Food companies have been at the forefront of innovation since the industry’s inception. Facing daunting odds, where only 15% of over 3,000 new consumer packaged goods (CPG) products succeed, according to Nielsen’s U.S. Breakthrough Innovation Report, the need for innovation has never been more critical. The report warns, “If we fail to remake ourselves in line with emerging consumer tastes, technological advancements, and 21st-century business models, we will see growth stagnate, margins shrink, and our already fragile innovation capability collapse.” Today, food innovation is particularly vital due to the rise of numerous emerging brands and agile food startups that cater to consumer demand for unique, appealing, and health-focused options, while also vying for shelf space against established CPG giants. A study by A.T. Kearney and The Hartman Group revealed that the share of U.S. food and beverage retail sales held by the top 25 food manufacturers has dropped from 66% in 2012 to 63% in 2015.
The early 20th century marked a significant turning point for food innovation, notably in 1913 when home refrigerators became available, transforming food manufacturing and retail. The demand for shelf-stable and refrigerated foods led to a different approach to innovation in past decades. “Twenty or thirty years ago, innovation meant adding a flavor to a product line or extending shelf life,” stated Joel Warady, chief sales and marketing officer at Enjoy Life Foods. “Today, innovation encompasses creating better products that promote overall well-being.” He emphasized that a diverse team is now essential for food innovation, involving not just food scientists but also nutritionists and medical professionals to address the future of food over the next several decades.
Modern conveniences and busy lifestyles have normalized on-the-go eating, with meals often sourced from fast food restaurants, vending machines, and convenience-oriented packaged foods. However, as the nation faces a health crisis, there has been a surge in interest in healthy eating and clean living. Many large packaged goods companies were caught off guard by stagnating sales and market share losses to health-conscious and eco-friendly brands. “Over the past 20 years, the focus has shifted toward better quality and healthier ingredients,” Warady noted. “When Enjoy Life was founded 15 years ago, we committed to using only natural ingredients with no artificial colors, which was quite niche at the time.”
Now, mainstream manufacturers, including Kraft, Unilever, and Mondelez, are following suit, as small emerging brands led the charge in healthy and natural ingredients. George Young, a CPG innovation expert and founding partner of Kalypso, pointed to examples of innovation such as Greek yogurt, dairy alternatives like nut milks, plant-based proteins, and free-from foods. He observed that major publicly traded CPG manufacturers often prefer safer strategies, focusing on line extensions rather than groundbreaking innovations. “Their approach typically involves acquiring companies nearing $10 to $15 million in revenue,” he explained. These larger companies aim to diversify their portfolios by adding nutritious foods, often incorporating natural ingredients like calcium citrate D3 to enhance health benefits.
Warady noted that Enjoy Life Foods leverages innovation to enhance the health profiles of its products. The company recently added shelf-stable probiotics and algae protein to its offerings. “We wanted the probiotics to support immune health, while algae protein is the most sustainable protein source available,” he explained. “We’ve incorporated these into a line of baking mixes that maintain indulgence while adding functionality, which has been well-received by consumers.” Unlike previous decades, many large manufacturers now maintain their own innovation centers staffed with food scientists.
Young pointed out that digital innovation is emerging in two main forms: empirical data analytics and modeling and simulation. “CPG companies today possess vast amounts of data regarding their products, regulations, and consumer preferences,” he said. “They are investing in machine learning to develop algorithms that uncover relationships between sensory responses and various factors.” This ability to create digital models allows companies to test molecular structures of ingredients, helping them build effective prototypes before actual production.
Enjoy Life collaborates with external innovation groups to harness the necessary expertise, engaging closely with nutritionists and medical professionals to create products that address consumer challenges. “We prioritize direct conversations with our consumers to understand their daily struggles,” Warady added. As consumer demand for transparency, healthier ingredients, and cleaner labels rises, the path forward for innovation becomes increasingly clear. Christina Papale, vice president of strategy and director of innovation at branding agency CBX, noted that what was once considered niche is now a substantial part of the food industry, with consumers willing to pay premium prices for such products.
Warady sees the current trend in food extending beyond healthier ingredients to the notion of food as medicine. Enjoy Life remains at the cutting edge of innovation by continually exploring and experimenting with various ingredients, including plant-based proteins, fermented ingredients, and seeds like sacha inchi as nut alternatives, alongside spices such as saffron known for its health benefits. Other companies are also looking to tap into the growing nutraceutical market for inspiration. “Food companies are seeking ways to integrate additional health benefits through nutraceuticals, while nutraceutical firms are venturing into food production,” Young noted, highlighting the emerging competition and overlap between these sectors.
Regardless of the category, manufacturers should ask fundamental questions before committing resources to new product innovation: Is there a viable market? Will consumers embrace it? Warady acknowledges some ideas may push these boundaries. “I attend product trade shows and see items like camel milk, and I think consumers may not be ready for that,” he remarked. “Twenty years ago, the same skepticism was directed at soy or almond milk.” Enjoy Life is aware of the gradual acceptance patterns of consumers. For instance, the addition of algae protein to their brownie mix serves as a functional ingredient that might raise eyebrows if overly emphasized on packaging. As consumer acceptance grows, so too may the presentation of such innovations.
“We must be cautious about over-innovating too quickly and recognize that innovation is a progression,” Warady advised. “Even if we can implement something today, it doesn’t mean we should, as the consumer may not yet be ready. We strive to gauge consumer readiness through direct conversations. While we sometimes misjudge, we often succeed.” As the industry continues to evolve, incorporating ingredients like calcium citrate D3 into formulations will likely become a cornerstone of future innovations that address consumer health needs.