A key challenge for food companies is to create a continuous stream of new products which are “UNIQUE” in the eye of the consumer. The pressure from periodic range reviews drives an “in with the new” and “out with the old” mentality in a constant battle to refresh and enhance shelf appeal in all retail categories.
At the same time margin pressure is high as is retail pressure to reduce “Branded” offers and replace them with retail branded products.
The net result is a constant requirement for “NEW” products with no guarantee on their longevity or profitability. Innovation shifts to incrementalism in a world where a graphic facelift, a new flavour, a pack size change or a bonus offer can drive the decision to buy.
Incrementalism is rampant in the food sector and while it is an excellent tactic if is in isolation a flawed strategy.
As reality sets in a small but increasing number of companies are recognising the need to take R&D of the critical path. Developing meaningfully different new product platforms away from the pressure of customer deadlines is critical. Quite simply, it is about putting the “R” back into R&D.
Innovation success in the food sector will be achieved by those companies which take the longer term view and strategically invest in research as well as tactically invest in development.
The Nespresso coffee pod is a simple but effective example of how a technology platform in the commodity coffee portion sector led to a 20 year industry monopoly built on patents and trademarks. Not all companies have the budget of Nestle but we have to learn from their strategies and apply them in our own back yard. Other examples of technology platforms are the “Low Carb” platform which was highly successful in the Beer category and is now finding new life as an effective strategy in the Baking category.
Most companies have a single process for all new products which in Food Companies is often represented as a 4 or 5 Stage Process:
Best practice companies now have multiple processes for effective product Innovation management.
In addition to a 4 or 5 stage process for typical new product development, they also have a Fast Track process for product changes such as artwork changes or deletions as well as a 3 stage process which encompasses the iterative nature of Technology Development projects.
In a recent survey of Australian CEO’s, a significant fear was of being blind-sided by an emerging technology they did not see coming. The best offence in this case is offence with a defined investment as a percentage of R+D spend allocated to those technology projects which may ensure the long term future success and growth of the business.
Gerard Ryan – Managing Director, Prodex Systems
The deployment of gated Innovation processes is at the core of what Prodex does for its customers which include: Blackmores, Goodman Fielder, Lion, Murray Goulburn and New Zealand King Salmon.
Our Product Innovation Masterclass workshops, featured in this newsletter provide an excellent introduction to these methodologies.
For more information about these events or to register please visit https://prodex.com.au/events/ or contact Prodex directly on +61 7 3844 3600.
