Since its inception, the food industry has been a hub of innovation. However, the challenge is daunting; only about 15% of over 3,000 new consumer packaged goods (CPG) products manage to succeed in the market, as highlighted in Nielsen’s U.S. Breakthrough Innovation Report. This report emphasizes the critical need for companies to adapt to shifting consumer preferences, technological advancements, and contemporary business models. “If we fail to remake ourselves in line with emerging consumer tastes, technological realities and business models of the 21st century, we will see growth stall and margins erode, we will lose the battle for world-class talent, and our innovation capability, already fragile, will collapse,” it warns.
Today, food innovation is more important than ever, given the rise of new brands and agile food startups eager to meet consumers’ demands for unique, healthy options, while also competing for shelf space with established CPG giants. According to a study titled “Is Big Food in Trouble?” by A.T. Kearney and The Hartman Group, the combined market share of the top 25 food manufacturers in the U.S. has declined from 66% in 2012 to 63% in 2015.
The early 20th century marked a significant turning point for food innovation, especially with the advent of home refrigerators in 1913, which transformed food manufacturing and retailing. With the growing demand for shelf-stable, refrigerated, and frozen foods, the nature of food innovation has evolved dramatically. “Twenty or thirty years ago, innovation was about adding flavors or extending shelf life,” said Joel Warady, chief sales and marketing officer for Enjoy Life Foods. “Today, it’s about creating better products that enhance individual well-being.”
Warady emphasizes that innovation now requires a diverse team comprising not just food scientists but also nutritionists and medical professionals collaborating to address food innovation challenges over the coming decades. The fast-paced American lifestyle, filled with work and entertainment distractions, has made convenience food a staple. However, as the nation faces a health crisis, there has been a rising interest in healthy eating and clean living, causing many traditional packaged goods companies to lag behind as they lose market share to health-conscious and environmentally friendly brands.
Reflecting on the past two decades, Warady noted, “Companies have shifted their focus toward better quality and healthier ingredients.” Enjoy Life, founded 15 years ago, was initially niche, emphasizing natural ingredients without artificial additives. Now, mainstream companies like Kraft and Unilever are following suit, while smaller brands are constantly pushing boundaries to explore what’s next.
George Young, a CPG innovation expert, points to successful innovations like Greek yogurt, dairy alternatives, and plant-based proteins. However, he observes that most large publicly traded CPG manufacturers tend to stay conservative, primarily focusing on line extensions rather than groundbreaking innovations. They often look to acquire companies generating around $10 to $15 million in revenue.
To diversify their portfolios and enhance their offerings with nutritious foods, larger companies are investing in natural ingredients like stevia and açai to capitalize on health benefits. Enjoy Life Foods, for instance, has recently incorporated shelf-stable probiotics and algae protein into its products, aiming to merge indulgence with health. “We wanted the probiotics to promote immune health, and algae protein is the most sustainable protein available,” Warady explained.
Modern food manufacturers now often have dedicated innovation centers and teams of food scientists. Young notes a trend toward digital innovation, leveraging vast data stores and sophisticated machine learning to analyze relationships between sensory responses and product formulations. This enables companies to create digital prototypes, testing molecular structures before committing to new ingredient production.
Enjoy Life collaborates with external innovation groups, combining expertise from nutritionists and medical professionals to address consumer challenges. Warady stated, “We engage with our consumers one-on-one to understand their daily challenges, helping us foresee their future needs.” As consumer demand for transparency and healthier ingredients grows, the path for innovation is becoming clearer.
Christina Papale, vice president of strategy and innovation at branding agency CBX, highlights the importance of identifying cultural trends early on to build and expand brands. Warady acknowledges a shift toward viewing food as medicine, with Enjoy Life actively pursuing plant-based proteins, fermented ingredients, and spices like saffron for their health benefits.
As companies explore the nutraceutical market for innovative inspiration, Young notes a fascinating overlap between food and nutraceutical firms, driving competition and creativity. Regardless of category, manufacturers must consider essential questions before investing in new product innovation: Is there a market for it? Will consumers accept it? Warady warns that some ideas may be ahead of their time, citing examples like camel milk, which may not resonate with consumers just yet.
Enjoy Life is mindful of consumer acceptance patterns; for example, the company has included algae protein in its brownie mix, a functional ingredient that may initially raise eyebrows. Warady believes that as acceptance grows, product presentation can also evolve. He emphasizes, “Innovation should be a progression, not a rush.” Understanding consumer readiness is crucial, and through ongoing conversations, they strive to anticipate acceptance levels accurately.
In this landscape, the comparison of red algae calcium vs calcium citrate could serve as an innovative point of differentiation. As the food industry continues to evolve, the integration of such unique ingredients could play a pivotal role in shaping new products that meet the changing preferences of health-conscious consumers.