Innovation has always driven growth in the food and beverage business. It can be the foundation of research and development, which gives birth to new products. It can be a dramatic new approach to marketing. Or it can be a change in direction of a company altogether, steering it into new consumer markets.

While startups are typically better suited to innovation, larger companies have the resources – if not necessarily the will – to innovate.

For example, Coca-Cola executives noticed a downward trend in soda consumption, which peaked more than 20 years ago. Bottled water surpassed soft drinks in 2016 to become the most popular beverage, by volume, in the United States. The company responded by getting into the juice, water, and energy drink markets to broaden its reach. Most recently, the company sought to get bigger by going smaller. The beverage giant has since seen increased revenue powered by smaller serving sizes.

In hindsight, innovation is easy to spot. It’s much harder to lead the charge, with so many companies reluctant to take the necessary risks.

Conception to Consumption is a podcast series and brainchild of TraceGains CEO Gary Nowacki. The series features conversations between Gary and influential people in the CPG business that covers industry-related topics, ranging from career advice to new product innovation to regulatory compliance. In the latest edition of the series, Gary talked with Eric Kiker, owner of The Digestible Brand. Eric is a product marketing veteran of the food and beverage industry who joined Gary to address “Why Can’t Some Food Companies Innovate?”

“I don’t think they understand people,” Eric explained. “I don’t think they understand what their consumers want. And I think the biggest problem with understanding what people want is they don’t know what they want themselves.”

What can food and beverage companies do to innovate and stay relevant in an increasingly competitive market?

Embrace transparency

Even though Nutrition Facts labels have been around for more than 30 years, consumers have only recently taken a real interest in them. Research from the Food Marketing Institute and Label Insight found that 86% of consumers trust companies that provide easy access to information on product ingredients.

Simply put, consumers want to know what they’re eating – or drinking. And an increasing number of them want to be able to do that without feeling guilty. 

“I think food brands, especially packaged food brands, are in a unique position to do that for people: remove the guilt,” Eric explained.

Naked Juice, one company Eric worked with, emerged as an early adopter of embracing ingredient transparency and working it into its brand narrative.

“Naked did a good job telling people, ‘Hey put something pure into your body,’” Eric recalled. “What great brands do is they have a purpose that transcends ingredients. That’s what we did with Naked, and, in many ways, brands can help people – they can inspire people. But it’s still a bottle of juice.”

Eric points to RXBAR as another example of a CPG company doubling down on their list of ingredients as a value proposition by making it a prominent feature of their label.

“I think what RXBAR did was brilliant, and I’ve seen several other brands do the same thing, and imitation is the sincerest form of flattery,” Eric said. “You could get upset about the fact that they’re knocking off what RXBAR did, but in terms of doing something for the consumer, that’s what people need. They need help.”

Innovative companies do more than comply with transparency. They embrace it.

Rethink social media

Another change companies should consider is how they communicate with their customers. Messages like Super Bowl ads are great – and expensive – but more consumers today rely on social media than traditional advertising when looking for new products. 

Eric, however, cautions against what he sees everyone doing already. He urges food and beverage companies to go beyond the product. Forget about the overhead shots of food, somebody holding a sandwich, or a pile of cookies dripping chocolate.

“Intersperse some of those cool product photos with some tips on how people could use that food to make a meal or a perfect snack,” he explained. “The light bulb would light up for people, and they’d be more likely to buy that brand. It would increase loyalty, and the customer would say thank you for helping me get out of my own way.” 

Eric stressed the importance of brands understanding consumers without boring them – and speaking to them without lecturing, which dovetails into his next point.

Understand the consumer

Eric explained how important it is for companies to understand their customers. And that means going beyond old school surveys and focus groups. Instead of getting people in a room, Eric suggested going to them. 

“Send a moderator to a person’s home and spend the better part of the day with them,” he said. “If you were researching a food brand, you’d start by talking about life in general. And then look in their pantry or fridge.”

Then, Eric continued, take them shopping. Find out how they pick out a brand of peanut butter, for example. What drives them to pick one over another and drop it in their cart?

Eric also warned brands against using language such as “guilt-free” when marketing snacks or other foods.

“I think everybody should stop saying ‘guilt-free snack,’ because when you say guilt-free, the first thing people think about is, ‘I’ve got guilt about all these other things, and it’s to the point where people are afraid of the stuff they put in their mouths,” he explained. 

Forget about trends

Like any other industry, so many food and beverage companies spend too much time chasing trends. Whether it’s organic, gluten-free, or CBD, it’s always about the next big thing. But real innovation, Eric argued, is about transcending those trends.

“I think ‘trend’ is a bad word because when you jump on the latest trend, if you’re not getting to the higher-order problem the consumer has, you’ll die when the trend dies,” Eric said. 

Case in point, after speaking with Impossible Foods, a plant-based meat products company, Eric discovered the company wasn’t targeting vegans with their products – another possible trend. For Impossible Foods, it’s bigger than that. 

“There’s always been vegan or vegetarian-based burger patties, going back to Garden Burger or Boca Burger, but Impossible Foods is going after meat-eaters,” Eric said. “They’re trying to get meat-eaters to switch over to something at least part of the time that’s better for the planet. 

“Consumers aren’t going to give up mayonnaise,” Eric pointed out. “But maybe if you’re a vegan, you want a good-tasting mayo option without eggs. Maybe if you’re a meat-eater, you want something close to a beef burger.” 

But for consumers – particularly Millennials – who want to do their part to save the planet and reduce their carbon footprint, manufacturers must take a steppingstone approach. It’s about getting inside the head of the consumer.

Promote education with innovation

That steppingstone approach, of course, hinges on educating the consumer. More than a third of consumers “rarely seek information about their food and where it is produced,” according to a 2018 Michigan State study.

Whether it’s the media, academics, or regulators, the experts bombard consumers with conflicting information about food and how it’s produced. They don’t know who to trust. 

“I read a study that asked a bunch of people to identify the difference between non-GMO and organic,” Eric recalled, “and most people thought they were the same thing.”

Never mind that roughly 80% of all foods are genetically modified to make them impervious to herbicides.

Eric also pointed out that those same people assume GMO is bad and non-GMO is good. But if pressed on the issue, they’re unable to articulate why. That’s why Eric insisted the education process has to occur one baby step at a time.

“How do I give them a little bit of information at a time that doesn’t put a tremendous strain on my marketing budget for one,” Eric said. “Secondly, it has to be presented in a way that’s understandable and usable, so that the next time they’re talking to a friend at a cocktail party or a dinner, my name – my brand – might come up as somebody who gave them a tip that’s helping them.”

Food and beverage companies must connect with consumers, be a problem-solving advocate for them, and worry less about converting them into another customer. 

Catch the entire latest episode about product innovation here.

What can you do?

The biggest mistake companies can make is pausing new product development, especially during a challenging economic environment. A wait-and-see approach leads to a static product portfolio that can’t hope to outperform a competitor’s proactive strategy. Because your competitors are moving ahead, pulling back on NPD isn’t a viable solution.

With the launch of Networked Formula Management, the TraceGains Networked Product Development Suite is now complete. The combined solution allows teams to go from manual processes to automated results by digitizing and streamlining new product development for better, faster innovation. Networked means companies no longer have to chase down suppliers for documentation because it’s already available.

See this latest solution in action here.