Pushing R&D Productivity
“The number of new food and beverages introduced into the North American market each year continues to climb,” notes Lynn Dornblaser, director, GNPD Consulting Services (Chicago). “The big growth categories the last few years are beverages, snacks, bakery products and confectionery.”
Dornblaser feels the growth in these areas reflects changes in what and how consumers eat. This includes smaller and more frequent meals, beverages substituting for solid foods, the popularity of sports drinks and bars and trendy diets or health initiatives (particularly impacting baked goods) such as low-carb last year and increased high-fiber, whole grains and decreased trans fats this year.
Pressure to provide products that meet new consumer interests drives new food launches. Additionally, new products are needed to take advantage of advances in agriculture and food science that create more consumer-acceptable foods, such as the light-colored, mild-flavored, whole-grain baked goods now entering the market, or those that contain omega-3 fatty acids.
As important as new products are to keeping companies vital, the R&D function receives “variable” financial support. Statistics on R&D expenditures by industries and by nations are offered much as grades on a report card. Foodnavigator.com quotes a recent Eurostat (Luxembourg) survey that examined ways to improve Europe's industrial R&D competitiveness. It notes that pressure on innovation to sustain food company growth means more resources must be provided to R&D departments. While European ingredient suppliers invest some 2.8% to 12.9% of their sales on R&D, food makers spend some 0.5% to 1.5%.
This pales in comparison to high-tech industries, which is logical. Food manufacturing is materials-intensive, says a November 2003 Technical Bulletin (TB1905) from the USDA's Agricultural Research Service. Raw and semi-processed agricultural foodstuff and packaging materials comprise 60% or more of the value of the finished food products. (See www.ers.usda.gov/AmberWaves/November 03/Findings/productivitygrowth.htm.) However, the report also notes that low investment in R&D could be one reason for the food industry's relatively low increase in productivity, 0.19% annually between 1975 and 1997, compared to an estimated 1.25% for the whole U.S. manufacturing sector. Steps to increase new product development efficiency are not identical to those improving operational productivity, neither are they mutually exclusive. More efficient, better-informed R&D staffs can assist on both fronts.
Toward that goal, tactics that maximize tight R&D resources can prove extremely useful. Thus, Prepared Foods has had a number of processors repeatedly participate in its PIX (ProductInnovationExchange) event.
PIX is a unique way for R&D and others on the product development team to expediently obtain useful, customized information from the vendor community. Although there is no lack of valuable ingredients and technologies for company product development initiatives, time-crunched R&D executives are challenged to set aside needed time to interact with suppliers, to discover their new offerings and find how they may be of benefit.
PIX's uniqueness comes in how it is structured. Processor companies' confidential initiatives are matched with suppliers who can most likely provide solutions. Communications start before the event and then, over three days, the R&D executive team meets off-site with a series of vendors who provide them with customized ideas, information and solutions.
For an efficient start to investigating the potential of PIX, to be held April 23-26, 2006, go to www.pi-xchange.com or contact Layne Skoyen, PIX event director, at email@example.com or 952-736-9373.