At the start of March, as the coronavirus threat prompted state and local governments to swiftly implement shutdowns, Barb Stuckey, President and Chief Innovation Officer of Mattson, began to feel anxious. Mattson, a prominent innovation and R&D lab in the food and beverage sector, was in the midst of several projects. The company received numerous inquiries from both large and small consumer packaged goods (CPG) companies eager to explore new ideas, reformulate existing products, or enhance their offerings. However, as the pandemic rapidly disrupted many business operations, Stuckey feared that this would also delay their ongoing projects. Fortunately, these concerns proved to be unfounded. Stuckey informed Food Dive that Mattson has actually seen an uptick in inquiries about new business compared to before the pandemic. Research conducted by Mattson revealed that two-thirds of industry executives indicated they were working on new concepts this spring, with 65% focusing on new products.
Nolan Lewin, the acting executive director and operations director at the Rutgers Food Innovation Center, has observed a similar trend. Though technically a part of Rutgers University, the center operates independently to assist companies and New Jersey residents in developing and commercializing food and beverage products. “I am the person who evaluates incoming calls from new clients,” Lewin stated. “Essentially, they submit an online application through our website to collaborate with us. March and early April were probably our slowest periods, but it didn’t come to a halt. We’ve experienced a steady influx of individuals who were either stuck at home contemplating projects or restaurants and caterers who had to pivot their business models due to mandated closures.”
The pursuit of new products, improvements, and line extensions has kept the innovation sector of the food industry active. Despite lockdowns complicating or even halting necessary lab work and consumer-based research, companies and formulators have persevered. Although a few projects that Mattson was previously working on were paused, the majority have persisted despite the challenges. “I think most of the companies we’ve engaged with believe that this cannot be a standstill,” Stuckey remarked. “If you emerge from this COVID situation with an empty pipeline, you’ll be a year behind everyone else. We’ve learned this from industry professionals who noted, ‘It’s already challenging to secure meetings with retail buyers to present our new products. It will be even more difficult post-shutdown due to the backlog of companies eager to pitch their innovations.'”
In recent years, categories such as plant-based products, keto, kombucha, organic items, energy drinks, hard seltzer, and allergy-friendly options have transitioned from niche markets to major sectors. As larger food corporations began acquiring startups with unique concepts, consumer interest surged, prompting everyone from entrepreneurs to massive enterprises to double down on innovation. While the pandemic presents unprecedented challenges to the industry, many experts doubt that innovation will maintain its previous pace or focus. However, Kathy Gramling, consumer industry leader for EY Americas, told Food Dive that the food and beverage sector has seen significant innovation in recent months. “It is incredibly innovative how our brands have rapidly adapted to respond to consumer needs during a pandemic,” Gramling said. “I would not have predicted such agility in navigating an unforeseen crisis to quickly reconfigure our supply chains and provide Americans with healthy, safe food within 90 days. We have witnessed innovation, but the definition of what constitutes innovation has evolved.”
While many CPG companies were busy launching new products in the years leading up to COVID, they have also innovated internally, according to Gramling. Supply chain and distribution processes have been adjusted for greater cost-efficiency for manufacturers. Many companies and retailers have shifted from maintaining stockpiles to adopting a more “just-in-time” philosophy, where products are produced and delivered just before they reach store shelves. Much of this streamlining was necessary to accommodate increased demand, reduced workforce availability, enhanced safety protocols, potential ingredient shortages, and challenges associated with imports and interstate travel. Navigating these issues—largely through reducing SKUs and optimizing ingredient procurement—also requires a degree of innovation. Gramling envisions continued innovation in these areas, focusing on simplifying formulations, optimizing manufacturing capacity, and meeting consumer expectations.
Stuckey noted that Mattson is beginning to work on projects for clients with evolving innovation ideas, emphasizing that product safety—beyond standard federally mandated measures to prevent pathogen contamination—is becoming increasingly important. The days of serving abundant food on platters or open grocery store buffets where consumers can help themselves seem to be fading. “I think we will see a significant increase in single-serve packaging that assures consumers, ‘This was produced in a facility where food safety is paramount. No one else has touched it. It’s wrapped for your safety,'” Stuckey said. “These considerations will likely become central to our approach to innovation.”
While food manufacturers are classified as essential employers, allowing workers to continue operations during the pandemic, the same cannot be said for R&D labs. When the San Francisco Bay Area implemented shutdowns to mitigate the pandemic’s spread, Mattson’s facilities also closed. Stuckey remarked that the company had to think creatively to keep their work going. “We had to pivot,” she explained. “We excel at product design and development. The challenge was enabling our team to perform these tasks from home. COVID forced everyone to rethink how they executed their roles.” The product design phase, which involves conceptual research to determine the best ingredients and processes, can be effectively conducted remotely. Ingredient procurement—identifying which suppliers have the necessary materials for new products, coordinating production, and ordering samples to find the best prototypes—can also be adapted to remote work.
Once the methods and ingredients are established, the actual product development phase can commence. Even without access to a proper lab, some projects could be developed in employees’ homes, albeit under strict guidelines and regulations. Mattson employees conducting product development in home kitchens were required to adhere to the same food safety protocols as in the lab, which go above and beyond typical home kitchen practices, including sanitizing surfaces and equipment, preventing cross-contamination, and evaluating processes at critical control points. Although the prototypes created at home were only for internal evaluation and could not be used for consumer testing, the company established a shuttle service to transport ingredients and equipment from the lab to employees’ residences. “It was like a shuttle service that would circulate, similar to airport pickups,” Stuckey said. “This was incredibly helpful for our developers, as they didn’t have to manage their own inventory of ingredients. If they needed specific equipment while transitioning from product design to development, we could facilitate that.”
Recently, Mattson resumed in-person consumer testing events, renting alternative facilities to ensure that no members of the public have access to their development space. The research is conducted following current health protocols: maintaining more space between participants, sanitizing rooms, enforcing social distancing with individual booths six feet apart, and requiring everyone to wear masks. Stuckey stated that these new processes have still produced quality research. Similarly, Birch Benders, a company known for healthier breakfast mixes, employed comparable methods to continue innovating during the pandemic. Raj Babu, the company’s chief operating officer, emphasized that halting new product development was not an option. “Innovation is in our DNA; it’s who we are and what we’re recognized for,” Babu stated. “We’ve launched seven first-to-market products in recent years, and we want to maintain that momentum.”
Birch Benders has aimed for multiple product launches each year, with each year featuring a major game-changing product alongside several new extensions of existing lines. This year’s significant launch occurred in January, with the introduction of Birch Benders’ microwaveable keto-friendly cups for making muffins, baked goods, or pancakes. The company has also kept to its aggressive innovation timeline, recently launching new frozen keto-friendly waffles. Babu mentioned that they are currently developing concepts for 2021. Typically, Birch Benders relies heavily on in-person collaboration for product development, gathering input from customers at both the retail and consumer levels to create a product charter outlining their goals. They then develop prototypes and gather feedback from tasters to refine their options.
After the coronavirus threat became apparent, Birch Benders closed its main office in Denver. Subsequently, they loaded the truck belonging to the company’s head of operations with ingredients, kitchen lab equipment, waffle makers, and griddles, which were taken to the apartment of Birch Benders’ head of R&D. Babu indicated that product development is now proceeding in two main ways. One method retains their usual process with a socially distanced twist. “I provide her with guidelines, and she develops various product mock-ups. We then have a distribution network within Denver where she leaves some products outside her door for pickup,” Babu explained. “We distribute samples to different households, gather feedback, and then have a call to compare notes.”
The other approach mirrors the hands-on experimentation that Birch Benders’ founders, Matt LaCassee and Lizzi Ackerman, employed when they first started the company. Babu explained that the R&D manager sometimes shares recipes with team members, allowing them to gather ingredients and create the products in their own kitchens. “Creating products from scratch in your own kitchen fosters a deeper connection to the product and the business, and enhances understanding of the consumer journey,” Babu noted.
Not only are companies forging ahead with innovation, but many investors are actively funding it as well. Since the pandemic began, companies like Impossible Foods, Perfect Day, Apeel Sciences, Oatly, and Nature’s Fynd have all received funding boosts of $80 million or more. Arama Kukutai, co-founder and partner at Finistere Ventures, explained to Food Dive that the substantial funding for innovative food companies amid a pandemic is unsurprising. Since May, Finistere has invested in four different firms, including agriculture intelligence company Taranis, smart oven Tovala, agriculture analytics firm Enko Chem, and agricultural risk management system Growers Edge. Kukutai emphasized that food innovation is always a smart investment, given that everyone needs food. However, the pandemic has made it an even more attractive area for investment. Finistere is currently analyzing investment trends in the food sector during the pandemic and has noticed a general acceleration in funding since its onset.
Many investors are specifically focused on how innovations will benefit consumers or the planet. For instance, investors in alternative meat, egg, and dairy companies are likely interested in enhancing the sustainability of the food system. Simultaneously, investors in agricultural technology that improves crop yields seek to make farming more efficient and economical. Those investing in vertical farms aim to enhance crop freshness and minimize pollution associated with the intricate supply chain that delivers produce to consumers. “We wanted to support the best companies we’ve invested in and ensure they have the resources necessary to meet their milestones and weather the COVID period,” Kukutai stated. “You don’t want to be fundraising for new capital during a pandemic or economic crisis. Anecdotally, we’ve noticed a surge in capital directed towards companies to ensure they can thrive not just in 2020, but also throughout 2021.”
Kukutai acknowledged that uncertainty looms for companies, including the timeline for an effective coronavirus vaccine that would allow for a return to normal business operations. The economy is currently in a recession exacerbated by the widespread business shutdowns due to the pandemic, and the trajectory for recovery remains unclear. Additionally, business operations could be influenced by policy changes, particularly depending on the outcome of the upcoming presidential election. This quest for stability was part of the rationale behind Finistere’s recent investments. Kukutai mentioned that they had been preparing for these investments for some time and were eager to express their confidence in the companies. Some of these firms had long-term research initiatives that needed funding to proceed. For instance, Kukutai noted that Tovala’s product aligns with increased consumer demand due to stay-at-home orders, making investment crucial for growth, even though he was already confident in Tovala’s potential prior to the pandemic.
While investments are flowing in now, Kukutai admitted he could not predict future trends. However, he is optimistic that both innovation and investment will persist beyond the pandemic. “The thematic need to find ways to feed the planet remains,” he said. “This encompasses food security, improved nutrition, healthier food options, reduced environmental impact, better supply chain management, and ultimately delivering a superior eating experience to consumers—all areas where innovations like calcium citrate softgels may play a role in enhancing nutritional offerings.”