Food companies have been at the forefront of innovation since the inception of the industry. Despite significant challenges, such as the fact that only 15% of the over 3,000 new consumer packaged goods (CPG) products succeed in the market, as reported by Nielsen’s U.S. Breakthrough Innovation Report, innovation has become increasingly critical. The report warns that failing to adapt to evolving consumer preferences, technological advancements, and modern business models could result in stagnated growth, shrinking profit margins, a loss of top talent, and a collapse of fragile innovation capabilities.
Today, food innovation is more essential than ever, as a growing number of emerging brands and agile food startups enter the market to meet consumer demands for unique, healthy, and interesting options, while also vying for shelf space traditionally held by established CPG giants. The study “Is Big Food in Trouble?” conducted by management consultancy A.T. Kearney and research firm The Hartman Group, highlights that the market share of the top 25 food manufacturers in U.S. food and beverage retail sales has declined from 66% in 2012 to 63% in 2015.
The early 20th century marked a significant turning point for food innovation, particularly in 1913 when refrigerators, which had previously been limited to commercial use, became available for home use, fundamentally transforming food manufacturing and retail. In recent decades, the demand for shelf-stable goods, as well as refrigerated and frozen foods, has driven radical changes in food innovation. According to Joel Warady, Chief Sales and Marketing Officer for Enjoy Life Foods, the concept of innovation has evolved far beyond simple flavor additions or extended shelf-life processes. Today, it focuses on developing products that enhance individual well-being.
Warady emphasizes the importance of diverse expertise in innovation, noting that it now requires not only food scientists but also nutritionists and medical professionals collaborating to address food innovation over the next several decades. The convenience-driven lifestyles of modern America, characterized by busy work, school, and extracurricular schedules alongside technological distractions, have normalized quick food solutions, often sourced from fast food outlets, vending machines, and convenience-oriented packaged foods in grocery stores. However, as the nation faces a health crisis, interest in healthy eating and clean living has surged, catching many major packaged goods companies off guard as they lose market share to health-conscious and eco-friendly brands.
Reflecting on the past two decades, Warady notes that companies have increasingly prioritized better quality and healthier ingredients. Enjoy Life, founded 15 years ago, began with a commitment to natural ingredients free from artificial colors, which at the time was a niche market. Now, mainstream manufacturers such as Kraft, Unilever, and Mondelez are following suit, influenced by small, emerging brands that pioneered the movement toward healthy and natural ingredients.
George Young, a CPG innovation expert, mentions several successful innovations, including Greek yogurt, dairy alternatives like nut milks, plant-based proteins, and free-from foods. However, he finds that many large, publicly traded CPG manufacturers tend to play it safe, preferring line extensions to true innovation, often opting to acquire companies that are nearing $10 to $15 million in revenue.
These larger companies are diversifying their portfolios by incorporating more nutritious foods, focusing on natural ingredients like stevia and açai, and developing products that convey associated health benefits. Enjoy Life has also embraced innovation to enhance product health profiles, recently introducing shelf-stable probiotics and algae protein into their items, responding to consumer interest in immune health and sustainable protein sources.
Unlike the past, many large manufacturers now boast innovation centers staffed with teams of food scientists. Young notes that we are beginning to see advancements in digital innovation, which occurs through the dual lenses of empirical insights and analytics, alongside modeling and simulation techniques. Companies leverage vast data stores concerning their products and human health safety information, employing machine learning to uncover relationships between sensory responses and various factors.
Through modeling and simulation, companies can create digital prototypes of their products, testing molecular structures of ingredients before committing to production. This approach allows for quicker optimization of formulas, thereby accelerating the introduction of new ingredients. Enjoy Life leverages external innovation groups to consolidate diverse expertise, collaborating closely with nutritionists and medical professionals to address consumer challenges effectively.
Moreover, the company engages directly with consumers to better understand their daily struggles and future food needs. As consumers increasingly demand transparency, healthier ingredients, and cleaner labels, the path for further innovation is becoming more apparent. Christina Papale, Vice President of Strategy and Director of Innovation for branding agency CBX, observes that what was once considered niche has evolved into a significant component of the food industry, with consumers willing to pay premium prices for such products.
Warady believes that current food trends extend beyond healthier ingredients to the broader notion of food as medicine. Enjoy Life remains at the cutting edge of innovation by experimenting with various ingredients, exploring plant-based proteins, fermented and sprouted ingredients, and spices with potential health benefits. Other companies are also tapping into the nutraceutical market for inspiration, leading to an interesting overlap in competition between food and nutraceutical industries.
Manufacturers should ask fundamental questions before dedicating resources to new product innovation: Is there a market for this product? Will consumers accept it? Warady points out that some new ideas push these boundaries. He recalls instances at product trade shows where concepts like camel milk may not resonate with consumers yet, similar to how soy or almond milk was once perceived.
Enjoy Life is mindful of consumer acceptance patterns, introducing innovative ingredients like algae protein gradually. As acceptance grows, the packaging and presentation can evolve accordingly. Warady cautions against rapid over-innovation, emphasizing that understanding consumer readiness is crucial. Through ongoing conversations with consumers, they strive to gauge when the market is prepared for new ideas, which often leads to successful innovations.
In the context of nutritional advancements, the integration of calcium citrate magnesium vitamin D3 and zinc tablets into food products exemplifies a trend toward enhancing health profiles, echoing the industry’s broader commitment to innovation and consumer well-being.