R&D Priorities for 2025: Remove Sugar, Replace Colors

About those colorants, perhaps the most hotly debated product development issue this year: “I saw this coming a mile away and always advocated to not use things that were already banned in EU,” wrote one respondent. “Actually, glad to see it,” wrote another about the replacements underway now at companies such as General Mills, Kraft Heinz, Nestle USA and Conagra.

While R&D budgets funded “about the same as last year” remained the top answer, as it seemingly has forever, this year’s 32% vote was the smallest plurality in at least 11 years – most years it hovers between 40% and 50%. Most of the missing responses defected to the “It’s been cut” answer, up 10 points from last year. The only time the “cut” answer has been this high was 2021 (22%); most years it’s been in the mid- to low teens. “It’s been increased” may have dropped 10 percentage points but last year’s number (32%) was unusually high.

Cocoa, eggs and coffee are the ingredients whose prices shot up the most in the past year, at least for the 72 respondents who took the time to specify the commodities they’re wrestling with. Several mentioned palm oil.

Keep in mind this survey was taken from mid-February through mid-May, so some of those ingredient prices have abated since then and the effect of Trump’s tariffs was uncertain for most of the survey period.

However, on the subject of tariffs: “Bought more stock before the tariffs were in place,” wrote one product developer. Several said they were looking for U.S. sources of formerly imported ingredients.

Cost control on the mind

Despite it not scoring highly in our opening question on top priorities, cost control came up often, especially in write-in embellishments to some questions.

The biggest cohort – 46% – said ingredient costs have risen 5-25% in the past year; 35% said they’re up 26-50% and 6.8% said they increased more than 50%. 12% said ingredients are costing about the same as in previous years. One lone vote – which doesn’t even account for a half-percent – said “believe it or not, they’ve gone down for us.”

Several respondents said they were reformulating to reduce costs: “Reformulated items, leading to ‘cost-neutral’ end state for company and customers.” Others mentioned a conscious effort to develop co-products as a way to offset input costs. One said she was “developing conventional formulas in place of what would have been organic.”

Other ways of mitigating rising costs:

* “Looking to move away from palm oil; as for cocoa, looking to use flavors and reduce the percentage of cocoa used in a formula,” wrote a woman at a bakery.

* “Emphasizing fudge flavors that use less or no chocolate,” wrote another.

* “We keep shrinking the pack sizes to be able to deliver value, and at some point consumers are going to get annoyed with that strategy,” wrote a product developer at one of the biggest U.S. food processors.

Worry about what consumers currently think of the food & beverage industry showed up in several ways, from the obvious worries about passing along cost increases to musings on ultraprocessed foods and questionable ingredients to general transparency.

Just over half – dare we say “only” 53% – are worried about reformulating without the ingredients being banned by some states or talked about at the federal level – ingredients such as the six petroleum-based colors, as well as (we specifically named) titanium dioxide, brominated vegetable oil, potassium bromate and propylparaben.

Product development is a team sport

Keeping in mind we get responses from companies of all sizes, 69% said they have a formal product development team – that’s 15 points lower than last year but not an historical anomaly. Not surprisingly, R&D has the highest influence on setting company product development goals, the case at 79% of respondents, although marketing is not far behind at 64%.

It’s worth noting that in about half of the responses, management and plant operations members are “very involved” in setting product development goals. Among write-in answers, a handful mentioned quality assurance/quality control being involved.

For those who have teams, 39% said the group meets weekly or more often -- that’s 12 points lower than last year and historically low. 24% said they talk a couple times a month.

It’s difficult to draw any conclusions about how long it takes to launch a new product. 18% said they can get a new product out in three months (that’s a historical high); 34%, the highest vote-getter, said six months; “nearly a year” dropped 12 points from 2024 but 13-23 months increased 11 points.

Most product ideas from this year’s group come from internal research (66%) -- general market research (58%) traditionally has gotten the highest response. Research provided by suppliers surged this year, to 53%; it’s traditionally garnered 20-40% of the vote. After being halved last year from our 2023 survey, focus groups jumped back up this year, to 35%.

In a final open-ended question, several mentioned trying to come to grips with what makes a product ultraprocessed. Several said they were working on ways to lessen the “processing,” primarily by avoiding ostracized ingredients. Other concerns written in:

• Impact of tariffs
• Sugar reduction
• Finding experienced R&D staff
• A handful mentioned removing seed oils; one specifically moved to beef tallow

We’ll give the final word to this product developer:

“We’re increasing transparency in labeling so consumers can make informed choices about what they put in their bodies. I hope companies are listening to informed consumers. There is increasing awareness that many foods contain harmful ingredients that contribute to chronic diseases. Consumers are looking for truly natural, whole-food-based products without artificial additives, seed oils or excess sugars. I encourage brands to consider feedback from health-conscious buyers when developing new products.”

Amen.