The Food Technology staff sent a questionnaire to the Chief Research Officers of 100 major food companies, asking about the areas of research that their departments were involved in. Of the 100 CROs surveyed, 38 returned the questionnaire. Here are the results.
Research spending apparently is keeping pace with inflation, but not much more. Most of the 38 CROs answering the survey noted that their budget for food science was “about the same” as last year, while 17 of the 38 noted that the budget was “about 5%” higher, and 8 had a 10% increase. None of the research officers suffered a decrease. But it is interesting to note that only one company that was very recently acquired was represented in the returns, so the effect of consolidation was not felt in this survey.
There are, of course, a number of ways to keep research costs from rising a lot, and that is by restricting the kinds of research being done. Less long-term research, less basic research, and more line extensions are typical responses from companies who have suffered from low rates of product successes. But the responding companies do not appear to be following that tack.
Basic research, according to the common wisdom, is on the wane in food companies. But of the 38 respondents, 28 do at least some of their own basic research, and 22 license basic research. Obviously, a number do both, and may license from universities, other companies, and government or other laboratories. Very few companies (2) work only on line extensions.
The current emphasis on speedy product development, rapid introduction, and fast product production is somewhat belied by the number of companies doing appreciable numbers of projects described by the respondent as long term. Twelve companies spend 40% of their time on long-term projects, 10 spend 30%, and 12 spend at least 20%. What is a long-term project? According to our survey, the average length of time considered “long term” is 18–24 months. However, 8 companies consider 3 months long term, and 12 companies consider up to 48 months long term. Short-term projects may be as short as 2 weeks, but the average is 6–12 months.
We asked the research directors what activities were considered part of the food science portfolio in their companies. The activities listed were new product development, product safety research, clinical trials or support, quality control, quality assurance, ingredient technology, process development, market research, and nutritional research or analysis.
All 38 companies do new product development, which is no surprise. Despite the relatively low rate of new product successes, new products still are a major factor in the grocery dollar spent by American consumers, and increasingly, by non-American consumers. New products cover the gamut of distribution methods: there are a large number of new products that appear on the menus of restaurants and other foodservice outlets. Product safety research occupies part of the staff in these major companies, with 36 companies noting their activities in that area. A surprising 24 companies invest time and budget in clinical trials or support for clinical trials, including time spent reading and analyzing the results of other companies’ clinical trials.
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The activity on quality control and quality assurance is of interest: some companies have technical divisions, in which these activities are placed under the technical umbrella. Others attach quality control to the manufacturing arm, and still others consider quality control to be a marketing function. The range of activities under these umbrellas is diverse, too: food science departments may develop quality assurance or quality control methods but not be directly involved with the testing itself. Twenty-six companies are involved in some way with quality control, 30 with quality assurance.
Because these companies are primarily involved with manufacturing and marketing food products, at either the retail or foodservice level, and are not considered suppliers, we were surprised to find that 32 of the 38 companies are involved with ingredient technology. In some cases, it appears that the technology is that of ingredient interactions. In any case, perhaps the reliance on ingredient suppliers is being supplanted by company-based science, leading to better-targeted products. According to one research director at a company involved with ingredient technology, his firm wants patent protection for new products, so that internal research on ingredients and on interactions is preferable to depending on suppliers. This company also does some fairly basic research on ingredients, and has special ingredients manufactured for products under a secrecy agreement with the supplier.
A number of these companies have strategic alliances with ingredient companies, and sometimes jointly develop ingredients for their special use. This is particularly true of companies that have developed medical foods or foods with health claims, working with supplier companies, as well as with academic researchers.
There is a fine line between ingredient technology and process development in many cases. All of the companies that answered the survey noted that a part of their budget was spent on process development.
Every respondent said that scientific personnel spend time in the plant for new product trials. In several cases, there were multiple exclamation marks after the positive response. The amount of time spent in processing applications is clearly evidenced from the question about cross-functional teams. Just about all of the companies are involved with multifunctional teams, although the make-up of the teams varied, and virtually all of the respondents noted that more time was spent on multifunctional or interdisciplinary teams than was the case 5 years ago. Nearly all of the respondents were involved with teams that include marketing, which may explain why only 4 science departments do market research. (One of the 4 noted that food science personnel handled the statistics involved with market research for their company.) Nineteen companies are involved in either manufacturing or operations, in addition to marketing, in interactive teams. Engineering was mentioned as a team member by 6 respondents, purchasing by 8, legal by 2, and MIS by 2. The average percentage of time working with interactive teams was about 15%, which appears to primarily cover team meetings.
What are the important areas of research for companies? We asked companies to rank the areas of food science that they felt were most important. Developing healthy foods was rated first, by a large majority. The second most important area was nutraceutical or medical foods, followed by food safety from a process standpoint. Developing “natural foods” ranked fourth, and food safety from an ingredient selection point of view was in fifth place. Organic food development ranked sixth, followed by reduced fat food development or altered lipid contents. In last place was methods development for quality control, ISO programs, and similar activity.
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In developing foods either for the “healthy” category or for the “nutraceutical or medical foods” category, the major difference appears to be where the emphasis on health claims falls. As we’ve seen within the past few weeks, health claims in different forms are appearing. Two of the companies that rated “healthy” foods as a top priority, and that also spend time and budget on clinical trials, mentioned that they actively sponsor specific clinical trials either alone or as part of a consortium that sponsors selected clinical trials that may provide information to support a health claim. In at least two cases, the clinical trials were supportive of healthful aspects of a basic raw material in which the firms had great interest. Resulting products were developed as “healthy” foods, with the option of developing a health claim at a later date. Companies that are primarily pharmaceutical companies are more likely to develop products and clinical trials with the view to distributing medical foods, within the meaning of the Food and Drug Administration’s definition of medical foods, partly because of distribution issues. If these medical foods later enter the general distribution area, the companies would considering spinning off the product line, to solve cost and distribution issues.
What About Academia?
Because of the interface between companies who develop new products and university researchers, we asked a number of food science department heads about their interactions with industry. Generally, the amount of time spent interacting with industry has increased over the past 5 years, to about 30% or more if the university has developed consortia or interactive programs with industry. Generally, academia and industry interact with each other on a need-to-know basis, but as relationships have grown closer, there is a broader exchange of information that appears to benefit both.
Mark McLellan, director of Texas A&M’s Institute of Food Science and Engineering, is aggressively seeking technical relationships with industry. The university is actively involved with developing electron beam technologies, and has entered into an agreement with a major manufacturer of such processing equipment, forming a partnership in which the equipment manufacturer will build a world-class facility and has the opportunity to work in the facility with faculty experts for about half of the available time. The pilot plant will link hurdle technologies and connect with other processes, including packaging and conventional sterilization techniques. The project will be used for work ranging from basic research in dosimetry and new concepts in process control regarding e-beam, to effective materials for generating x-rays in this process, plus information about the effects of e-beam on emerging pathogens. Companies that can’t take a chance on getting into production until they are sure they get the optimum product will have the opportunity to produce pilot quantities for shelf-life and organoleptic testing. For a small number of dollars, individual companies can enter into a relationship-building agreement where chief technical officers have the opportunities to work with Texas A&M faculty and students.
Training in partnership with government is another area in which the group is moving. The university can provide training to government groups, leading to some form of certification on a global basis, unlike the current process schools, which are more national in scope.
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Purdue University has been reaching out to industry with various programs for several decades. The university has remained close to major industry, through alumni and joint research programs, including the Whistler Center, whose industrial base has included most major processing companies for the past 10–15 years, and now includes pharmaceutical companies interested in the possibilities of complex carbohydrates. Nearly half of the Whistler Center’s projects are in conjunction with industry. The industrial effort at Purdue hasn’t changed, but major funding is also coming from the state government, and from the federal government as well. The National Science Foundation has funded a major project on evaluating botanicals as active ingredients, to the tune of about $7.5 million. This will include clinical trials run at Indiana’s joint medical center (Indiana University and Purdue) in Indianapolis. The state of Indiana has added a $2 million program for Enhancing Foods to Protect Health, also involving phytochemicals. According to department chair Philip Nelson, a major emphasis is on food safety. A new initiative, the Food Safety Engineering program, funded partly by a grant from the U.S. Dept. of Agriculture, will emphasize quicker, in-line identification of pathogens, including emerging pathogens, and recognition of a need for altering a process when the bugs show up.
What Food Companies
Food safety was the second most important subject in ranking of the companies surveyed, but was high on each and every company’s list. Baby food is a particularly sensitive topic. “Food safety is implicit in all new product development,” said Jan Relford, Senior Vice President for Research of Gerber, a division of Swiss pharmaceutical and agro-business giant Novartis. “In some products, safety aspects are half of the expense of new products.”
The issue of organic foods has proved difficult for some companies. Not so at Gerber’s, which rolled out an initial line of organic baby food called Tender Harvest™ more than 3 years ago. “It’s easier when you are a major agro-business company,” noted Relford. “We know the growers and their growing conditions, and can certify organic without a lot of searching.” Additional flavors of the organic line have appeared recently. The entire project, from start to completion of the initial line, took about 6 months. When asked how Gerber’s manages the basic research used as a cornerstone for its new products, Relford noted that parent company Novartis “believes in research.” The company matches the available expertise to the need, whether it is clinical studies at Tufts or Harvard, or basic science at the Swiss laboratories of Novartis, or work at Gerber’s Michigan laboratories. “Novartis has invested heavily in research,” said Relford, “and Gerber’s has benefitted.”
Recent product introductions by major companies exemplify the areas of research shown in answers to the questionnaire. For instance, Kraft’s recent introduction of California Pizza Kitchen frozen pizzas, offered both in the restaurants and in supermarket freezers in Denver, include such flavors as BBQ Chicken, Thai Chicken, Sausage Pepperoni & Mushroom, Rosemary Potato Chicken, Five Cheese and Tomato, Portobello Mixed Mushroom, Garlic Chicken, and Southwestern Chicken. The types are “healthy,” including lots of chicken and vegetables. A defining difference is the patented technology from Kraft that produces a crust that rises in the oven, dependably, and produces a just-baked taste and texture. Kraft’s Oscar Mayer division has carried the popular Lunchables line into breakfast with kid-friendly products that combine Kraft innovations (a Tang™ beverage plus pancakes, waffles, cereal bars, and such). These products aren’t simply line extensions—they represent new research in packaging and processing technology.
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General Mills has been concentrating some of its resources on calcium utilization. Last spring, in two fast introductions, calcium was a central theme for Yumsters, a kids’ yogurt that provides as much calcium as a child’s serving of milk. Total™ cereal with 100% calcium has equal bioavailability to milk, as well.
Hershey Foods, a company that works closely with academic partners as well as its own strong internal research team, has had a long string of new product successes through the 1990s and forward. “Understanding consumer needs, when combined with the effective utilization of technology to deliver products with great taste, a meaningful point of difference and excellent value, is what makes Hershey a leader in the introduction of new chocolate and confectionery products,” said Charles Duncan, Vice President, Research & Development. “Candy is an ‘impulse’ purchase for consumers. It takes a solid understanding of what will excite consumers at retail to ‘pull’ them over into a purchase decision.”
Hershey sees its role as an innovator that has affected the overall confectionery market. “New products certainly are important for Hershey Foods. However, they are equally important for the health of the confectionery category,” said Dennis Eshleman, Vice President, Marketing—New Products, in Hershey’s annual report.
Del Monte, a company with sales of $1.5 billion in fiscal 2000 in the category of canned fruits and vegetables, has established as a published priority the introduction of new products in single-service sizes in new packages. This requires process development work, as well as study of the combination of fruits that work best together.
Most of the companies surveyed said that 20–80% of their research staff have advanced degrees. There appears to be at least two models at work here: in a relatively small number of companies, a Ph.D. or M.S. level researcher is assisted by a technician with some education past high school. In other companies, the ranking of scientists is a hierarchy in which education, expertise, and time-in-grade is applied to determine which scientist works on which projects. With the advent of interactive teams, this second department style is somewhat more prevalent among this group of companies. Companies fit their priorities to their business models, and according to our survey, the outlook is positive.
CORRELATING COMPANY EXPERTISE WITH
The closeness of ranking of the areas of research in the survey suggests that certain areas of research correspond to centers of excellence within companies. It’s no surprise that the expertise of individuals, plus the needs of a specific company, can affect the content of a research portfolio. In these discussions, it is clear that these companies make few mistakes in designing research portfolios. In evaluating the answers to questions, certain correlations can be seen:
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Differentiating Commodity Products. Milk and milk products are a natural for this category. The appearance of bright plastic containers in smaller sizes, particularly snack size, has gained enough popularity to keep milk as a beverage prominently on the refrigerator shelves, if not growing rapidly in share of the beverage market. If the company is a dairy, it generally has expertise in sanitation, packaging, and processing. The higher-level staff is likely to hold degrees in dairy science, microbiology, and engineering, plus packaging. The best companies spend money on checking out new methods, and reading and digesting clinical studies on calcium, potassium, and proteins. Most of the fat-reduction work is already finished, at least for this round of product development, and its importance is clearly on the wane, at least for now. Nutritional and healthy foods, food safety via processing, and organic food development are the important areas here.
Fruits and vegetables—canned, frozen, or fresh—generally are produced by companies with knowledge of the provenance of product, literally from the ground up. Many of the companies are active in the agribusiness areas, and deal directly with farmers and orchardists. Expertise is likely to be in agronomics, agricultural economics, engineering, sensory evaluation, quality control, and quality assurance. There is also likely to be expertise and research in processing techniques, packaging, and microbiology. Organic products are relatively easy to develop, as are fresh-and-convenient products, nutritious and healthy foods, and food safety from a processing viewpoint. Some companies that are deeply involved with specific fruits and vegetables have sponsored clinical studies leading to health claims on labels, although they usually don’t do the research themselves. Strong brand presence also helps differentiate fresh products from regular produce. This may become particularly important for organic products, as it suggests that these products really are organic.
Low-fat Foods, and Foods with Special Lipid Ratios. The new products that relate to lipids are now in the realm of medical foods and foods with health claims. Low-fat-food development, except for those products that have cholesterol-lowering effects, have mostly hit the shelves, and a number have failed. Low-fat products may see a renaissance as new technologies emerge, but for now their emphasis is greatly reduced. Companies that continue to work in low-fat foods do not see it as a major point of additional research now. The medical foods arena requires researchers with expertise in clinical trials, emulsion technology, sensory evaluation, and rheology.
Functional Foods, Nutraceuticals, and Medical Foods. Major companies, like those we surveyed, are interested in this category, and are gaining products by acquisition. Beverages are an area of interest, and enriched beverages and meal bars are also being studied and purchased. Smart companies entering these food categories are doing so with a level of trepidation—they often leave the original brand name on the product, and don’t emphasize ownership. Technical staff and expertise needed is knowledge of nutrition, ingredient technology, sensory sciences, and food engineering. Knowledge of food law, as the intricacies of health claims and medical food labeling unfold, is particularly helpful. Obviously, if the target is a medical food, clinical trial experience is essential.
Line Extensions, with a Plus. Companies with a strong portfolio of branded products often find it more useful to add products to a strong brand than to start a new one. This can leave the impression that there aren’t any new products in sight, but this generally isn’t true. There is often scientific content in these products that appear to be line extensions, but consumers see and trust the original brand. Companies using this strategy appear to have more sensory and flavor scientists, rheologists, nutritionists, and food engineers than most. Packaging expertise is at a premium, as are process engineers, since “line extensions” often occupy a production line that requires some “cutting to fit.”
by FRANCES KATZ