The economy’s shaky. Tariffs are flaring. Supply chains are anything but stable. And yet, food and beverage companies are doubling down on new product development (NPD) like never before. According to our latest 2025 NPD Report, 83% of companies are increasing their NPD investments this year, marking the third consecutive year of growth.
It’s innovation on edge, where rising ambitions to bring new products to market are colliding with an industry still held back by outdated, manual ways of working. This is the tension at the heart of today’s NPD landscape: the drive to innovate faster and smarter in a world that’s still largely analog. At first glance, it seems counterintuitive—why pour more into innovation when costs are high, global trade is uncertain, and consumer preferences keep shifting?
Because standing still is no longer an option.
Here’s a closer look at the trends, challenges, and opportunities shaping product development in 2025.
A risky global market is fueling, not slowing, innovation
The economic landscape in 2025 is defined by pressure from every direction:
- Tariffs and trade disputes are forcing companies to rethink sourcing strategies.
- Inflation and cost volatility have made margin protection a daily concern.
- Consumers are demanding more—more health benefits, more sustainability, more transparency.
In the face of these pressures, you might expect companies to pull back. Instead, nearly half (47%) say the global trade environment is actually making them more likely to invest in NPD. Only 44% report the opposite.
Why? Because uncertainty rewards agility. Brands are seeking new ingredient sources, expanding into different markets, and reengineering products to withstand supply disruptions. The message is clear: when the ground keeps shifting, the safest move is to keep moving.
The innovation paradox: Investing more, but operating in the past
Here’s where the paradox comes in. While investment is up, process and technical maturity is not. An overwhelming 82% of companies still rely on manual processes, emails, and spreadsheets to manage NPD. That means innovation teams are pushing for speed and precision using tools that slow them down and increase the risk of costly mistakes.
It’s like trying to run a modern factory on century-old machinery—it can work to a degree, but those legacy tools are difficult to adapt to changing inputs. In a landscape where regulatory requirements are multiplying and product lifecycles are shortening, this disconnect is more than inconvenient, it’s risky.
AI: Hype or hope?
There’s good news on the horizon, but only for those who are acting on it. While much of the industry is still analog, a bold 17% of companies report being “all in” on AI for NPD.
Early adopters are leveraging AI to:
- Analyze market and consumer trend data at scale
- Streamline documents and compliance
- Accelerate formulation and recipe development
- Generate new ideas or test concepts
- Optimize supplier and ingredient sourcing decisions
These companies are setting themselves up for an innovation advantage that compounds over time. And as the technology matures, the gap between AI-enabled innovators and manual-process holdouts will only grow wider.
The innovation imperative
The 2025 NPD Report reveals a clear shift in mindset: innovation is no longer reserved for long-term growth—it’s being treated as a tactical response to today’s volatile market. But throwing more money at NPD without modernizing the systems behind it is a short-term play at best.
The leaders of tomorrow will be the ones who:
- Close the digital gap
- Invest in AI early enough to gain an edge
- Reformulate strategically to balance cost, health, and sustainability
- Build resilience into product portfolios before the next disruption hits
TraceGains’ NPD Suite helps food, beverage, and CPG brands replace slow, manual workflows with connected, AI-driven processes that keep innovation moving.
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