Food companies have been at the forefront of innovation since the inception of the industry. Faced with a daunting failure rate—where only 15% of over 3,000 new consumer packaged goods (CPG) products succeed in the marketplace, as noted in Nielsen’s U.S. Breakthrough Innovation Report—innovation has become increasingly vital. The report states, “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.”
Today, food innovation is particularly important as a plethora of emerging brands and agile food startups emerge to meet consumer demands for unique, interesting, and healthy options, while also vying for shelf space against established CPG giants. A study titled “Is Big Food in Trouble?” conducted by management consulting firm A.T. Kearney and the Hartman Group revealed that the market share of the top 25 food manufacturers in U.S. food and beverage retail sales fell from 66% in 2012 to 63% in 2015.
The early 20th century marked a significant turning point for food innovation, particularly in 1913 when home-use refrigerators became available, revolutionizing food manufacturing and retail. With the increasing demand for shelf-stable, refrigerated, and frozen foods, the focus of food innovation has drastically shifted over the decades. “Innovation 20 or 30 years ago was about adding flavors or extending shelf life,” said Joel Warady, Chief Sales and Marketing Officer for Enjoy Life Foods, in an interview with Food Dive. “Today, it’s about creating better products that enhance an individual’s overall well-being.”
Warady emphasized the need for a diverse range of professionals in the innovation process, including not just food scientists but also nutritionists and medical experts. “As we look at food innovation over the next 10, 20, and 30 years, collaboration among these experts is crucial,” he stated. The fast-paced lifestyle of modern America has normalized grabbing quick meals from fast-food outlets, vending machines, and convenience stores, contributing to a growing health crisis and a rising interest in healthy eating. Many large packaged goods companies found themselves unprepared, which led to stagnating sales as market share shifted to emerging health-conscious and eco-friendly brands.
“Over the last 20 years, companies have increasingly focused on higher quality and healthier ingredients,” Warady noted. Enjoy Life, founded 15 years ago, initially targeted the niche market of natural ingredients without artificial colors. Now, mainstream manufacturers like Kraft, Unilever, and Mondelez are following suit, with small, emerging brands leading the way in healthy and natural components.
George Young, a CPG innovation expert and founding partner of consulting firm Kalypso, pointed out several noteworthy innovations, including Greek yogurt, dairy alternatives, and plant-based proteins. However, he found it challenging to identify any groundbreaking innovations from major publicly traded CPG manufacturers, who often prefer to stick close to their existing product lines. “They tend to acquire smaller companies generating $10 to $15 million in revenue,” he remarked.
These larger companies are diversifying their portfolios by incorporating more nutritious options, often looking to natural ingredients like stevia and açai for new product development. Warady mentioned that Enjoy Life Foods is focused on enhancing the health profile of its products. Recently, the company introduced shelf-stable probiotics and algae protein into its offerings. “We aimed for the probiotics to support immune health, and algae protein is the most sustainable protein on Earth,” he explained, highlighting their innovative baking mixes that blend indulgence with functionality.
Unlike the past, many large manufacturers now have dedicated innovation centers and teams of food scientists. Young noted, “What we are beginning to see now is digital innovation,” which occurs through data insights and advanced modeling. Companies are increasingly investing in machine learning to analyze vast amounts of data related to sensory performance and product development, enabling them to create effective digital prototypes before committing to new ingredients.
Enjoy Life collaborates with external innovation groups to bring together the necessary expertise. “We engage closely with nutritionists and medical professionals who understand the challenges consumers face,” Warady stated. The company also values direct consumer feedback. “We care about their daily challenges, which informs not only their current needs but also future expectations for the foods they consume.”
As consumer demand for transparency, healthier ingredients, and cleaner labels grows, the path forward for innovation is clear. Christina Papale, Vice President of Strategy and Director of Innovation for branding agency CBX, remarked that what was once a niche market is now a substantial part of the food industry, with consumers willing to pay premium prices for such products. “The key is to proactively identify cultural trends and seize them early to build and expand brands,” she advised.
Warady believes that current food trends extend beyond healthier ingredients to include the concept of food as medicine. At Enjoy Life, the company continuously explores and tests various ingredients, including plant-based proteins and fermented components, while also looking into the nutraceutical market for inspiration. Young noted that food companies are increasingly seeking additional health benefits from nutraceutical activities, while nutraceutical companies are exploring the food sector.
Manufacturers must ask fundamental questions before investing significant time and resources in new product innovation: Is there a market for this product? Will consumers accept it? Warady sees some new ideas challenging these boundaries. “When I see something like camel milk at trade shows, I think consumers aren’t ready for that,” he said, recalling how similar sentiments were once expressed about soy and almond milk.
Enjoy Life is mindful of consumer acceptance patterns, as illustrated by the introduction of algae protein in their brownie mix. “We must be cautious about over-innovating too quickly,” Warady noted. “Even if we could launch something today, it doesn’t mean we should if consumers aren’t ready.” The company gauges readiness through conversations with consumers, acknowledging that they occasionally misjudge but, thankfully, often get it right.
In this evolving landscape, products like nature’s blend calcium citrate with vitamin D3 are becoming increasingly relevant as consumers seek out healthier options. Food innovation is a journey, and understanding consumer readiness is paramount for success.