Navigating the Evolving Food Landscape: Balancing Innovation and Cost Optimization

The food industry has undergone a remarkable transformation in the aftermath of the COVID-19 pandemic. While the initial focus was on maintaining product availability on retail shelves, companies are now shifting their attention to innovation and brand development. However, cost remains a significant concern, as the industry grapples with the ongoing challenges of supply chain disruptions and volatile ingredient prices.

Unlocking the Potential of Post-Pandemic Innovation

Embracing Complexity Reduction and Stability

The pandemic era brought about a surge of complexity in the food industry, with supply chain disruptions and labor shortages posing significant challenges. In response, many companies opted to streamline their product portfolios, reducing the number of stock-keeping units (SKUs) to maintain stability. However, as the industry has stabilized, the focus has shifted towards reclaiming the ability to innovate and target specific consumer needs."As you get away from being eaten alive from complexity, and you get stability, and you can get the ability to focus on growth, you will have more SKUs coming back in because you will be targeting your consumers and where they are and what they're actually looking for," said David VanenEinde, vice president and group R&D leader for food solutions America at Cargill.

Resurgence of Innovation and Invention

A recent product innovation survey by Cypress Research for Food Business News revealed a renewed emphasis on innovation and invention within the food processing industry. The survey, which involved 224 industry professionals, showed a significant increase in the importance of invention, with 67% of respondents assigning it a high priority, compared to 59% in the previous year's survey."The biggest change we've seen here during the past two years is the share of professionals assigning a four or a five," said Marjorie Hellmer, president of Cypress Research, referring to the survey's five-point scale for measuring the importance of innovation, renovation, and invention.

Navigating the Evolving Landscape

As the industry navigates the post-pandemic landscape, food companies are faced with a multitude of factors that influence their product development and R&D strategies. Cost reduction emerged as the top priority, with 59% of survey respondents citing it as a key consideration. Clean label and convenience also ranked highly, with 53% and 50% of respondents, respectively, highlighting their importance.The survey also revealed that nearly half (49%) of the respondents had experienced an increase in ingredient costs of more than 10% over the past 12 months, further underscoring the need for cost optimization strategies.

Ingredient Trends and Priorities

When asked about the ingredients that would receive priority in new product invention or innovation over the next 12 to 18 months, the survey respondents identified whole grains as the top choice, followed by ingredients to reduce calories, organic ingredients, and dietary fiber, all of which were selected by 14% of the participants."There is no silver bullet," VanenEinde said, emphasizing the diverse value propositions and benefits offered by various health and wellness-focused ingredients. "There are many routes to getting after those" consumer needs, he added, highlighting the importance of a multifaceted approach to product development.

Leveraging Technology for Supply Chain Stability

As the industry navigates the ongoing challenges of supply chain volatility, VanenEinde emphasized the continued need for reliable supply chains. He suggested that emerging technologies, such as precision fermentation and cellular meat (also known as cultivated meat), may hold the key to stabilizing supply and addressing the industry's complexities."Invention is going to be called upon more and more to solve those problems, which is to stable out that volatility and give me new ways of surety of supply," VanenEinde said, underscoring the critical role of innovation in ensuring a resilient and sustainable food system.The full webinar, which delves deeper into the industry's evolving landscape and the strategies being employed to navigate it, is available on demand.