Soup-To-Nuts Podcast: How ingredient suppliers and distributors are stepping up to fill an innovation void

By Elizabeth Crawford contact

- Last updated on GMT

Related tags: Soup-To-Nuts Podcast, trendspotting, IFT show

When large food companies began cutting back on in-house R&D in favor of investing in startups’ with promising ideas, some either didn’t factor in or miscalculated the resources and time needed to scale-up their acquisitions before seeing returns – leaving them with a gap in their innovation pipelines and no easy way to fill it themselves.

At the same time, many startups or even mid-sized companies may have great ideas, but not know how to manufacture them at scale in a cost effective manner without first suffering through an expensive period of trial-and-error.

Luckily, an unexpected hero is coming to their rescue: ingredient suppliers and distributors. Recognizing the opportunity before them, these players are evolving beyond simply purveyors of base components to provide whole turnkey solutions that range from trendspotting to meet consumers emerging needs and expectations to solving formulation challenges and managing supply chain problems.

At IFT19 in New Orleans earlier this month, representatives from the specialty ingredient distributor IMCD Food & Nutrition and the ingredient supplier Archer Daniels Midland Company shared how their companies are expanding to fill this new need and what trends they see as have the most potential now and in the near future.

An evolving landscape

In the last 10 years the once standard – and stable – operating procedures for the food and beverage industry have been disrupted so that there is no longer clearly defined roles for each player in the supply chain and development process.

According to Marc van Gerwen, the business group director at the specialty ingredient distributor IMCD Food & Nutrition, a major source of this disruption has been an increasingly sophisticated and well-educated consumer as well as an influx of smaller, nimble companies that can more quickly respond to consumers’ changing whims.

“The food market is in a rapid transition. … So many customers are facing dramatic formulation challenges, whether is to do sugar reduction, plant-based formulation, vegan, trends like the keto diet,”​ he said. “Building on that, the larger players are finding it harder to innovate. You see a lot of innovation coming through from small players.”

In response to this, many of the larger food companies began snapping up the smaller players as a way to access their inspiration and innovation, according to ADM’s Senior Vice President and President of ADM Nutrition Vince Macciocchi. And while this strategy has many benefits, he points out it also brings challenges.

“Companies are, you know, they are resources challenged and they are paying big multiples to make acquisitions. So it is about synergies and how do they deliver against synergies in their need to realize returns versus the launch and innovative products in the marketplace. So, it is striking the right balance,”​ he said.

And, as Macciocchi pointed out, one way they are finding that balance is by turning to ingredient suppliers, like ADM, and distributors like IMCD, for help earlier and earlier in the process.

In response to consumers evolving needs, Ana Ferrel, ADM’s global VP of marketing, added that ADM is changing its outlook to be much more “B2C2B.”

“We have been really tapping into much more of an outside in perspective into the company to help us think, as I like to say, much more from a B2C2B perspective. I think that is show I see us evolving and we are building the marketing capabilities and the insights and the global trends. We are investing quite a lot in the global trends framework to help us better inform what we can be next as we talk to customers,”​ she said.

She added, “We are beginning to be called into the conversation much more about helping pave  the way to ​the future as oppose to solving for challenges of today.”

van Gerwen agreed, noting that this shift also is creating a big opportunity for IMCD.

“IMCD is a global specialty ingredient distributor company, and the way we differentiate ourselves is through value through expertise, that is our tagline. So, what does that mean? We offer a lot of technical advice to our customer base to reformulate for consumer trends, and the food market in particular this is super important,”​ he said.

He added that the company has top of the line equipment and multiple locations as well as technical expertise to help translate consumer trends into solutions.

Personalized nutrition is emerging as the next big trend

In addition to offering technical expertise and key ingredients, each company also has their fingers on the pulse of the shopper to identify which trends are emerging, maturing and fading so that when manufacturers come to them with questions they not only have answers – they also have solutions.

Among the top emerging trends that each company is tracking is personalized nutrition.

Unfortunately, like many new trends, van Gerwen points out that the definition of personalized nutrition is ambiguous at best – making it difficult to precisely pinpoint the opportunity.

“Personalized nutrition is an expression about consumers want to shop, that is how interpret it,”​ meaning they are looking for claims that apply specifically to them, such as vegan or heart healthy or keto, he said.

While the trend may be still be blurry, the marketing potential of personalized nutrition is very clear, as van Gerwen notes.

“The data we are seeing is that 48% of consumers spend more when their experience is personalized,”​ he said.

Macciocchi agreed, noting that ADM is approaching personalized nutrition by focusing on different consumer groups’ needs.

“There are people my age who are interested in digestive health, gut health, heart health. There are millennials who are leading completely different lifestyles in terms of flexitarian,”​ and there are mothers who are looking for healthy options to feed their children, he said.

Free-from is expanding to include added nutritional value

To an extent personalized nutrition is growing out of the maturing free-from trend, which IMCD’s Technical Director Mary Lim says is here to stay, but, which she notes, also is evolving.

She explained consumers don’t just care about what isn’t in the product – they also care what is in it. That is why she said IMCD is focused on ensuring that free-from products, including protypes it showcased at IFT, offer positive nutrition.

Gut health is moving to center stage

Gut health is another emerging trend that van Gerwen says is spinning out of the free-from movement and the push for personalized nutrition.

“Gut health, for example, is a super hot item for consumers. So you see gut health claims for some of our fibers”​ and a lot of scientific research in the area, he said.

ADM also is closely tracking the trend, according to Macciocchi who noted recent acquisitions positions it well to provide solutions.

Plant-based is becoming more sophisticated

Plant-based also continued to generate a lot of buzz at IFT, as companies look not just for alternatives to animal-based products but as ADM’s Macciocchi pointed out they want plant-based options that taste good.

“Plant-based ingredients, of course, are in huge demand and  a lot of products are being formulated with plant-based ingredients, which is great for us,”​ he said.

He added that the future of plant-based is blending ingredients to improve the flavor profile and the nutritional benefits of the products. This includes combining proteins with different inputs such as soy, pea, lentils, legumes and increasingly fruits, nuts, seeds and ancient grains.

With so many trends to keep track of and an increasing pressure to launch innovative solutions quickly it is no wonder that manufacturers are looking for additional help from ingredient suppliers and distributors. And as both ADM and IMCD point out – these trends are only a small fraction of their areas of expertise so if companies have ideas for other new products, it is likely they can help create them as well.

 

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