2015 R&D Trends Survey: Doing Without GMOs and PHOs

May 18, 2015
Our 44th annual R&D Survey indicates a year of regulatory challenges but less emphasis on cost control.

Sometimes we worry that we write too much about genetically engineered ingredients (GMOs) and regulatory issues, especially for you folks in product development. But the two subjects seem to be coming up a lot lately, with the latter concern focusing on an expected FDA ban on partially hydrogenated oils (PHOs).

Download all 16 questions and answers (and charts) via this PDF.

This year especially, the two issues seem to be staring you in the face and impacting your job, although your responses to our 44th annual R&D Survey reflect the divisions on both of those two issues.

Last year was the first time we included GMOs in our list of issues that may impact your company’s R&D strategy. Then it scored poorly, garnering just 5.6 percent of first-place votes and a 681 score overall, ranking it sixth out of seven issues (this weighted score applies 7 points to a first-place vote, 1 point to a seventh-place vote, etc.). You can read the 2014 survey results at 2014 R&D Survey: Open to New Ideas

This year it moved up with a bullet, to second place in the weighted score. It captured only 11 percent of first-place votes, ranking it fourth in that category,  but it was nearly everyone’s second and third choice and had the second-lowest last-place votes.

PHOs are either your biggest worry or a non-issue. They got the second-most first place votes but also the second-most last-place tallies (coming in second to food safety on both ends of the spectrum).

Back to GMOs, when we asked if your company has or is seeking non-GMO certification, 23 percent (should that be “only 23 percent" or “a whopping 23 percent”?) answered they are going through that process.

A companion question about where your company stands on the issue shows the split: 12.9 percent are strongly opposed to genetically engineered ingredients, 12.5 percent are strongly supportive (21 percent are mildly supportive, 9.6 percent are mildly opposed and 28 percent are neutral).

Those are just two of the 20 questions we asked in our annual query about your R&D priorities for 2015. The survey was taken in March. We had 285 responses, up from 215 last year. (By the way: Thank you for taking it!)

What are you working on?

Since we presumably have a pretty static group, changes are minute from year to year. But on the very first question, “Which of the following targets are most important for your R&D efforts this year”?” there was one significant change. Cost control consistently has been in the teens – 17 percent last year and 13 percent in the two previous years. But this year only 7.5 percent of product development professionals have been told to reformulate to save some dough.

“Really new” product development, the perennial winner of that question, came in at 42 percent this year, a little higher than last year’s 39 percent but below the all-time high of 48 percent in our 2013 survey.

“New twists on old products are hot in our segment right now,” wrote Daniel Feldman, production manager for Dodo Distilleries, Salt Lake City, Utah. “This is a year to discover new products that can become permanent additions, rather than seasonal products.”

“New product lines and product categories are key to our future growth,” wrote a maker of flavored syrups.

“Developing really new products and ‘cleaning up’ current product labels are equally important,” wrote another.

“We’ve seen a nice improvement in the perception of the need for R&D’s support,” wrote a product developer at a Colorado meat company.

“To stay in the current market, products have to clean up – even the older warhorse meat products need a smart review to reduce/replace ingredients that now get scrutinized. R&D budgets have loosened up in response to current market demands.”

“Our main customers are looking for clean labels – natural meats, no preservatives, and non-GMO.”

“We are actually following two main targets – developing new products and cost control,” wrote an R&D employee at a Midwestern soup company. “Cost control with current products to position them better in the market and gain profitability.”

Except for her, with cost control so low, could that mean the checkbook is wide open this year? As for the R&D Dept. budget, 24 percent said it’s been increased and 12 percent said it’s been cut. That’s a nice 2:1 ratio, but each extreme moved only one percentage point from last year’s answers.

“It’s business as usual, higher expectations, but no cuts, so that’s a great plus,” wrote an Illinois product developer.

“It’s challenging to [do more] with the same budget, but that is part of the excitement,” wrote another.

“We expect a good year.”

While we expect some guidance any day now from the FDA on a possible ban on PHOs, most R&D Depts. seem to have that under control.

Nearly half either already have removed the precursor to trans fat or have it under control; only 7.5 percent consider it a big and looming problem.

Also expected soon from government regulators is the 2015 edition of the Dietary Guidelines for Americans. As the basis for federally funded feeding programs (school lunches, Meals on Wheels, prison cafeterias) and nutrition advice, they’re wide-ranging and instructive, but their impact on the food processing industry is marginal.

So perhaps it’s no surprise that only 16 percent of you said they’ll have a huge impact on product development this year (that number also could be low because the final Dietary Guidelines haven’t been issued yet). The guidelines were ranked higher in impact in both of the previous annual surveys.

We must have picked a pretty good list of ingredients to add or subtract from formulations, because there were only minute differences from the two previous years. Removing sodium remained the top priority at 33 percent, up 3 points from last year. Removing added sugars was second at 26 percent, and adding fruits and vegetables scored 24 percent.

But that question also had one of the highest number of “other” responses. There was no strong consensus for any other single ingredient, good or bad, but those write-in votes included adding protein, reaching 95 percent organic status and “looking for unique ingredients.”

One or two write-ins hinted at cleaning up labels, and indeed that had its own survey question – but an open-ended one. “What is your company doing to make a cleaner label?” we asked. Some of the more interesting answers were:

  •   “Limit number of ingredients to essential items only. No preservatives. Natural ingredients.”
  •   “Examine every formula and remove any ‘extraneous’ ingredients.”
  •   “Products contain no preservatives, mold inhibitors, synthetic antioxidants or artificial colors.”
  •   “Removing yeast extracts, hydrolyzed proteins, etc.”
  •   “Pushing suppliers to produce clean label equivalents to ingredients we use.”
  •   “Eliminate preservatives and use high-pressure processing.”
  •   “We strongly target ‘smart’ sodium levels; we seek alternatives to flavors that read badly; we call out natural and minimally processed when appropriate.”

And how many of you are guilty of this venial sin: “We call out ‘no XXXXX’ even when [something] wouldn’t realistically be present – e.g., putting ‘Gluten Free’ on steak packaging. That’s what the customer wants!”

Who’s working with you?

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.

80 percent of you have R&D represented on the team – and it always seems odd to us that number is not 100 percent (but it never is, it’s always in the 80s). Marketing is next, on 62 percent of the teams. While manufacturing comes in third (on 52 percent of the teams), manufacturing/plant operations’ influence weakens in other questions about who wields power in the product development process.

Manufacturing & Plant Operations’ influence grew a bit over last year in our “involvement” question, but remained last among the “very involved” groups. General management and the CEO/President/CFO are more involved, even after giving up a few points from last year. Quality control or quality assurance led among write-in candidates for who else is important to the team. There were a few votes for engineering, apparently as distinct from plant operations, and a few for culinary teams. Also: “Our compliance team is more important than every before – e.g., ‘How can we label this new product? What are the possible claims/shout-outs?’ ” wrote a Rocky Mountain product developer.

But you do have a team; that’s remained rock-steady over the years. 63 percent of you do, within a percentage point of answers over the past few years. And 79 percent of you do have meetings, most weekly or at least several times per month.

Maybe it’s all those meetings that are slowing down your product introduction cycle. While 16 percent claim to be able to get a product to market in three months or less, more than half of you take six months to a year.

In the wild card question – “Any other important R&D issues you want to mention?” – there were a couple answers worth mentioning:

  •   “Being in Vermont, we are closely watching the status of the GMO labeling initiative.”
  •   “We’re already focusing on next year.”
  •   “This generation that eats on the run as well as wants to cook at home but does not know how.”

And we leave you with this one, from a Canadian reader. His goal is “to ensure our products create trust because they are great and can be trusted. We see a consumer who feels taken and the pendulum may swing the other way in anger. Our main worry is to put out a great product and get over-looked because of the lack of trust.”

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