What's up with Dairy R&D?

A recent survey by Dairy Foods, a sister publication of Prepared Foods, showcases the current trends in research and development in the dairy industry. The survey, which includes input from R&D personnel in companies ranging in size from less than 50 to over 500 employees and with dollar volumes from less than $25 million to $75 million or more, was designed to measure the decision process and level of R&D in these companies. Respondents included R&D managers, food technologists, QC personnel, plant engineers, and other R&D professionals.

R&D tends to be centralized, with 42% of the respondents having R&D, manufacturing and headquarters at the same location, and 39% with multiple manufacturing sites but centralized corporate R&D. Only about 22% of the dairy product companies surveyed outsource their R&D, and 61% of the outsourced activities reported were in the field of new product development.

New products account for 51% of all R&D activities, with several factors driving this activity. Some 71% of the respondents cited the need to expand existing product offerings, and cost and competition carry equal weight (55%). New direction from management (41%) and new technology and equipment (37%) also are major factors. New technology influences not only the development of new products, as reported by 76% of the respondents, but also forces changes to existing products (51%).

Even among those companies that do not outsource, R&D spending is relatively low. A total of 51% of the respondents indicated they would spend only 5% or less of their 2001 revenues on R&D. However, in 29% of the companies surveyed, this represents an increase over 2001 spending. Some 64% will spend about the same as in 2001.

On the other hand, only 3% report that R&D has less impact on ingredient purchasing than the department did five years ago. In 39% of these companies, R&D is reported as having more influence in the purchasing decision-making process, and for 58%, R&D has about the same level of influence as it has in past years.