Disruption Reset

Rabobank consumer foods analyst Thomas Bailey thinks the time has come for the food industry to ready itself for “boredom.”

Bailey first made that point a year ago in a report entitled ‘Disruptive’ Food Products Prove to be More Hype Than Bite: Is the Age of Food Disruption Over? in which he argued that attempts to revolutionize food products in the form of new technologies like plant-based meats, synthetic fat replacements, and precision fermented milk proteins failed to hit the target. As a result, companies are moving away from disruptive innovation to more incremental strategies involving their core product offerings.

“If you look at what products are in the market today, we haven’t seen anything that has really changed the balance of power within the market or that has created a wholly new market for food,” he told Food Technology recently. “While we do see some new products out there, most of us are still eating the same sorts of proteins, carbohydrates, sugars, and fats that our grandparents did.”

Given the issues the food industry is facing, ranging from consumer behavior shifts to the impacts of climate change on agriculture and the greater food supply chain, there is no question that the food industry is ripe for disruption. Yet, Bailey argues, despite significant investment, many attempts to recast the way we develop, manufacture, and package food over the past decade have failed to live up to their promise. And with large brands like Chobani announcing their intention to scale back and focus on innovation in core product offerings, it may seem like the age of incremental innovation is upon us.

“Several companies took forays into new categories and tried to launch these new products as a way to shake up the industry. They thought that’s what consumers wanted,” he explains. “But, when it came to food, most of the things they tried just didn’t take. So, what we’re seeing is the bigger companies going back to what they know best—and working on precise tweaks and refinements to existing products that are aligned with their supplier, inventory, and consumer base.”

A Time to Reflect and Assess

Other experts in the industry, however, don’t see the end of the disruptive innovation era so much as a much-needed moment of reflection and reassessment. Justin Shimek, CEO and chief technology officer at Mattson, a product development company specializing in innovation, says it is easy to see that the pandemic, and many of the supply chain issues that came with it, have led companies to reexamine their current approaches to product development and manufacturing.

“The pandemic accelerated many existing supply chain issues, making it hard to manufacture products that were already on shelves,” he explains. “Many companies had to go through stock keeping unit (SKU) rationalization—if you used to have 25 flavors of cake mix and you could only produce 10 because of supply chain problems, you start to wonder, do you really need all 25 flavors? Fast forward a year or two, and you get into the macro inflationary time, and you have to boost the top line purely through pricing actions. This is going to make you think about your innovation efforts, because your strategy can’t just be about expanding categories anymore. It has to be about bringing energy and excitement to products so you can drive top-line growth. That changes how you think about future food development.”

"I don’t think the age of disruption is over. I think the age of ‘uninformed investment’ in disruption is over."

Jamie Valenti-Jordan

CEO of Catapult Commercialization Services

While that brings some companies, particularly bigger brands, back to their core offerings, Jamie Valenti-Jordan, CEO of Catapult Commercialization Services, says smaller organizations are still looking for the next big, disruptive thing. All you need to do is walk through one of the big food expo floors to see it. The biggest changes he sees, however, are in how—or even if—these new products are funded. Without a truly breakthrough concept, he adds, it’s nearly impossible to get the capital required to get the idea off the ground.

“I don’t think the age of disruption is over. I think the age of ‘uninformed investment’ in disruption is over,” he says. “Disruption is still happening, and investment is still there if you want it. But you have to have a truly unique idea. So, I’d say that we’re moving to more functional disruption now, as opposed to disruption just for disruption’s sake.”

Categories Ripe for Disruption

As product developers consider where to focus their efforts, consumer wants and needs, as ever, remain top of mind for companies large and small. Yet, Jeff Grogg, managing director of JPG Resources, a product and process development consultancy, says that understanding consumer behaviors remains a challenge. While consumers report they want healthier ingredients in food products—as well as more sustainable packaging—what they say, and what they are willing to pay for at the grocery store are often quite different things.

“The Mondelēz International State of Snacking report … says that consumers want to eat healthier, but they aren’t willing to trade off very much to do that, in terms of taste or cost,” says Grogg. “And there are things in the report that consumers said that are demonstrably false. Seventy-four percent of people claim to typically recycle the packaging their snacks come in. That’s an outrageous falsehood. To start, most of that packaging just isn’t recyclable. Two, consumer behavior isn’t that good. We wish it were, but it’s not. It makes it harder to push bigger changes because we need those kinds of innovations, which can be quite expensive, to work both for the brand and the consumer.”

That said, when asked what categories were ripe for disruption, several overlapping themes emerged. Rob Dongoski, a global lead for food and agribusiness at Kearney, a strategy and management consulting firm, says that he sees, moving forward, a greater push for companies to simplify their ingredient stacks. With consumers reporting an increased focus on health, they want to be able to feel good about what they see on the food labels of the products they buy.

“If you look at a lot of the ingredient stacks today, you see 25 or more items with a lot of chemical–sounding names. Consumers want to see five ingredients or less, with names they can pronounce,” says Dongoski. “There’s a real opportunity here for food scientists to reformulate these ingredients not only for consumer appeal, but also to find more sustainable options, lower costs, and then lower exposure in the supply chain.”

Chris Aurand, open innovation leader at Thai Union Group, says another area that is ripe for disruption globally is food products for “silver age groups.”

“Everyone talks about population booms and how we need to figure out how to feed everyone by 2050—but no one talks about the breakdown of ages of those people,” he says. “There are a lot of opportunities for new products for this aging population both in terms of nutrition, as well as sustainability.”

Historically, older adults have been overlooked in new product development, with a few exceptions. But Aurand says that today’s baby boomers don’t want to be eating “old people food.”

Product developers should consider formulating exciting, healthy, and sustainable new products for the growing aging population. © Wavebreakmedia/iStock/Getty Images Plus

“We have to think about what kinds of foods these will be. They should be more nutritionally dense, with less volume, but still taste good. It’s going to be a challenge for food technologists,” he says. “We are also going to have to think about how to market these products to make sure they aren’t for old people only.”

Phil Kafarakis, CEO of the International Foodservice Manufacturers Association, agrees and says that many baby boomers are more adventurous eaters and also have more disposable income for good food. But they also have health issues that need to be taken into consideration in product development.

“As food scientists are thinking about ingredients, they have to think about gut health, lactose intolerance, allergies, type 2 diabetes, obesity—they are going to have to contend with all of that as they try to figure out the ingredients and the unique set of flavors to make up a new product,” he says. “But if they can crack that code to deliver an amazing flavor combination into some new breakthrough product that can meet boomer needs, it’s going to be a game changer.”

Beyond just creating foods for older adults, Kafarakis adds that the industry also needs to be more disruptive when it comes to creating packaging for aging consumers. There’s ample discussion about the need to develop more sustainable and eco-friendly packaging, but with baby boomers living and, often, eating and cooking independently well into their golden years, the design of cartons, bags, and boxes should also be considered.

“People don’t realize that, as you get older, opening a package can be a struggle,” explains Kafarakis. “The pharmaceutical industry has made a big push to change caps and packaging. They’ve done that not just for safety, but also to make it easier for someone with arthritis to open their medication. Pulling up the side of a Cryovac package is quite difficult for someone with arthritis. This is something that branded manufacturers haven’t really thought about before but, as so many people are living longer, they should.”

Will Plant-Based Products Make a Comeback?

One of the examples that Bailey highlighted in his report demonstrating the failures of past disruptive innovation was the lack of performance seen in plant-based meat alternative products.

“We’ve seen Impossible Foods. We’ve seen Beyond Meat. We’ve seen precision fermentation and companies like Perfect Day. We’ve seen these companies evolve and grow. But despite a lot of investment, they didn’t really catch on,” he says.

Yet, despite the fact that plant-based burgers didn’t quite live up to the hype, most analysts and industry experts remain quite optimistic about the future of plant-based food products. Even Bailey himself.

Plant-based composite products, like Sobo Foods’ “Pork” & Chive Dumplings, are growing in popularity and could be the path to success for plant-based meats. Photo courtesy of Sobo Foods

“Precision fermentation, especially, has applications, particularly with regard to the production of proteins and sugars for new product and ingredient uses, that are very promising,” he says. “For example, there are sugars and proteins found in human breast milk that you can’t find in nature. If you can create these using precision fermentation, we could create an infant formula product that is closer to human breast milk than anything we currently have.”

Other industry experts are also bullish on plant-based products in the future. Grogg likens the nonperformance of plant-based meat alternatives to a “forest fire.”

“Out of a fire like that comes a renewal—and there’s going to be new and better products in that space. Beyond Meat was never going to be the destination in that space. It was too highly processed and had too many ingredients. But it was a marker on the way to the future,” he says. “As we get to that future, I think we need to get away from the idea of a meat alternative. I think the future is going to be completely new plant-based products that are healthy, convenient, and desirable. We just don’t know what those products are yet.”

Precision fermentation is among the technologies that has the potential to continue to disrupt product development in truly innovative ways. © Mariia Skovpen/iStock/Getty Images Plus

Aurand says, in Asia, companies are making great strides with plant-based applications by not trying to replace or mimic a particular type of meat or seafood but rather adding plant-based products to other types of food applications. For example, he says that products like plant-based shrimp dumplings are gaining the most traction in the Asian market. “These dumplings are very popular here,” says Aurand. “You aren’t hiding the shrimp. You give the consumer that shrimp taste in the dumpling, but you aren’t making it so they are comparing it directly to a real shrimp.”

Aurand adds that he thinks that successful plant-based products will be the ones that don’t try to be the “exact equal” of a burger or salmon filet but instead try to provide good taste or flavor to a composite product. That’s the big challenge that the field has moving forward, he says, figuring out where plant-based applications make the most sense.

“Determining where these products can fit is very nuanced,” he says. “A lot of smaller companies and startups don’t have the capacity or, for that matter, the money to try to create a whole new product category. As we move forward, and work to determine where plant-based foods are going to find success, it’s going to require a lot of education—not just for consumers, but for product developers, too.”

Innovation Via Artificial Intelligence

Any discussion of innovation, disruptive or otherwise, would be incomplete without including the potential contribution of artificial intelligence (AI) solutions. Flavor giant McCormick & Company made headlines in 2019 when it announced it was partnering with IBM to leverage its ingredient and sensory data to accelerate its product development cycles using AI algorithms. Might AI be the missing ingredient for future disruption across the greater food industry, too?

Dongoski says, while AI solutions can help food and beverage companies solve multiple problems across their value chain, it’s not a “silver bullet.”

“More and more, we are going to see AI used in the industry, whether you are talking about shrink, streamlining operations, or customer engagement,” he says. “AI will be a pervasive technology going forward, no doubt about it. But how it will be used, and what it can actually do, really depends on the question you are trying to answer and what data you have on hand to try to answer it.”

"It takes money to make systemic change happen in the market. And the money will be there for the right products."

Jeff Grogg

managing director of JPG Resources

The growth and evolution of AI-powered tools, says Barb Stuckey, chief innovation and marketing officer at Mattson, will also help drive future disruption. In the meantime, however, she believes that anyone who thinks that disruption is dead—or even on hold—need only walk the halls of Natural Products Expo West to see that disruption continues to happen. Seeing those new products makes it clear that there is value for companies to continue pursuing some form of disruption in order to address emerging consumer needs and markets.

Grogg agreed—and said that smaller companies will continue to take the risks that bigger companies won’t. And venture capitalists are willing to invest in innovative products provided they show appropriate value and relevance.

“I don’t think we can say the age of disruptive innovation is over. It’s more of a short-term pause and necessary clean-out. There’s just been too many products that should have never existed, clogging up store shelves we don’t need,” he said. “But a reset is good and healthy—and there will be more funding out there. Because it takes money to innovate. It takes money to make systemic change happen in the market. And the money will be there for the right products.”ft