The changing face of food ingredients
The food industry and the food ingredients industry, in particular, has undergone significant change in recent years and continues to adapt to the developing global environment in which it operates.
The pandemic, of course, affected everyone deeply and personally, as well as causing extreme supply and production stress. It also resulted in significant changes in consumer attitudes and behaviour, which we are still assimilating today. The tragic war in Ukraine and the Middle East conflict, with their awful human consequences, have also interrupted supply networks and created severe supply side problems globally. The cost of living and energy crisis has impacted all of us and equally caused the industry and its customers and consumers to reflect on product choice.
The continued realisation of how delicate the planet is, and the effects of climate change, have further driven the demand for truly sustainable product solutions to feed our increasingly crowded world. Social and digital media continues to expand, and stories within the news, be they real or false, spread even faster often raising the question of the need for reliable factual clarification. The regulatory environment, always complex, requires deep understanding, especially for new products and increasingly the continued approval for use of existing products. All of this comes on top of the regular demands for product innovation and sustained high quality and safety, which the industry has to address.
What does this mean for the food ingredient industry?
It is, of course, a challenge in the sense of continuing to produce cost-effective, quality ingredients that meet an increasingly broad range of application uses, yet also satisfy the need for responsible sourcing, environmental care, ethics and well-being, plus of course the constant drive for natural solutions and simple labelling.
With food manufacturers also regularly outsourcing product idea development innovation to their ingredient suppliers, the need grows for ingredient companies to reach beyond their direct customer and demonstrate meaningful consumer awareness to a higher degree. An excellent example is how the changing dietary demands for vegetarian, flexitarian and meat alternatives have driven the growth of the alternative, plant-based ingredient market. Even here though possible questions are sometimes raised over higher levels of water, energy usage and C02 in the production of these ingredients.
Transparency of the supply and production process is ever more critical to success and B2B companies have had to embrace wider communication media tools, including social media channels, to establish their credentials. Once again food manufacturers frequently pass the burden of proof to their ingredient suppliers, with all the demands this entails.
Maintaining awareness of trends and spotting potential changes well in advance enables opportunities to be taken. Given the time to market with approval processes for food ingredients differing greatly depending on geography, decisions have to be taken carefully. Frequently the combination of existing ingredients or looking at current ingredients for different purpose can be a very successful route taken. New technologies are also entering the landscape all the time, including AI, and it is important to embrace and explore these opportunities.
Understanding how ‘own label’ developments and a retail push for specific market advantage, can be a key driver of several consumer issues and choices which then impact the food and subsequently food ingredients industry, is critical. Anticipating change and reviewing possible product offerings from existing ranges in completely different formulations to capitalise on this, can yield significant returns.
Navigating this complex environment takes ingenuity, time and patience to bring the very best solution from the ingredients company’s core resource – its products, market awareness, knowledge and above all its people. In many situations the answer lies within the organisation’s reach and is locked into its history, expertise and experience, but this may not be immediately apparent.
Above all applying lateral thinking, detailed research and analysis together with a distinctly open approach can reveal new opportunities to exploit and help drive success. In the wider commercial world market disruptors are regularly pointed to for success in today’s rapidly changing markets: the food ingredient industry is no different in this and constantly challenging the existing approach is also a valuable route.
In the same way that looking for both novel products and new uses for existing products is important, at the international level the transfer of ideas is valuable too. With consumers becoming increasingly more sophisticated in their choice, the exposure to different regional food cultures and tastes present opportunities in innovation in different markets with the transfer and mixing of food experiences from one region to another, widening choice.
Ingredients for success
Price is still a key deciding factor and in some situations even more important today than before, which means that however sophisticated both your ingredient and its application, its price positioning is fundamental. Integral to this and essential in itself is building into the ingredient its direct application benefit as well as its contribution to the wider picture of sourcing, status and health positioning, such that credibility is a part of its overall value – the complete package. The ingredient company has to reach beyond its customer to the consumer to demonstrate consumer awareness but great care is always needed not to over promise and remain realistic.
The net effect of all this is to require ingredient companies to have sophisticated products that function effectively in a variety of different applications, and can demonstrate their sourcing performance, and credibility. The appeal, appearance, texture and flavour of a food product as always remain critical to its success but the need for a deeper understanding of the complex elements behind choice and consumer psychology, has grown significantly.
Food ingredient manufacturers of the future will continue to face the challenges that have shaped the industry over time whether from a political, regulatory, economic, market or consumer perspective. The key to a constantly changing environment is the ability to adapt and to successfully develop opportunities from these situations offering new products, services and business models.
About the author
Denbigh Lloyd works as a business development, marketing and training consultant with food and agri product industries.
