Market View: Why Is New Product Innovation Lacking in the Food and Beverage Industry?

There may be good reasons, but complacency should not be one of them.

By John Stanton, Contributing Editor

Reading about the Consumer Electronics Show got me to thinking about how the world has changed. I never would have thought the largest collection of hotel rooms would be Airbnb, or the largest taxi cab company in the world would be Uber, or that the largest retailer would be Alibaba. Just a few years ago I had never even heard of these companies. Another eye-opener at the CES conference was a computer embedded in a refrigerator where you can simply push on the screen icons to order more food. Wow!

Around the same time, I was reading a new product showcase in a food industry magazine. And I was not left with the feeling of “wow.” It seemed to me to be much of the same in new packaging and new flavors. I don’t want to give the wrong impression, I do think new packaging and new flavors can become very profitable and can in fact be what the consumer is asking for and would pay to get.

However, what really seemed to be missing was something that was just new, out-of-the-box, and exciting. I tried to make a list of big innovations in the food industry, but I couldn't come up with too many. However there clearly are a number of innovations that may become big.

Some have tried and failed. I thought Procter & Gamble’s Olestra artificial fat was an absolutely breakthrough innovation. I had the pleasure of working on this project and believed it would become a license to print money. Of course I didn’t realize the impact it would have on the digestive tract and the rather unpleasant warning that had to be placed on the label.

Here are a couple of things I think are true innovations that someday may or may not be successful.

I think the subscription meal service may someday be a very profitable but niche business. You can have all the ingredients as well as the recipe shipped to your house so you can make the meal yourself. Making a meal is the way a cook shows her love and affection for her family or partner. There is a big difference between saying, “Which hamburger is yours, honey?” and "Look at what I made for you tonight, honey.” I think this is a big innovation because it totally changes the channels of distribution and gets people away from the traditional supermarket, which is slowly dying away.

I saw another innovation at a recent Promotion Optimization Institute conference. It was right out of the Jetsons. The product is actually a machine that has a number of baskets. After you fill the baskets with ingredients, you simply push a button and your meal is mixed together and cooked. It still needs some development, but the idea that you insert ingredients, push a button and then walk away is quite innovative. My colleagues suggested this is not that different from throwing everything into a crock pot, but this new age meal preparer gives you more variety of meals including scrambled eggs.

I also wondered why it is that the food industry never seems to have products featured in Time magazine’s new products of the year issue. Occasionally we do but not often. Is it that the food category has already extracted all the innovation we can, or have we become so focused on the next quarterly financial report that we’re not really searching for that breakthrough innovation?

Let me suggest three scenarios that might explain the lack of “breakthrough innovation.” One is that food is something with which consumers are very comfortable and familiar. They just don't want the change. Maybe in the area of food, consumers really want small changes and not big innovations. For example, American consumers seem to be willing to try some new foods like Thai or Indian, but they won't venture into the area of proteins from insects (which many think will be an key food of the future).

The second scenario might be that the food industry is unwilling to take those big steps to create a “breakthrough innovation.” If this scenario is true, it might be because they believe the first scenario. That is, why try to push consumers into something very new when they may be unwilling to try it? It could also be that the food industry is slowly looking for “breakthrough innovations.” This may be a very reasonable strategy as we know Aesop told us that the tortoise beat the hare. And some companies want to be “first at being second.”

A third scenario could be that some food companies are coming up with breakthrough innovations, but they are so hush-hush that the public is not aware of them. If I were working on some truly great innovation I would keep it a secret as long as possible. But I believe we would have heard of something in the last five years or so.
I may be a little myopic and there may be things in the market I’m just missing. So do me a favor, if you can think of some really breakthrough innovation in the food industry, send me an email and tell me about them. I hope this stuff is out there, and I’m the blind one!

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  • You may just be looking in the wrong place. Over the last 5 years the Natural Products Expo has become the food industry M&A capital. The trends in the beverage industry that are moving towards mainstream are; low sugar natural soda, fresh pressed juices, kombucha and cold brewed coffee beverages. Development is not just limited to products themselves. The squeeze pouch for beverages, sports gels and baby food were also started at this show. Along with a launch of nut butters other than peanut, packaging them in snack tubes is another Natural Products innovation. Manufacturer's like White Wave already know it is cheaper to by innovation at these shows then set up an R&D department. This is the new reality for food, like Uber has replaced issuing Taxi medallions to expand service.

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