Food companies have been at the forefront of innovation since the inception of the industry. Despite the daunting odds of failure—where only 15% of 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 vital. The report warns, “If we fail to adapt to emerging consumer preferences, technological advancements, and the business models of the 21st century, we risk stagnating growth, eroding margins, losing the competition for top talent, and ultimately collapsing our already fragile innovation capabilities.”
Today, food innovation is more critical than ever, as a growing number of emerging brands and agile food startups emerge to meet consumer demand for unique, healthy options, while also encroaching on shelf space occupied by established CPG giants. According to the study “Is Big Food in Trouble?” by A.T. Kearney and The Hartman Group, the share of U.S. food and beverage retail sales held by the top 25 food manufacturers dropped from 66% in 2012 to 63% in 2015.
The early 20th century marked a pivotal moment in food innovation, particularly in 1913 when refrigerators, previously limited to commercial use, became available for home use, revolutionizing food manufacturing and retail. As demand for shelf-stable, refrigerated, and frozen foods surged, the nature of food innovation changed drastically. “Twenty or thirty years ago, the focus was on how to add flavors to line extensions or how to process foods for longer shelf life,” noted Joel Warady, chief sales and marketing officer at Enjoy Life Foods. “Today, innovation is about creating better products that enhance individual well-being.”
Warady emphasized the need for diverse expertise in innovation, stating, “It’s not just food scientists we need; nutritionists and medical professionals must collaborate to drive food innovation over the next several decades.” The conveniences of modern life, characterized by busy schedules and various digital devices, have normalized the trend of grabbing food on the go, often from fast food outlets, vending machines, and convenience stores.
As the nation faces a health crisis, interest in healthy eating and clean living has surged, catching many large packaged goods companies off guard as they experience stagnant sales and a loss of market share to emerging health-conscious brands. Warady remarked, “Over the last two decades, companies have increasingly focused on quality and healthful ingredients.” When Enjoy Life was founded 15 years ago, all ingredients were required to be natural and free from artificial colors, a niche concept at the time.
Now, mainstream manufacturers like Kraft, Unilever, and Mondelez are following suit, shifting towards healthier and natural ingredients. Warady explained that while small brands were pioneers in this area, mainstream companies are now asking, “What’s next?” George Young, a CPG innovation expert, highlighted innovative developments such as Greek yogurt, dairy alternatives, plant-based proteins, and free-from foods, although he noted a lack of breakthrough innovations from major publicly traded CPG manufacturers.
These larger firms tend to avoid adventurous moves, opting instead for safe line extensions or acquiring smaller companies with revenues between $10 million and $15 million. Young stated that these companies are diversifying their portfolios with nutritious foods, often incorporating natural ingredients like stevia and açai. Warady mentioned that Enjoy Life leverages innovation to enhance its product health profiles, recently adding shelf-stable probiotics and algae protein to their offerings, aiming to provide health benefits while maintaining indulgence.
Unlike in the past, many major manufacturers now boast innovation centers staffed with food scientists. Young remarked that we are beginning to see advancements in digital innovation, particularly through analytics and modeling. “CPG companies have vast data regarding their products, regulatory information, and consumer preferences,” he explained. Companies are now investing in machine learning to create algorithms that reveal relationships between sensory responses and various factors.
Enjoy Life collaborates with external innovation groups to pool necessary expertise. “We work closely with nutritionists and medical professionals to develop products that address consumer challenges,” Warady said. Additionally, the company engages directly with consumers to understand their needs, which informs future product development.
As consumers increasingly demand transparency, healthier ingredients, and cleaner labels, the path for innovation becomes clearer. Christina Papale from branding agency CBX noted that what was once considered niche has now become a significant part of the food industry, with consumers willing to pay premium prices for such products. Warady sees the current trends in food extending beyond healthier ingredients to the idea of food as medicine.
Enjoy Life remains at the cutting edge of innovation by experimenting with various ingredients, including plant-based proteins, fermented and sprouted components, and even nutraceuticals like calcium citrate, calcium ascorbate, and cholecalciferol, which offer added health benefits. Young pointed out that food companies are exploring how to incorporate these nutraceutical activities into their products, thereby creating intriguing competition between food and nutraceutical manufacturers.
Regardless of the category, manufacturers should ask fundamental questions before committing to new product innovation: Is there a market for it? Will consumers accept it? Warady noted that some new ideas might be ahead of their time. “For instance, when I see camel milk at trade shows, I think consumers may not be ready for that,” he remarked, drawing a parallel to the past acceptance of soy or almond milk.
Warady emphasized the importance of pacing innovation to align with consumer readiness, cautioning against over-innovating too quickly. “We strive to recognize when consumers are ready for new concepts by engaging with them directly. Sometimes we miss the mark, but fortunately, more often than not, we get it right.”