Be a Trendsetter

For decades, consumers generally cared only about the taste and price of their food products, states “The Science of Ingredient Innovation,” a Dec. 19, 2014, article on The Daily - Beast website, contributed and written by Purchase, N.Y.-based PepsiCo. Now, however, consumers are better informed and want to know much more about their food products, including exactly what ingredients are in a product, where and how those ingredients are sourced and how they fit their specific functional needs. And they expect those products to remain affordable and taste great.

As a company with $66.7 billion in net revenue in 2014, PepsiCo no doubt can afford to innovate with ingredients. But so could retailers. By partnering with ingredient suppliers, they could set themselves up to be at the forefront of ingredient trends, whether that means incorporating vegan protein sources into store brand snack bars, removing gluten from bakery products or something else.

Modernize store brands

Private label products have evolved in recent years, and they are increasingly perceived as innovative, on-trend, says Rikka Cornelia, product manager, BI Nutraceuticals, Long Beach, Calif. This is especially true of the more healthful product lines that many retailers have been launching. These healthful lines contribute to consumer perception that such retailers are on the cutting edge. To maintain that reputation, it is crucial that retailers stay on top of current food and beverage trends.

As retailers develop new store brand products to address food and beverage trends, flavor is a common way to drive innovation. However, on-trend ingredients outside of the flavor arena could also help retailers drive innovation in new product development.

“Often it is the ingredient itself that catches consumer attention and creates demand,” says Richard Aust, director technical services, iTi Tropicals Inc., Lawrenceville, N.J. He gives the example of chia seeds and coconut water as two on-trend ingredients that have become very popular among consumers.

Retailers could also use ingredients to appeal to consumers who are reading labels more carefully for health reasons, states Kim Holman, director of marketing for Wixon, St. Francis, Wis.

“Consumers want to be informed about ingredients so they can purchase foods and beverages that ‘fit’ their lifestyle,” Holman adds. “Retailers need to understand that [ingredient transparency] has the power to drive trust and even sales with consumers.”

And ingredients are a great way to drive product differentiation, Holman states. A retailer could offer its customers plain old private brand cheddar cheese chips, or it could go a step farther to innovate here, creating, for example, private brand Sharp Wisconsin Cheddar Cheese Chips from the Red Barn Family Farm. By offering a point of differentiation, retailers could drive sales.

Denver-based Ardent Mills, for example, was able to help one of its clients differentiate itself and shed its “white bread” image in the breakfast category by developing a new artisan-quality breakfast bread and creative seasonal offerings, says Zachery Sanders, director of marketing for the company.

Get rid of the ‘bad’

Part of successful new product development is knowing what ingredients to leave out. With consumers more health-conscious now than ever before and reading labels more often, cleaner and easier-to-read labels are important for new product launches, states Gil Bakal, managing director, A&B Ingredients, Fairfield, N.J.

Because of consumer health concerns, Cornelia recommends that retailers avoid ingredients such as high-fructose corn syrup and partially hydrogenated oils. And retailers could look to natural alternatives to artificial colors and flavors. As an added bonus, natural alternatives usually provide added nutrition and/or a unique backstory. BI Nutraceuticals’ quinoa flour, for example, is an alternative to traditional wheat flour that adds fiber and protein to baked goods, and it has a unique backstory with its reputation as an ancient grain from South America.

And sometimes consumers are so concerned with avoiding one particular ingredient that they will change their entire diet.

“There are so many trends that target the elimination of some ingredient(s) that the industry has termed these trends ‘free from’ food and beverages,” Holman states.

Gluten-free and non-GMO are the biggest and most recent trends that are concerned with the removal of specific ingredients, Holman adds.

Plus, retailers could save money by leaving certain ingredients out of a product’s formulation — and replacing them with others. The recent avian flu outbreak, for example, has caused retail egg prices to “skyrocket,” Bakal says. A&B Ingredients offers its Pisane pea protein as a cost-effective alternative to egg powders and egg whites.

Build better relationships

But before retailers begin to address consumer concerns and trends in regard to ingredients, they might want to consider forming positive relationships with ingredient suppliers. One positive benefit is the access to consumer research and data such suppliers could offer to retailers.

“Ingredient suppliers know what is hot and trending among their products,” Aust says. “They can add a dimension beyond Mintel, Innova, SPINS and IRI data.”

Cornelia agrees and takes it a step further.

“Although consumers shape market trends and manufacturers develop them, ingredient suppliers ultimately start them, or at least help start them,” she says. “Ingredient suppliers are the first ones to know what concept/ingredient is gaining demand. … Because of this knowledge, ingredient suppliers are able to find new sources that address or complement it before consumers actually demand it.”

Another benefit to partnering with ingredient suppliers has to do with research and development. Some ingredient companies are able to work with retailers to develop confidential prototypes of new or improved food products and provide access to laboratories with state-of-the-art equipment, pilot plant facilities and testing capabilities, Bakal states.

Plus, many ingredient companies source worldwide and could quickly get the ingredients needed to support whatever trend a retailer is interested in pursuing, Holman says. The ability to source ingredients quickly and efficiently, combined with the ability to develop new products, could also save the retailer time and money.

And ingredient suppliers are also able to educate the companies that provide the ingredients with an understanding of first-world quality standards, Aust says.

Don’t lose money on mistakes

Ingredient suppliers are able to work with retailers to prevent mistakes, too. One common error made by product developers is not taking into account the impact of crop seasonality on the availability of agricultural ingredients, Aust says. Or retailers might make mistakes when it comes to regulatory paperwork. Ingredient companies could work with them to ensure that a proper Hazard Analysis Critical Control Point (HACCP) system is in place and that the required documentation is available for different certifications such as kosher, halal and organic, as well as for pesticide and heavy metal testing.

Both retailers — and national brands — make the error of ignoring ingredients that might seem old or unexciting instead of highlighting them, Cornelia says. However, some “old” ingredients such as ginger and turmeric, for example, have begun to trend recently with consumers because of health studies proving their health benefits.

And retailers should think big when it comes to new product development. Many of them make the mistake of launching only a line extension to address a trend instead of capitalizing on that trend with an entire line that is branded around it, Holman adds.