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The Latest Talking Points in New Product Development
28 June 2024As recently highlighted in a feature by The Grocer, innovation is a fundamental driver for the strategies of most brands and retailers. There is a direct correlation between performance and levels of product development, with 19% of sales coming from new products across the top five manufacturers against 8% overall.
This is a view supported by Kerry Cavanaugh, business unit director at Mars Wrigley UK who comments, ‘We’re always balancing bringing innovation to our core brands, so we keep consumers excited to try new versions of their favourites, while also looking for areas where we can launch new products that are truly expanding the category’. Certainly, according to Innova Market Insights Europe leads the way for confectionery launches for the year ending September 2023 with 40% of all global activity.
The food and beverage industry in the UK (and overseas) is facing some significant challenges in 2024 says Brandt Maybury, Co-founder of Tastehead. “Without a doubt, the most pressing issue is ingredient prices. Taking the cocoa industry as an example, we’ve seen prices double in some cases over the past year. This has shifted many of our clients from profitable commercial models to negative margins. As a result, there’s a major focus on cost reduction, especially for products containing significant amounts of chocolate. However, this issue isn’t confined to cocoa; it spans almost every category”.
Indeed, the industry has never faced such a challenging period, with a series of major challenges among others Brexit, COVID19, the cost-of-living crisis, truck drivers’ strikes, and evolving HFSS guidelines. Brandt “All these factors have come at a time when consumer expectations are changing dramatically. In snacking and on-the-go products innovation is now heavily focussing on functionality. Consumers expect their products to offer more than just to fill them up with a great taste—they look for benefits like adaptogens, nootropics, cognitive performance enhancers, gut health, collagen peptides, and sea moss. These trends certainly add complexity and challenges to the product development process as we strive to integrate these elements without compromising on taste or cost”.
Technology to increase the shelf life of food produce and reduce waste has been developed by the Manchester-based OSY Group. ‘Xtend’ is a water-based antimicrobial coating for packaging surfaces that kills microbes and slows the natural spoiling process affecting fresh produce. Speaking about the £750,000 funding from investors to support its rollout across the UK and worldwide, Chief Executive, Marc Braterman commented: ‘We aspire to lead the charge in global food waste reduction through our innovative technology, as well as helping to drive down greenhouse gas emissions and food poverty, supporting grocers as they strive to achieve their sustainability targets and enabling food producers to tap into more export markets.
In Scotland, the Food and Drink Federation is providing £50,000 of funding to help Scottish producers create healthier food. Known as the Reformul8 Challenge Fund, awards will be granted to small and medium sized food and drink businesses. This will include nutritional testing and technical support, as well as collaboration with ingredient suppliers to source new solutions that enhance the health benefits of products.
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Turning to the bakery sector, Ortho-K client, Hovis has announced an exclusive three-year brand licensing agreement with Modern Baker to co-manufacture, develop, co-package and distribute exclusive new bakery products. This will facilitate the expansion of Modern Baker’s gut-health loaf and other ‘health plus’ bakery products, leveraging Hovis R&D. Jon Jenkins, CEO of Hovis, remarked, ‘We know that today’s consumer is increasingly interested in health and gut health, and we look forward to working with Modern Baker to grow the current range.’
Bakery and Snacks journalist, Gill Hyslop, writes: “In a strategic move it hopes will ‘revolutionize product development’, networked ingredient marketplace TraceGains has acquired NutriCalc, renowned for its highly accurate nutritional calculation software.” TraceGains looks set to inherit NutriCalc’s expertise, as well as gain access to its customer base across US, Europe, Asia-Pacific and Latin America. This will facilitate an exchange of information between CPG processing sites and suppliers at each stage of the farm-to-fork process. TraceGains 2024 NPD Report reports a noticeable increase in NPD investment.
Frozen food giants Iceland have launched their ‘Brands on Ice’ accelerator scheme for new and existing brands to pitch innovative ranges to a team of Iceland buyers and executives. Offering a minimum investment of £100,000 to launch and stock new products exclusively in Iceland stores, Oliver Gilding, Iceland Foods’ head of innovation and licensing, commented, ‘What’s different about Brands on Ice is whereas we would be talking to own-label suppliers about opportunities for our exclusive brands, we want to be talking to more branded suppliers about opportunities for their innovation.” Iceland has already established successful partnerships with Harry Ramsden’s, TGI Fridays and Myprotein.
The exponential growth of AI is making a massive impact on NPD and the food and beverage industry generally. The AI platform for food and beverage trends, Tastewise, works alongside food and beverage brands to spot trends, validate new product concepts and generate in-depth market research reports. Tastewise has now unveiled a conversational chatbot to help users instantly gain the insights they need, hailing the development, ‘the next step in our AI evolutional journey’. Separately, James Jesty from Shape New Ideas expressed a similar opinion: ‘In the early phase of an innovation project, you need to challenge the status quo. Studies show that Chat GPT can inspire associations between disparate concepts that challenge fixed thinking.’
Brand Maybury “I’m following the growth of artificial intelligence closely, with a mix of excitement and fear. While its broader societal implications are a topic for another time, there’s no doubt that AI can be harnessed for better results in product development. I feel that many people don’t yet appreciate its full potential. Although some argue that AI will never replace human creativity, from what I’ve learned even the best human creativity follows patterns of thought that AI could eventually match, and most likely surpass. Thankfully, I think we are quite a way off from this.
Currently, the most obvious use of AI is in data analysis. It has proven to be a useful addition for us at Tastehead when building executive summaries from market research activities like surveys and focus groups. AI helps us identify patterns that might not be immediately obvious and validates our insights, confirming that we’re on the right track. Although we haven’t used AI for recipe formulation yet, it’s only a matter of time before this becomes a reality. If you ask ChatGPT or a similar model to generate a creative recipe, such as a ‘high-protein, sugar-free Marmite marshmallow’, it often provides a pretty good starting point. However, it’s still unable to refine recipes in the same way that a good chef/technologist can, taking something from ok, to good, to outstanding. This is an area where human expertise currently remains superior”.
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IPLC Europe`s Paul Stainton, a Retail Brand Specialist comments “leading supermarkets can gain an advantage in NPD through their exclusive private label (PL) ranges. ‘Premier tier’ ranges see the most product innovation with brands such as Tesco Finest, Sainsbury’s Taste the Difference and Aldi’s Specially Selected. A standout example is M&S whose 1,300 new private label products have seen their market share grow as a result of a 13% increase in food sales”.
Paul further observes “The change in consumer behaviour can also be addressed quickly with PL launches. The pandemic and recent cost-of-living crisis has led to a reduced level of eating out-of-home. Retailers have responded to this by launching out-of-home alternatives within their PL chilled ranges, including fast-food snack options, pizza meal deals, and many new ready meal ranges covering traditional and emerging world flavours. In particular, the market has seen many new Asian ready meal ranges launched, including the impressive “Japan Menyū” selection at Waitrose”.
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Assisting companies to relieve the pressure on NPD specialists is the way forward according to Anthony Warner of New Food Innovation who recently observed: ‘Outsourcing large, stressful chunks of non-core work can make a huge difference to a team’s success’.
In line with sentiments expressed across the whole sector, Accountancy and Business Advisory firm BDO, reported that almost a third of respondents concurred that new product development will be a key driver for growth across the next 12 months.
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