Food companies have continuously embraced innovation since the inception of the industry. Facing daunting failure rates—where only 15% of over 3,000 new consumer packaged goods (CPG) products achieve market success, as highlighted in Nielsen’s U.S. Breakthrough Innovation Report—innovation has become increasingly vital. The report warns, “If we do not adapt ourselves to emerging consumer preferences, technological advancements, and 21st-century business models, we risk stagnating growth, diminishing profit margins, losing the competition for top talent, and ultimately witnessing the collapse of our already fragile innovation capabilities.”
Today, food innovation is critical due to the emergence of numerous new brands and agile food startups aiming to meet consumer desires for unique, intriguing, and health-conscious products, while also vying for shelf space against established CPG giants. A study by A.T. Kearney and The Hartman Group, titled “Is Big Food in Trouble?” reveals that the market share of the top 25 food manufacturers in U.S. food and beverage retail sales dropped from 66% in 2012 to 63% in 2015.
The early 20th century marked a significant turning point in food innovation, particularly in 1913 when refrigerators transitioned from commercial use to home availability, fundamentally altering food manufacturing and retail. As consumer demand for shelf-stable items and refrigerated or frozen foods surged, the nature of food innovation began to evolve dramatically.
Joel Warady, Chief Sales and Marketing Officer for Enjoy Life Foods, explains, “Two or three decades ago, innovation focused on adding flavors to existing products or extending shelf life. Today, it’s much broader; it’s about creating products that enhance individual well-being.” He emphasizes the necessity of diverse expertise in innovation, stating, “It’s not just food scientists; we need nutritionists and medical professionals collaborating to shape the future of food innovation over the coming decades.”
Modern American lifestyles, characterized by busy schedules filled with work, school, and extracurricular activities, have normalized grabbing food on the go. Consumers often turn to fast food outlets, vending machines, convenience stores, and aisles of packaged goods. As health concerns loom large, interest in healthy eating and clean living has surged, catching many large packaged goods companies off guard as they faced stagnant sales and declining market shares to emerging brands focused on health and sustainability.
Warady notes, “Over the last 20 years, companies have begun prioritizing higher quality and healthier ingredients.” Enjoy Life, founded 15 years ago, initially focused on using natural ingredients with no artificial colors—an approach that was quite niche at the time. He observes, “Mainstream manufacturers like Kraft, Unilever, and Mondelez are now following suit. Small, emerging brands were the pioneers in the healthy and natural ingredients space, and now they are evolving to explore ‘what’s next?’”
George Young, a CPG innovation expert and founding partner of Kalypso, points to innovations such as Greek yogurt, dairy alternatives like nut milks, plant-based proteins, and free-from foods but finds a lack of groundbreaking innovations among major publicly traded CPG companies. “They typically play it safe with line extensions and prefer to acquire companies approaching $10 to $15 million in revenue,” he explains.
These larger corporations aim to diversify their portfolios and incorporate more nutritious foods into their offerings, driving their innovation efforts. “They are exploring natural ingredients like stevia and açai to create products that deliver associated health benefits,” adds Young. Warady mentions that Enjoy Life Foods leverages innovation to enhance the health profiles of its products, recently integrating shelf-stable probiotics and algae protein into certain items. “We aimed for the probiotics to support immune health and chose algae protein not only for its protein content but also because it is the most sustainable protein source on Earth,” he states. “This innovation marries indulgence with functionality, and consumer feedback has been overwhelmingly positive.”
Unlike decades past, many large manufacturers now boast dedicated innovation centers staffed with food scientists. “This is a significant advancement,” Young remarks, adding that digital innovation is increasingly prevalent. This digital transformation occurs in two main ways: empirical research through insights and analytics, and modeling and simulation.
“CPG companies possess vast amounts of data regarding their products, regulatory compliance, human health and safety, and sensory performance,” Young explains. “They are honing their skills in machine learning to develop algorithms that identify relationships between sensory responses and various factors.” Companies employ modeling and simulation techniques to create digital representations of their products, testing molecular structures of specific ingredients to anticipate potential responses, thereby developing effective digital prototypes prior to physical production.
Enjoy Life collaborates with external innovation groups, as Warady believes this approach effectively brings together the necessary expertise. “We partner closely with nutritionists and medical professionals who understand the challenges people face from a health perspective. Our innovation teams work alongside them to develop products that address these challenges.”
Additionally, Warady stresses the importance of consumer engagement in the innovation process. “We interact with our consumers one-on-one to understand their daily challenges. This insight helps us grasp not only their current needs but also what they might seek in the future.” As consumer demand for transparency, healthier ingredients, and cleaner labels grows, the path for innovation becomes evident.
Christina Papale, Vice President of Strategy and Director of Innovation at branding agency CBX, notes that what was once considered niche is now a significant segment of the food industry, with consumers willing to pay premium prices for such products. “The key is to proactively identify cultural trends and capitalize on them early to grow and expand brands,” she advises.
Warady envisions current food trends extending beyond healthier ingredients to encompass the concept of food as medicine. Enjoy Life remains at the forefront of innovation by investigating, experimenting with, and testing various ingredients. The company explores plant-based proteins, fermented and sprouted ingredients, seeds like sacha inchi as nut substitutes, and spices such as saffron, known for its health benefits.
With many companies pursuing this trend, they are also looking into the expanding nutraceutical market for inspiration in their innovations. “Food companies are seeking ways to derive additional health benefits from nutraceutical activities,” Young explains. “Conversely, nutraceutical companies are leveraging their expertise in natural ingredients to create food products, leading to intriguing competition and overlap.”
Regardless of the category, manufacturers should consider fundamental questions before committing significant resources to new product innovation: Is there a market for the product? Will consumers accept it? Warady acknowledges that some novel ideas may push these boundaries. “When I observe innovative products like camel milk at trade shows, I wonder if consumers are ready for that,” he reflects. “Twenty years ago, a similar sentiment was likely expressed about almond or soy milk.”
Warady emphasizes that Enjoy Life remains aware of the gradual acceptance patterns among consumers. For instance, the company has incorporated algae protein into its brownie mix—an innovative ingredient that may raise eyebrows if highlighted too prominently on packaging. As consumer acceptance grows, the presentation may evolve as well. “We must be cautious about over-innovating too quickly and recognize that innovation is a gradual process,” he stresses. “Even if we can introduce something today, it doesn’t mean we should—consumers may not yet be ready for it. We gauge consumer readiness through ongoing conversations. While we occasionally miss the mark, we often succeed.”
In summary, as food companies continue to innovate, incorporating ingredients like calcium citrate complex can further enhance product offerings, aligning with consumer demand for health and sustainability.