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Innovation that makes us money

The slow pace of innovation in some parts of the food industry is a recurring theme that will not lose its importance as competition and the fight for differentiation between companies and brands continues. With the Grocer’s top product survey showing a 45% downturn in new innovation launches last year, it looks like this debate is set to continue in 2013. Nonetheless, whilst it is often too easy to point the finger accusing brands and food businesses of playing it safe, there is a need to acknowledge the role that the lack of customer support [retailers, ready meal manufacturer’s and the end consumer] plays in providing a limited incentive for business to innovate.


Innovation when successful can generate new consumers, markets and create value in a competitive arena. However, in a financial crisis where there is a marked dichotomy between price and the need for value for money, it is critical to ensure that we get it right and that we are bringing products that will affect real change if we want to drive significant commercial growth.


It is essential for brands to identify new product development programmes and plans if they are going to discover new channels and gain substantial differentiation. It is also essential to further fine-tune our understanding of our customers as an industry. By taking this approach it will allow us to develop new thinking which will in turn result in the launch of new and innovative products that are in line with customer needs. In fact at Leathams we are looking at recruiting a Food Innovations Manager whose sole role will be to co-ordinate all our innovation into well planned and profitable launches.


Nonetheless, whilst it sounds straight forward on paper, the pitfalls can be quite substantial as innovation is a costly process. In many instances and for some SME’s, the cost versus benefit analysis can make them err on the speculative in terms of return, and this is primarily because whilst customers welcome and in many cases demand innovation they are not willing to pay for it and often expect an innovative food at a mainstream price. I believe that it is this lack of commitment by the customer across the entire food industry that has contributed to our innovation slowdown and must be addressed as a matter of urgency.


In the last few years Leathams have successfully introduced a number of innovative products to market such as our Merchant Gourmet® Ready to Eat pulse and grain range, Roquito® peppers, Baby SunBlush® plum tomatoes as well as IQF pasta, brie and Buffalo Mozzarella. Some of these products now make it possible for manufacturers to work with products that traditionally were not accessible and have introduced new customers to new foods. However, whilst these have been a success, the story across the board is not always a positive one, and whilst it is easy to say that innovation should lead the way in the food industry, the temptation to remain cautious, particularly in this economic climate is high. When you look at the risk versus reward equation associated with innovation, it is easy to see why SME’s may not see innovation as a key revenue generator that will help them deliver the required profit at the end of the year.


Also when discussions are held around innovation there is a tendency to focus on the introduction of new foods, yet less attention is paid to the opportunities that can come available through the fine-tuning of existing products. One of Leathams most successful examples of this thinking can be seen through our Merchant Gourmet® Ready to eat grains and pulses pouches, which are nutritiously difficult to cook and quite time consuming. We targeted a demographic that wanted grains and pulses but who did not have the knowledge or the time to prepare them and we provided them with a healthy ready to eat option. As a result our entire ready to eat range has experienced 104% YOY sales growth in both the Retail Grocery and the Foodservice marketplaces.


There is an abundance of untapped potential, but in order for the industry to continue to drive innovation and add texture, flavour, colour, provenance and authenticity to their foods, we have to go beyond just selling the product and focus on ensuring that the end consumer pays for this innovation. It is not until we bridge that gap between the need for innovation and the willingness to pay the price that we will see a change. Until that dichotomy is addressed the food industry will continue to see businesses investing less time in innovation and more time focusing on value engineering a product to cheapen it as they feel this will generate more a short term benefit to their business. This however in my view is not the way forward if we want a vibrant and exciting food industry.
 

Innovators in food since 1980
Serving the Foodservice,
Ingredients & Retail
sectors