Those are sweeping generalizations, admittedly, but they are among the inferences from our 47th annual (yes, we've been doing this quite a while) R&D Survey. The survey was fielded March through mid-April and drew 623 responses, up 39 percent from last year.
Its very first question (Figure 1) always asks how important several general targets are for your R&D efforts this year. "Really new product development" continues to rank first, but at its lowest score in at least four years – 33 percent said it was paramount, not terribly far above "cleaning up current products" (23 percent). On the other hand, "cost control" (14 percent) was roughly double the score of its previous three years. We did add one possible answer, which could have diluted all scores: "Preparing for the new Nutrition Facts panel" got a surprisingly tepid 4.6 percent response.
"Cost-cutting and removal of GMO ingredients," was top of the to-do list for one R&D department head.
Label cleanup came to the fore in last year's survey, and it remained a key trend in this year's project. In an open-ended question, "What is your company doing to make a cleaner label?" we got many interesting responses:
- "Removing FD&C colors, becoming organic compliant and non- GMO where requested."
- "Discontinue using DATEM, SSL, L-cysteine, mono- and diglycerides and limiting high fructose corn syrup, just for a beginning. We are using natural flavors and colors more prevalently."
- "We are only using ingredients that have a function, we are not using any 'fillers.' "
- "Shopping for ingredients that have fewer sub ingredients."
- "Reducing sugar, staying with pantry ingredients, highlighting benefits of ingredients."
- "Create more shades with just fruit and vegetable juices and offer organic certified colors."
- "Eliminating artificial colors and sweeteners, BHA/BHT, synthetic fats, caffeine, L-cysteine, replacing chemical names with common names."
- "All new products that are developed must be clean label. Old SKUs are being phased out or modified."
"Removing GMO ingredients" continued its No. 1 spot among ingredients you're working on this year (Figure 2), its 34 percent score up a bit from last year. "Removing added sugars" held steady, but the rest of our ingredients-to-remove list (sodium, trans fat, saturated fat, even "replacing refined grains with whole grains") dropped.
The ones you could add stayed about the same as in past years, but "adding fruits and vegetables" dropped by about a quarter.
The new Nutrition Facts panel was supposed to go into effect this year but has been delayed till 2020. Whether product developers are taking advantage of the extra time or they already had this under their belts, fewer R&D Depts. are concerned with the new label this year (Figure 4).
There were several random comments about clean labels. "Most if not all of our new product development is swinging to all-natural or clean label. Our clients are requesting that existing products get cleaned up," wrote a contract manufacturer.
"No more synthetics in food, should be all naturals, we need clean labeling," wrote another. And this shot of reality: "There are lots of moving targets about clean labels."
Another new regulatory wrinkle involves the FDA's accepted definition of fiber. The agency at the end of 2016 restricted the definition to naturally occurring fibers and those with a physiological benefit. Any "newly isolated or manufactured dietary fiber" would need to be evaluated by the FDA before it could be listed as dietary fiber on food packaging.
Some of the negative write-ins were: "Asked to do more with same budget"; "Same number of people, yet many more projects"; and "Procurement of some necessities has been shelved for monetary reasons."
But there also were some positive comments. "New product development is our business lifeline." "Future growth will be through innovation, retention and growth of reputation, staying ahead of any pseudo competition." And "Our growth strategy is tied to our innovation plan."
It's a team effort
In Figure 5, R&D is represented on 86 percent of teams (we're always curious why that's not 100 percent); Marketing is next, on 54 percent of the teams (down 7 points from last year); and Manufacturing makes its concerns known on 49 percent of teams.
It's about the same for general influence in setting product development goals (Figure 9), however with the C suite and general management a little more involved than manufacturing.
"Our quality partners always have a seat at the table," wrote one respondent. "Both general quality and computer validation are always present from the beginning of a new project."
Sometimes R&D, Manufacturing and Management (and maybe other "departments") are the same people. "We are a small manufacturer, just getting started, and everyone wears several hats," said one. Another echoed, "I am a department of one that works closely with QC, Management, Sales and Procurement."
As for how your companies identify new product ideas, 72 percent use general market research, and 48 percent (down 18 points from last year and 21 points from our 2016 survey) are able to fund internal research (Figure 12). Research provided by suppliers is used by 39 percent, and 38 percent or responding companies practice open innovation.
Throughout the survey, there are places to write in random comments, and many of them ring true. One product developer lamented "increasing raw material costs, changes in trade agreements [and] ever-changing regulatory situations around the world." Another was "working to meet diverse (and often conflicting) requests from grocery chains." Still another is "focusing on sustainability - for ingredients, products, and packaging."
Good luck to you product developers who are wrestling with shrinking budgets, demands for cleaner ingredients and fickle consumers. And our thanks to the 623 of you who took the time to respond to our survey.