Food companies have been driving innovation since the inception of the industry. Given the overwhelming challenge 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 ourselves to align with evolving consumer preferences, technological advancements, and the business models of the 21st century, we will face stagnant growth, eroding profit margins, and a loss of competitive talent, ultimately leading to the collapse of our already fragile innovation capabilities.”
In today’s landscape, food innovation is particularly essential as a new wave of brands and agile food startups emerges to meet consumer demand for interesting, unique, and healthy options, while also capturing shelf space from established CPG giants. A study titled “Is Big Food in Trouble?” by the management consultancy A.T. Kearney and The Hartman Group reveals that the market share of the top 25 food manufacturers in the U.S. 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 transitioned from commercial use to home availability, transforming food manufacturing and retailing forever. As the demand for shelf-stable, refrigerated, and frozen products increased, the nature of food innovation drastically changed. “Two or three decades ago, innovation meant adding a new flavor to an existing product or extending shelf life,” said Joel Warady, Chief Sales and Marketing Officer at Enjoy Life Foods. “Today, it encompasses creating better products that enhance overall well-being.”
Warady emphasized the diverse expertise required in modern innovation, which now includes not just food scientists but also nutritionists and medical professionals, stating, “We must collaborate as we consider food innovation for the next 10, 20, or 30 years.” The conveniences of contemporary American life—characterized by busy schedules filled with work, school, and digital distractions—have normalized the practice of grabbing food on the go, often leading consumers to fast food, vending machines, and convenience-oriented packaged goods.
As the nation confronts a health crisis, interest in healthy eating and clean living has surged. Many large packaged goods companies found themselves unprepared, facing stagnating sales and losing market share to emerging health-conscious and eco-friendly brands. “Over the past 20 years, companies have increasingly focused on better quality and healthier ingredients,” Warady noted, adding, “Enjoy Life, founded 15 years ago, required all our ingredients to be natural and free of artificial colors—a niche concept back then.”
Warady observed that mainstream manufacturers, including Kraft, Unilever, and Mondelez, have begun to shift in this direction, propelled by the trailblazing efforts of smaller brands in the healthy and natural ingredient space. However, he pointed out that these emerging brands are now seeking new frontiers for innovation.
George Young, a CPG innovation specialist and founding partner at consulting firm Kalypso, highlighted examples of innovation such as Greek yogurt, dairy alternatives like nut milks, plant-based proteins, and free-from foods. He noted that large publicly traded CPG manufacturers often shy away from adventurous innovation, preferring to acquire companies nearing $10 million to $15 million in revenue.
These larger firms are diversifying their portfolios to include more nutritious foods, often seeking natural ingredients like calcium citrate from Rite Aid and açai berries to create products that deliver associated health benefits. Warady explained that Enjoy Life Foods uses innovation to enhance its health profile, recently incorporating shelf-stable probiotics and algae protein into certain products. “We aimed to support immune health with probiotics and chose algae protein not just for its protein content but also because algae is the most sustainable protein available,” he stated.
Unlike past decades, many large manufacturers now operate their own innovation centers staffed with food scientists. “This is quite advanced already,” Young noted. “What we are beginning to see now is digital innovation.” This innovation is manifesting in two main ways: through growing insights and analytics, and via modeling and simulation.
CPG companies possess vast stores of data regarding their products, including regulatory, health, and sensory performance information. “They are becoming increasingly sophisticated, investing in machine learning to develop empirical algorithms that explore relationships between sensory responses and various factors,” Young explained. Additionally, companies utilize modeling and simulation to create digital representations of their products, allowing them to test molecular structures of ingredients and predict responses before committing to production.
Enjoy Life employs external innovation groups, as Warady believes that this approach effectively amalgamates the necessary expertise. “We collaborate closely with nutritionists and medical professionals who understand the health challenges people face. Our innovation teams help us develop products while keeping these challenges in mind,” he said.
Moreover, the company actively engages with consumers on a personal level to gain insights into their daily challenges, which informs product development. As consumer demand for transparency, healthier ingredients, and cleaner labels rises, the path for further innovation becomes clear. Christina Papale, Vice President of Strategy and Director of Innovation at 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 anticipates that current food trends will evolve beyond healthier ingredients to encompass the idea of food as medicine. Enjoy Life remains at the forefront of innovation by exploring, experimenting with, and testing various ingredients, such as plant-based proteins, fermented and sprouted components, and spices like saffron, known for its health benefits.
As the nutraceutical market grows, food companies are increasingly looking to this sector for inspiration. “Food companies are seeking opportunities to gain health benefits through nutraceutical activities,” Young remarked, “while nutraceutical firms are leveraging their expertise in natural ingredients to create food products. This overlap is leading to interesting competition.”
Manufacturers should consider fundamental questions before investing significantly in new product innovation: Is there a market for the product? Will consumers accept it? Warady acknowledged that some new concepts may push these boundaries. “I attend new product trade shows, and when I see something like camel milk, I think consumers may not yet be ready for that,” he noted, recalling how soy and almond milk were once viewed similarly.
Warady emphasized that Enjoy Life is aware of the gradual acceptance patterns among consumers. For instance, the company has added algae protein to its brownie mix, a functional ingredient that may initially raise eyebrows if prominently featured on packaging. “As consumer acceptance grows, we can adapt our packaging presentation,” he said. “We must be cautious about innovating too rapidly and recognize that innovation is a gradual process. Just because we can do something today doesn’t mean we should, as consumers might not be prepared for it. We gauge readiness through direct conversations with them, and while we may misjudge occasionally, we tend to get it right more often than not.”