 Dietary Guidelines, being relatively new, would score higher than they did – last year only 13 percent called their influence "huge." Their importance actually rose a little this year, with 19 percent voting for "huge" and another 57 percent calling them reasonably important to product development.

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