2024 NPD Report Says F&B Sector is Ramping Up Innovation Efforts Despite Challenges – vegconomist

A new 2024 NPD report conducted by global technology company TraceGains reveals emerging trends in new product development and a significant increase in innovation despite the F&B industry facing various challenges.

The survey, which questioned 261 small and large brands worldwide, shows that 76% of respondents plan to increase their NPD spending in 2024, a 12% increase from the previous year.

32% of brands banking on plant alternatives

When asked about which food innovation would have the most potential to drive significant industry change in 2024, more than half (60%) of brands said “better for you” formulations would be the main innovation driver, followed by sustainable packaging and plant-based alternatives (32%). Meanwhile, 26% said they would prioritize water and / or carbon-neutral strategies.

ESG initiatives, which in 2023 fell in importance as a major driver of innovation, were identified as a notable trend within the industry in this year’s study. A significant number of brands are prioritizing supply chain traceability (44%), sustainable ingredients (42%), and sustainable packaging (48%) as key drivers of innovation.

The survey also found that AI technologies are gaining traction. A growing number of brands ( 36%) are testing the waters with AI-related tools to improve efficiency and competitiveness. Another 53% consider AI to help source ingredients and materials and formulate products.

Other findings

However, despite the positive outlook on NPD and innovation, brands face several hurdles impacting their efforts. Brands continue to be wary of macroeconomic factors, including increasing production and labor costs (58%), fluctuating demand and commodity prices (53%), ingredient and material availability (46%), talent acquisition challenges (36%), and regulatory uncertainties (28%).

These challenges are expected to significantly impact R&D teams as they work to drive new product development initiatives and improve revenue and profitability.

Another important aspect highlighted in the survey is the increasing focus on regulatory compliance and labeling accuracy. Brands are urged to monitor both the front and back of packaging labeling to avoid missteps that could damage consumer trust. The study explains that, for example, with FDA product recalls on the rise, incorrect allergen declarations and labeling errors are top concerns for brands seeking to maintain consumer loyalty.

In addition to regulatory challenges, brands struggle with outdated technology platforms and manual processes when managing product formulas and recipes. Over one-third (37%) of brands still rely on manual processes, 25% need help with staffing challenges, and 23% acknowledge working on outdated technology platforms.

In-house formulations

Finally, transparency in the supply chain remains a pressing issue for brands as they balance the need for traceability with intellectual property protection. Many brands are choosing to keep certain aspects of the R&D process in-house to safeguard recipe formulations and product concepts: product concept ideation (70%), recipe formulations (74%), ingredient selections (70%), product development (73%) and packaging (57%).

Companies are doubling down on their NPD efforts, prioritizing sustainability and transparency, and leveraging technology to stay ahead in a competitive market, concludes the report.

Paul Bradley, Senior Director and Product Marketing at TraceGains, comments: “Our research reveals a clear imperative for brands to invest in product innovation as numerous transformative shifts coalesce across the industry forcing them to act.

“While it’s evident that brands require robust tools and solutions to navigate these challenges, a significant gap still exists in internal resources that may hinder their progress.”