The food and beverage industry is one of the most interesting and competitive industries when it comes to innovation and new product development. As consumer tastes and dietary preferences evolve, companies in the food and beverage sector must find new ways to meet the needs of their customers, sharpen their innovation processes and keep up with the competition.
I recently joined Stefan Gates on the Food Matters Live podcast to discuss the latest in food and beverage innovation and new product development. Stefan has interviewed many experts in a variety of areas related to food, so it was a real pleasure to be his guest to talk about how to drive product innovation forward in this exciting industry.
Here are four of the many topics we discussed which are central to success in new product development.
Regardless of industry, there are common factors that position organizations to drive innovation:
"First of all, there's what the product is. It's product management or brand management, or category management. Whatever label you want to put on it, you really have to have [those factors] under control. Another common factor is the systems and the processes that create innovation. Where do these ideas come from? How do they come into your company? How do you assess them? [You have several] tools and products and things like that [which} are necessary to be successful in innovation. There's the ecosystem—a partnership with companies you never thought you'd have a partnership with.”
In the food and beverage industry, understanding your customer's needs is critical to creating a customer-based innovation:
“The most important thing is to really understand your buyers, whoever's buying your product. So wherever you are in that chain [you must] understand that need better than your consumer understands themselves. And coupled with that is what a lot of people call the North Star: What are we trying to do as a company? Why are we here? What's our objective? Is our objective to improve the experience, of the taste of food? Is our objective sustainability? That NorthStar will guide you in that lens when you try to understand the product you're trying to create.”
Alternative meat offerings and energy drinks represent some of the most compelling examples of trying to find the right audience for innovative food products:
“[People] worked on it for many, many, many years. There was a lot of science in there. A lot of discovery, a lot of failure, right? A lot of companies we don't even know came and went because they couldn't do it. But then once [alternative meat hit the market], who are the consumers? Who's going to be interested? How are we going to reach them? Maybe you have a partnership in the United States with a big chain like Burger King [that wants to] make a burger with this type of food technology. But McDonald's tries it and says, “No, we're not going that way.”
So it's really unclear that whole experience of how it gets to the end consumer that needs to be considered when you think about that stuff.
“Think about energy drinks. Twenty years ago, you just picked a brand of soft drink that had a lot of caffeine in it. Mountain Dew was an example. And then, all of a sudden, Red Bull [comes] out of nowhere, and then, you've got Monster. A tremendous amount of small companies [emerge] in the beverage industry. Another good beverage example is microbrews. But now, if you want even to create a new beer, good luck naming it because every name you could possibly think of is already taken out there.”
Embracing and managing risk is a fundamental component of transformative food and beverage innovation and maintaining brand relevance:
“Think of your own personal investment portfolio [and] personal finances. You know that you should put some money in a safe place and some money in a high-growth area. People will choose to put money in real estate or however they're going to invest their retirement funds. And then there are pros that do this for you. But it is all about managing risk, because what comes with risk is the reward. And so, what's your profile? How much risk do you want to take [to achieve] reward—that is exactly what portfolio management around innovation is. It's managing risky bets. Safe bets, product line extensions, disruptive products. And if you're a bigger company, [you need] ]a mix and you have to know how to mix your desired risk-reward profile when you decide how you're going to innovate.”
<<Listen to the full Food Matters Live podcast here>>
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