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Through innovation centers, ingredient suppliers and brand marketers are working together to take product advancement to new heights.
There was a time when ingredient suppliers were just that-suppliers of raw ingredients. Today, however, suppliers can play a much more sophisticated role in the supply chain. Many like to call themselves “solutions providers,” and indeed, today’s suppliers are more heavily involved in helping their customers-finished-product marketers-solve their product development challenges. As evidence, note the growing number of innovation centers ingredient suppliers are opening. While some companies have long-established innovation centers, these resources are growing in demand. The reason? You name it. Whether it’s new ingredients, changing marketing trends, or evolving customer needs, the nutrition and health landscape is always advancing, and sometimes, marketers can use a helping hand to discover what’s possible.
What are innovation centers? The definition can vary by company. In general, they are most often state-of-the-art facilities where ingredient supplier technologists can collaborate with brand marketers to develop and test formulation concepts and mockups.
In March of this year, DSM Nutritional Products celebrated the opening of its U.S. nutrition innovation center, at its North American headquarters in Parsippany, NJ. (In total, the company has six innovation facilities globally.) The facility offers DSM customers everything ranging from a fully equipped pilot plant to a sensory-analysis laboratory, for creating food and beverage products, dietary supplements, and even personal care items.
Need to create a nutrition bar concept? DSM’s center offers in-house slab and cut systems, Hobart mixers, gas conveyor and convection ovens, and texture-analysis tools for creating bars in house. For supplements, the center has everything from state-of-the-art tablet presses, side-vented coating pans, a full line of analytical equipment for powders, and a laser-diffraction particle-size analyzer. For dairy products? Marketers will find ultra-high-temperature (UHT), high-temperature short time (HTST), and aseptic filling systems; rapid fat and moisture analysis technology; and processing equipment for milk drinks, soy milk, milkshakes, smoothies, processed cheese, and all types of yogurt.
Just this summer, Cargill (Minneapolis) opened the doors to not one, but two, innovation centers-a $14.7 million, 75,000-sq-ft facility in Wichita, KS; and another $12.6 million, 20,000-sq-ft facility in Campinas, near São Paulo, Brazil-offering research and development, culinary, laboratory, flavor and aroma, and pilot plant capabilities, among others. (Like DSM, the company has numerous other innovation centers globally. By opening innovation centers worldwide, ingredient suppliers are able to better serve their local markets as well.)
Just this September, Roquette America Inc. (Keokuk, IA) celebrated the grand opening of its first innovation center on U.S. soil, located in Geneva, IL. The environmentally friendly, LEED-certified facility offers laboratory and pilot equipment, including analytical instrumentation, all to “meet the ever-changing needs of the North American market and decrease the cycle time of new product development,” says Jeff Felgar, the company’s market analyst senior specialist. Other features of the new facility include a culinary kitchen and a Roquette University auditorium and meeting rooms.
Of course, the greatest asset innovation facilities have to offer is expertise, including applications specialists, professional chefs, and last, but not least, ingredient technologists. After all, who knows better what an ingredient can-and can’t-do than the company that makes it?
“The products of today can be far more complex than those of even a few years ago,” says Jean-Claude Tritsch, DSM’s director of global technical marketing. “The range of forms of nutritional and functional ingredients is ever growing, as is the public’s demand for new and more healthful products. Developing innovative products in this environment requires a close working relationship between ingredient suppliers and product manufacturers, each of which brings unique knowledge and skills to the mix. Facilities such as DSM’s Nutrition Innovation Center provide a forum where all this expertise can be focused, new ideas explored, and concepts tested in a variety of applications.”
Kerr Dow, Cargill’s vice president of global food technology, adds, “Where previously we might have manufactured a lot of fairly standard products that didn’t need a lot of customer support, today we have very complex portfolios, with broad ranges of ingredients that can be combined in different and unusual ways. We have specialty ingredients that we need to help our customers understand.”
“The formulating challenges facing companies today are numerous,” chimes in Roquette’s Felgar. “At the Roquette Innovation Center, the goal is to work one on one with our customers in areas where we have core competencies. In doing so, we can help our customers make their development process more smooth and efficient.”
Moreover, adds Dow, customers have come to expect this type of expertise from their ingredient suppliers. “They look to us to be able to take this large palette of ingredients and paint something different from it, because we should understand how our ingredients work together and interact. They’re really looking to us to help them figure that out.”
And, he adds, experts are specialized, ranging from bakery and beverage technologists to convenience-food technologists. “These are the kinds of R&D people our customers might have, so we also need those kinds of capabilities. We need them because we need to understand how to use our ingredients to build solutions for our customers; therefore, we need to understand those finished products.”
At what point in the product development cycle can innovation centers play a role? Pretty much at any point-although many prefer to enter the process at the early stage.
In describing the range of services, Cargill’s Dow says, “We may provide some basic support to help our customers understand some basic functionality or provide them with some ingredient choices that they can then apply. We’ve built prototypes, concepts that our customers can look at and actually touch to see how some of our technologies might work for them. Or, we can take it much further down the line. For some customers, we’ve developed finished products. They’ve basically taken the finished product formulation that we’ve created and launched those products pretty much intact into the market.”
However, he says, it’s always most beneficial for most parties if ingredient suppliers are brought into development early on. “We love it when customers bring us in early when they’re still in the creative stage of their development program because that allows us to come forward with a lot more ideas and solutions.”
Late-comers are always welcome, though. “Equally, sometimes a customer will come to us fairly late on a development, where maybe they’ve taken a product so far and have come up against a roadblock and are just looking for a solution to help complete their development. We can come forward with solutions to help fix whatever problem they have,” he says.
Not everything innovation centers work on is new, either. Sometimes it’s existing products-products already on the market-that need to be tweaked and adapted to meet new consumer demands-for instance, making cleaner-label products and products with less sodium, saturated fat, and sugar.
In fact, tracking marketing trends and evolving consumer preferences is also a part of what innovation centers, along with an ingredient supplier’s marketing teams, do. “We put quite a lot of effort into doing that,” says Dow. “Traditionally, R&D teams or technology teams like ours would certainly understand changes in innovation in the marketplace, new scientific developments, regulatory changes that are driving change-and we do all of that. But in addition, we have marketing teams in Cargill that commission market research. They try to understand consumer trends and do the same kind of trend analysis that our customers would be doing.”
And, thanks to innovation centers, working with so many customers on innovation also allows ingredient suppliers to keep abreast of what companies out there are doing. “Probably the most important source of trend analysis is talking to our customers and understanding where they see future trends and demands in the industry. And it’s in their interest as well. They want to communicate to the ingredient supply industry so that we can come back and respond to their future needs,” says Dow.
Improvements can also be practical-improving efficiency, for instance. Cost optimization, especially in these economic times, is often a target. “Many of our customers are looking to continue to keep their prices steady,” says Dow. “They’re seeing food and fuel prices rise and so they are looking to optimize the total cost of their products, while keeping the quality and experience the same for the consumer. We can look across a complete formula and its ingredients, then look across our ingredient portfolio and figure out ways to put things together differently to create the same thing, maybe at a lower cost.”
Finally, guidance from innovation experts means that often products can get to market quicker.
“Innovation centers shorten the time it would otherwise take to bring a product from initial concept to being introduced to the marketplace,” says DSM’s Tritsch. “Today’s modern innovation center has forged that crossroad into a high-speed interchange capable of handling a high volume of traffic in a smooth and efficient manner. Leveraging the combined skills of the partners’ technical, marketing, and development teams, working side by side, innovation centers make it possible to bring a number of product ideas quickly to the evaluation level.”
“Working more closely with a supplier can help an organization reduce product development time and, in turn, time to market,” agrees Roquette’s Felgar.
If you’re a small nutrition company, you might be wondering if you also have access to these innovation centers. The answer is, yes.
“We deal with large and small customers,” says Cargill’s Dow. “With some of the larger customers, they’re going to have very specific requirements for very unique and proprietary products that are highly recognized in the marketplace. These are big development programs and we may be a little piece of that puzzle, and we might have to put quite a lot of work into that.”
He continues, “With some small, regional companies, we may be able to use a lot of off-the-shelf ideas. They may be looking for a more-generic solution, and we have a lot of those already developed. So we can work with a lot of small companies to provide off-the-shelf ideas that can allow them to move quickly.”
Also, “Little companies are sometimes looking for unique ideas, too. Sometimes small companies don’t have the R&D backup, and they really value the knowledge that we can bring, whereas with a big customer, they may already have very good capabilities. It’s a real case-by-case basis,” he says.
Expect to see more suppliers opening innovation centers in the future-largely for competitive reasons. “They make a statement that as a leading supplier, you do more than provide raw ingredients; you are willing to invest the time, money, and expertise in helping your business partners succeed,” says DSM’s Tritsch.
“More and more manufacturers are aligning themselves with a supplier offering the advantages of a fully staffed and operating innovation center,” he adds. “It has become clear to them that these innovation centers save them time and money, as well as give them an edge against their competitors. As for the other manufacturers, they are beginning to see that they are starting the product-development race at a disadvantage and see the need to partner with suppliers offering the advantages of an innovation center.”
Looking forward, as the health and nutrition industry continues to advance, so must the ways in which marketers and their ingredient suppliers work together. Innovation centers will continue to play an important role in this.
Cargill’s Dow says, “I think that historically, R&D centers, as we probably would have called them, would have been more internally focused, developing new products to support our operations and doing more basic customer support. I think where innovation centers have changed in more recent years is providing customers with more-developed solutions, rather than just providing them with technical support around our ingredients.”
“In particular, food manufacturers are more and more interested in the concept of open innovation. They recognize that maybe they don’t have all the best ideas that they can apply to the business. Most of the big, progressive food companies are actively looking externally from their own company. They’re looking to universities, they’re looking to other small companies, and they’re looking to suppliers to work with them to innovate.”
“The core concept of creating a collaborative environment is not new per se, but the increase in innovation centers lends evidence to the thought that organizations are beginning to put this concept into practice,” adds Roquette’s Felgar. “As the competition in the market grows more and more fierce, with an increasingly more savvy customer, organizations will continue to focus more and more on innovation and differentiation strategies.”
“The importance of innovation centers in the future will undoubtedly be more magnified as the health and nutrition marketplace develops further,” Felgar continues. “As more and more niche markets develop and the culture continues to gravitate towards a mass-customization mindset, it will be even more important for organizations to work with companies who specialize in certain areas.