In the past years we have witnessed fierce competition among a rising number of ingredients suppliers around the world. Today ingredients companies need to look beyond just ‘high volume and low price’. Karin Nielson reports.
At Canadean Ingredients, we constantly try to gain more knowledge on the complex world of food ingredients. With our research we always try to get closer to the understanding of what factors and objective criteria that matters in ingredient business investments, as the ingredient’s market usability and formulation capability for product manufacturers as well as in the minds of the consumers. We call this, the innovation dimension.
We learn from dialogues with the industry that product manufacturers today need to look far beyond price and supply guarantees. To be competitive and gain market share today, they must have many and different criteria for short listing ingredients when developing new products. Today’s ingredient industry must always be one step ahead and adopt different business models for ingredient innovations. Many of the ingredient characteristics are evaluated via other functions than the procurement functions, typically by Application, R& D and Innovation departments.
At Canadean Ingredients we are researching ingredients in many different perspectives and dimensions. This is also reflected in the new awards systems at FiE.
At this year’s FiE, Canadean Ingredients, together with the rest of the judging panel, are going to scrutinize the shortlisted candidates for these awards: Most Innovative Food Ingredient Award, Bakery Innovation of the Year, Beverage Innovation of the Year, Sustainability Initiative of the Year. All these awards are directly related to consumer experiences. Additionally we are going to contribute on the Ingredient Insights 2013 Awards. Here we will be adding more hard core sector in depth insights by granting the following awards: Inventors Award, Supply Chain Control Award, Clean Label Award, and Consumer’s recognition Award.
Here are some clues to the criteria we are adapting in our research:
- Raw Material Control, Traceability and Footprint
Consumers are getting more and more alert on ingredient labels and how food is marketed. With programs such as BBC’s Rip off Food, viewers are gaining insights into very technical levels of food ingredients. In one episode the program looked at hydrocolloids and its capacity to reduce fat content, but also gave the viewers food for thought when testing its capabilities as wall paper glue! Clearly the industry is up for scrutiny as consumers want to know where the ingredients come from and how they are handled from soil to fork. This is part of the mega trend on increased transparency and a move towards sustainable and natural foods.
The industry is moving towards more natural components they also need towards natural extraction methods. Many companies today chose not to use any harmful chemicals. Instead they use water, Co2 and natural occurring solvents as nature’s terpene alcohols from fruits and botanicals. Transparency and the traceability of ingredients in our foods continue to be important for modern consumers. We constantly observe new innovations entering the market. These include optimising ingredient and food production via by-products use or by agricultural rethinking of eco protection and replanting. This can be clean label technical ingredients, valuable nutrients and healthy bioactive compounds.
– This is why natural origin, raw material and supply chain control are scoring parameters in our evaluations
- Application versatility
The more versatile an ingredient is the better it is for suppliers and product manufacturers. It is a long approval process for many product manufacturers to incorporate a new ingredient specification in their MSDS library. A versatile ingredient has good cooking, baking, colour and solubility capabilities without losing its key purpose, which can be nutritional, product functionality or health benefits. Imagine the benefit for the application laboratory tasks of prototyping efforts if they are familiar with the physical properties of a particular ingredient as well as the services from the suppliers. Few people outside this industry imagine the time and cost used to make the perfect recipe on a new product and the task to scale it into real life large scale production. Powder structure and colour may be banal show-stoppers as tubes may clog, or the final end product may become less appealing if not choosing right.
– In terms of market versatility, we rate availability within markets, as a successful consumer product may be less relevant, if choosing an ingredient from one continent only to find a supply issue on another.
Clean label capabilities are one of the latest trends in ingredient innovations. In Europe there has been an increasing aversion to the additives safety registration system (the E-numbers). Products with a long list of E-numbers are not perceived well amongst many European consumer groups, and the current regulation demands labelling of ingredients and E-numbers. Many product manufacturers will therefore be happy with the possibility to use alternative ingredients substituting the E-numbers. Typically new clean label ingredients are found to be stabilisers, anti-cakers and acidulants.
– Application versatility, food grade approvals, more markets availability, characteristics as clean label functions are all scoring parameters in our evaluations
- Technology and Market protection of Innovation
The actual innovations behind various successful ingredients are becoming important assets in terms of patents. Strong patents on new natural bioactives and /or efficient and cost beneficial extraction or purification technologies are absolute success parameters in this industry today. Protecting innovations protects investments and risks. Product manufacturers partnering with companies holding patents will often result unique know-how for the ingredient company. This is also likely to add value to the partnership with the opportunity of bespoke development projects or new manufacturing agreements specified to individual needs.
– We rate the manufacturing technology control, the flexibility in doing pilot plant development work, as well as the presence of an experience technical guru who has been granted one or more patents.
- Consumer Recognition
Decades ago the ingredient suppliers started branding their ingredients and it is still debated if this pays off. The product manufacturers are naturally weary of co-branding as it puts them into a tight supply relationship as well as marketing dependence. However, highly branded, well documented ingredients are seen on more and more products, and also communicated directly via media. Thus it is not just a one-way relationship, as the ingredient supplier has obligations of providing value directly towards the consumer, who can find out who is behind the name on the ingredient label.
In this case, the liability goes directly from ingredient supplier to consumer and both warrants. It also creates consumer ingredient loyalty. It is still early to say, but we believe that this will be a market protection parameter against copycat ingredients. Thus there’s a great chance this will only become bigger in the future. We simply evaluate if branded ingredients warrants what they say. If our investigation elucidates that a trademarkis abandoned, or never invested in, it does make you consider the suppliers intentions.
We also look into regulatory issues related to marketing. This is used as a way of evaluating if the product label is capable on informing consumers about ingredientsorigin and potential premium benefits in a correct and approved manner according to the law. These relations between health-function and consumer recognition to an ingredient category will be a strong market parameter in the future.
– We rate consumer recognition on brand name, category level as well as do individual research projects.
We only scratch the surface when evaluating ingredients, as the result of using a particular ingredient within a good formulation is beyond our capabilities. Our research do not taste, smell or look at product prototypes with an ingredient. This may change the perception of ingredients capabilities, but also has the risk of more subjective perceptions related to one product- one ingredient relationship.
However, we hope that our objective scoring approach will be of assistance for the Award process. We will be present during the Award event to discuss our methodologies, as well as be present on the show floor.
