2017 R&D Survey: A Year of Cleaning Up Existing Products

Food Processing's 46th Annual R&D Survey finds teams working on removing GMOs and added sugars.

By Dave Fusaro, Editor in Chief

To no one's surprise, 2017 is shaping up to be a year of cleaning up -- or cleaning out -- for R&D teams. With GMO labeling and a new Nutrition Facts panel coming up next year, product development (or perhaps "redevelopment") teams are reducing added sugar, eliminating genetically engineered ingredients (GMOs), removing sodium and replacing synthetic colors.

Those are the top four answers to one of the questions on our 46th annual R&D Survey. Despite those product adjustments, 42 percent of respondents say they are working on "really new" product development (do we see a contradiction here?) instead of "cleaning up” current products (22%).

At least it appears there's money for all this rework. 23 percent said their department's budget has been increased, and 46 percent say it's about the same.

Not so for at least one product developer. "Due to the high cost of ingredients caused by recession and inflation, the budget had to come down. However, the demand of consumers for clean label and to eat healthy has spurred us to improve on the product quality and to find a niche in the market, while still building trust and loyalty for the consumers." Sounds like a plan.

Despite all the rework, 48 percent say it's not because of the new Nutrition Facts panel (52 percent say it is). However, when asked, "How strongly will the following impact your R&D strategy this year?" preparing for the new panel came in second, close behind preventive health.

"One of the issues we are facing is on deciding serving size for our products because of new regulation," wrote a maker of ethnic entrees.

When asked, "How will your company respond to mandatory GMO labeling in 2018?", the biggest group (35 percent) said they're seeking non-GMO certification. 27 percent said they'll rely on the anticipated USDA label (with fingers crossed); 22 percent will just state they use GMOs on labels and 17 percent will use the Grocery Manufacturers Assn.'s SmartLabel, putting the GMO information online.

As in the past, this year’s survey confirms that product development is a cross-functional team effort. While the R&D Dept. rightfully has the most say, marketing & sales held onto second place in several questions relating to the teams’ makeup and who has an impact on product development.

In Figure 10, 87 percent of you have R&D represented on the team; Marketing is next, on 61 percent of the teams; Manufacturing holds down third, on 53 percent of teams.
As for how your companies identify new product ideas, 74 percent use general market research, and 66 percent are able to fund internal research. Research provided by suppliers has been on a multi-year increase, with 45 percent valuing it this year. 41 percent practice open innovation.

The survey was taken during April and early May. We had 447 responses, up 11 from last year.

What are you working on?

We’ve started out with the same question for several years now: “Which of the following will be most important for your R&D efforts this year?” “Really new” product development continued its multi-year run in first place, and its score this year was up 4 points from last year (and more in line with previous scores). In addition to "cleaning up" current products, also on the list was existing product improvement (excluding "cleaning up") at 17 percent, product line extensions (11 percent) and cost control (5.9 percent) – all within a percent or two of last year's responses.

We asked, "What ingredients will you be working most on this year?" and gave respondents 10 choices, plus a write-in "other." Among the predetermined answers, "removing added sugars" was at the top of the list, and removing GMOs and sodium were not far behind. The answers weren't all negative; "adding fruits and vegetables" placed fourth.

23 percent took advantage of that open-ended "other" option. Write-ins getting more than five mentions each were (in order) adding protein, removing allergens and removing or replacing preservatives.

Other "others" included replacing high-fructose corn syrup; caramel color replacements; adding probiotics; going phosphate free; "changing fibers per new FDA regulations"; non-meat proteins; only natural flavors; no antibiotics ever; "using only USA sourced and manufactured ingredients"; reducing water usage throughout the supply chain; removing more processed ingredients; and getting gluten-free certification.

Further into the survey, we had an open-ended question: “What is your company doing to make a cleaner label?” A couple of proud product developers answered: "Nothing, we are already clean as a whistle." "Our ingredient statement reads like a recipe." "Only using ingredients 'from Grandma's pantry.'"

But most agreed they were still working on this. "We have been removing ingredients and simplifying labels for several years," wrote a developer of seafood entrees. "That effort will continue until all of our items have been renovated, as well as being a focus in new product development." Other clean-label efforts included:

  • "No HFCS, artificial colors (including caramel color), artificial flavors, or chemical preservatives."
  • "We are finding alternative ingredients and making formula changes to eliminate trans-fat and gradually reduce GMO ingredients."
  • "Replacing ingredients that sound chemical and reducing the number of ingredients used in the product." + "No Antibiotics Ever label."
  • "Replacing complicated preservatives with simple, easy to read ingredients that will maintain the current shelf life is a tall order!"
  • "Using some alternate sugars (monk fruit, stevia, inulin).
  • "Not using nitrates/nitrites."
  • "Pea fiber as binder in meat rather than a binder compound."

Year-to-year changes

While most of our email list remains static year to year, there's no telling if the same group answers each year. With that caveat, we point out a few significant changes in this year's responses.

As for who makes up the product development team, most of the answers are within a few percentages of previous years' answers. But "multiple suppliers" took a 50 percent jump, to 31 percent. Single suppliers also jumped, nearly five-fold, but that's still a small number. Finance sits on a third of the teams.

Is it taking longer to get new products on the shelf? Time to market shows no big changes, but all the time-periods of a year or less declined or stayed the same, while answers in the 13 months and above increased.

Maybe it's all the meetings. The frequency of product development team meetings has been inching up for several years. This year, weekly meetings, the most popular answer, took a big jump, to 44 percent (from 29 percent). Virtual meetings have been on the rise, too.

Another 2018 deadline is the removal of partially hydrogenated oils. We've been tracking your preparedness since the looming ban was announced in June 2015, which is also when concern over replacing them peaked. This year, just 18 percent are worried about replacing PHOs.

Some random comments:

  • One seafood developer noted, "We will be focused on innovative packaging as well as innovative products."
  • A respondent at a boutique food firm said, "One issue is obtaining quality ingredients: this has been an ongoing issue but is becoming increasingly more difficult."
  • A contract manufacturer noted "product innovation, process innovation, customer co-innovation, package innovation are all elements of a greatly expanded R&D function."
  • "Since the company is trying to improve packaging for marketing purposes it would be a great timing for R&D to corroborate with marketing on how we can comply on the new regulations in both Canada and the U.S.," wrote a product developer at a small Canadian baker. "And probably to have a cleaner label -- which will be good for marketing purposes too."
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