Innovation is king – or is it? Fear of legislation or simple lack of imagination has depressed innovation in the food sector for a couple of years. Brand extensions and me-too copycats are not the same as truly innovative products that can get consumers excited. Have we really run out of good ideas for new things to eat? Hugh Westbrook investigates.
Go deeper with GlobalData
Innovation is alive and kicking in the food industry. Well isn’t it? The word bombards us from all sides, competitions abound for the most innovative products of the year, and we are told “Innovation is the key to profitability in the competitive world food markets” (Australia’s National Food Industry Strategy) or “Innovation is considered to be essential to the long-term survival and profitability of food and drink companies” (Ireland’s National Food Centre). So innovation must be the thing.
But has there been a decrease in new and exciting products on the supermarket shelves, and is innovation merely something that is being talked about rather than being done. In short, is innovation dead?
The simple answer is no, but leaves us needing to pose another question. What exactly is innovation? Is it merely the creation of new products? Is it the wholesale creation of new categories? Or is it more to do with what goes on behind the scenes?
Focus on convenience
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThis third factor is critical. While innovation is still vital, changes are not as obvious to consumers as they might once have been and are not affecting their main meals so much. In a recent report, Leatherhead Food International noted that “innovation is essential” but said that the main drivers now are: “Convenience and Snacking, Health and Wellbeing, and Pleasure and Indulgence”. This suggests that even in the world of food innovation, there are niche areas to develop.
Arthur Day knows all about what innovation means in the food industry. He is Nestlé Rowntree’s head of innovation. He told just-food that defining the word innovation is one of the problems behind understanding it.
Innovation, not renovation
“Too often people confuse renovation with innovation,” he said. “Renovation is most commonly what is happening when people talk about innovation – repackaging, flavour variants, new ranges – things to create new consumer interest but which don’t go beyond what consumers expect.
“The best definition is products which go beyond consumer expectations.”
Day argued that in a mature industry such as food and drink, proper innovation is one of the few ways in which a company can grow. “You can be cost competitive or you have to be different. The only long-term way to grow sales is to try things that are more radical.”
But identifying those opportunities needs a scientific approach. “Brainstorming is old-fashioned and discredited. You need to combine techniques. You try to get information on consumer trends and behaviour, on which drivers affect people’s attitudes.
“Changes in attitude lead to changes in behaviour which lead to new products. You can’t predict the future but you can understand how it might evolve.”
If not exactly scathing of new product development, Day agreed that the blurring of the lines between innovation and renovation means it is easy for consumers to believe that there is less novelty on the supermarket shelves.
“A lot of new products are being thrown out but ultimately most of them aren’t that different. Consumers want to try different products, but when they find they’re not much different they lose interest.
“Senior managers want to feel there is innovation going on, but there is quite a low level of understanding about what innovation is in the boardrooms of food and drink companies.”
European NPD lagging behind US, Japan
But what is true for Europe is not true for the rest of the world. “The USA, the Far East, Japan, they are all putting out a much bigger percentage of new products than Europe,” Day added.
“In Europe the culture is risk-averse, lots of short-termism, lots of reaction to share prices and stock market pressures to deliver results, hence the huge focus on cost-saving and profitability. Often in the UK businesses cannot take a long-term view because of the market. It’s a big issue for Europe.”
Nevertheless, Day believes consumers will still see “as much or even more innovations because the alternative ways of optimising your existing business will not be enough.”
So if innovation is alive and well, which sort of industries would we see it in? According to Leatherhead, snacking and indulgence are important, and Day’s expertise bears that out. What about health and nutrition.
Health and nutrition buoyant
Innovation is very important in the organic sector, though perhaps in ways which are not immediately apparent to the consumer. Amarjit Sahota, director of organic industry analysts Organic Monitor said that while innovation can come from the route of new flavours and recipes, more common is the creation of products to fulfil certain nutritional needs.
He told just-food: “The free-from sector is showing a lot of growth, merging products for consumers with allergies together with those for people seeking more natural and more organic ingredients.
“There is lots of innovation in the UK and Europe. Belgian company Alpro is dominating the European soy market. It has gone from normal milk to chilled soya milk, yoghurt, custard and so on. There is lots of innovation and a whole category for people with allergies.” He said similar growth is happening in products for people with wheat allergies.
Sahota explained that the organic market is no longer growing with quite the abandon it showed five years ago. “There has been a rationalisation of categories, and certain things have not done well, such as dairy fresh cream, because it has lots of fat.” He said consumers are put off such products because they associate organic products with health.
“Innovative new products will now grow the market. Initially me-too products did it, but many of them failed, such as organic ketchup, crisps, cola, because they had nothing to offer beyond being organic.
“Now manufacturers can’t just sell a product because of it being organic, there has to be another point of differentiation, so now new flavours, low calories and so on will drive growth.”
Innovation also extends to food science, packaging, ingredients, shelf life and various other technical aspects of putting a product together. But from a manufacturer’s point of view, innovation is clearly important, providing that there is an understanding of what innovation itself means as a term. And fully understanding the concept and embracing it will mean that consumers will continue to be stunned, rather than mildly excited, by the new products coming their way over the next few years.
