by Megan Poinski
In the beginning of March, as the threat of coronavirus led state and local governments to quickly shut down, Mattson President and Chief Innovation Officer Barb Stuckey started to get worried.
Mattson, one of the leading innovation and R&D labs in the food and beverage business, had several ongoing projects. The company fields many requests from CPGs big and small that are looking to try something new, reformulate or improve. But as the pandemic quickly stopped a lot of business activity in its tracks, Stuckey thought that might also halt much of their pending work.
Those fears turned out to be unfounded. Stuckey told Food Dive Mattson has actually had more inquiries about new business than before the pandemic. According to research done by Mattson, two-thirds of industry execs said this spring they were working on new concepts, and 65% were working on new products.
Nolan Lewin, the acting executive director and director of operations at the Rutgers Food Innovation Center, has seen much the same trend. The center, which is technically part of Rutgers University but is completely non-academic, works with companies and New Jersey residents to aid in creating and commercializing food and beverage products.
"I'm the person who vets the calls into the center for new clients," Lewin told Food Dive. "Essentially, they fill out an online application on our webpage to work with us. In March and early April, I'd say that was probably the slowest period, but it didn't stop. We've seen a continuous stream of people who were either stuck at home and had a lot of time to think about projects, or restaurants or caterers that now had to pivot in their businesses because they were no longer allowed to open the restaurant doors."
Thoughts of new products, improvements and line extensions have kept the innovation sector of the food business humming. Even though lockdowns have made it difficult — and sometimes impossible — to do the necessary lab work and hands-on or consumer-based research, companies and formulators have kept going. While a few projects Mattson was working on before the pandemic were paused, most have continued, despite the challenges.
"I think most of the companies we've talked to believe that it can't not go on," Stuckey said. "If you come out of this COVID thing and have nothing in the pipeline, you're gonna be a year behind everyone else. ...We learned that through industry professionals. Professionals who have said, 'Hey, you know what? It's hard enough already right now getting meetings with retail buyers to present our new products. It's gonna be even harder after the shutdown then, because they're going to have this huge backlog of people wanting to talk to them about new products."
What does innovation look like?
In recent years, plant-based, keto, kombucha, organic, energy drinks, hard seltzer and allergy-friendly have gone from fringe specialties with a few products to huge categories. As Big Food started to snap up startups with unique ideas, and consumer interest in these areas peaked, everyone from entrepreneurs to massive companies doubled down on innovation.
As the pandemic adds unprecedented challenges to the industry, many experts said it is unlikely that innovation will continue on the same cadence and through the same themes. But Kathy Gramling, consumer products & retail advisory industry leader for EY Americas, told Food Dive that food and beverage has actually undergone a lot of innovation just in the last few months.
"I think it is tremendously innovative, the way in which our brands have moved in such a quick amount of time to respond to consumers in a pandemic," Gramling said. "I would not have expected us to be able to be so agile already within an unforeseen black swan to be able to, within 90 days, recast our supply chain and be able to provide Americans with healthy, safe food. I think we have seen innovation. I think it's just your filter [of] what is innovation."
While many CPGs cranked out new products in the years before COVID, they've also innovated behind the scenes, Gramling said. Supply chain and distribution have changed to be more cost-efficient for manufacturers. Many companies and retailers have transitioned from keeping products stockpiled to a more "just-in-time" philosophy, where products are made and get to where they need to be shortly before they move to shelves.
A lot of this needed to be streamlined and adjusted for increased demand, fewer workers, more careful processes, potential ingredient shortages and difficulties with both imports and interstate travel, she said. Figuring out how to wade through these issues — mostly so far through cutting SKUs and smarter ingredient procurement — also takes a degree of innovation. And Gramling said she sees innovation continuing along those lines: Working to simplify formulations, optimize manufacturing capacity and continue to please the consumer.
"I have to take my cue from my consumer," Gramling said. "As a brand, I then must back into a set of changes in my activity more immediately than I actually ever have pivoted before. And I think that's what we've seen over the last 90 days, and I expect to see over the summer, is a series of very strategic and deliberate conversations of what we start, stop and continue."
"And when you say, 'Well, what happens to those really cool, innovative R&D projects?' A lot of those, pre-COVID, were really around M&A," Gramling continued. "... Most of those really big innovative 'a-ha's were coming from Big Food by buying up the ankle biters and spending a tremendous amount. The multiples, pre-COVID, on those acquisitions were really extraordinary, right? So I think what you'll probably see is what we're starting to see already: a slow down on that activity. I expect that to continue for the foreseeable future."
Kantha Shelke, food scientist and principal at consulting firm Corvus Blue, told Food Dive in an email that the pandemic has really put a damper on the type of work that has been done in food innovation.
"People will always eat and several times a day and with their communities," Shelke wrote. "The pandemic is a reset button for how and what types of innovation will be necessary for the post-pandemic world. Innovation will continue on a whole plane to influence how food is grown, processed, stored, distributed, and procured."
Stuckey said Mattson is starting to work on projects for clients who have evolving ideas for innovations. Safety of a product — beyond the regular federally mandated measures to prevent pathogen contamination — is becoming key. The days of plentiful food being heaped on a platter, or open grocery store buffets with different options for consumers to help themselves to, are likely at an end.
"I think you're gonna see a lot more single serve packaging that's saying to the consumer, 'This was made in a facility where food safety is top of mind. Nobody else has touched it. It's wrapped for your safety,'" Stuckey said. "Those kinds of things, I would expect, are going to be top of mind when we're thinking about innovation."
While food manufacturers are deemed essential employers and workers have been able to continue going to factories during the pandemic, the same is not true for R&D labs.
When the San Francisco Bay Area shut down to slow the pandemic's spread, Mattson's facilities were also closed. Stuckey said the company needed to be creative to continue its work.
"It was a pivot for us," Stuckey said. "We are really super efficient at doing product design and development. How do we enable our team to do it from their homes? I think that's just the way that COVID was forcing everyone to think differently about how they executed their job. You know, this is our job, and we had to figure it out."
The product design phase, where conceptual research is performed to try to figure out which ingredients and processes might work best, can easily be done in a remote setting. Ingredient procurement — finding out which suppliers have precisely what might be needed for the new product, working out how those ingredients are going to be produced and ordering samples from several to see which makes the best prototype — also can be adapted to remote work.
Once the methods of making the product and the ingredients are figured out, it's time to get into actual product development. And even without access to a proper lab, some projects could still be worked on at employees' homes — though under strict guidelines and regulations. Mattson employees doing product development work in home kitchens all needed to follow the same kind of food safety protocols that they would in the lab, Stuckey said. These protocols are above and beyond what is typically done in a home kitchen, including sanitizing surfaces and equipment, taking special care to prevent cross-contamination and evaluating processes at critical control points. Even though employees followed safety protocol just like they would in their lab, prototypes made at home were only for internal evaluation. None of these items could be used for consumer testing down the line.
While some of what is needed for prototyping can be found in home kitchens, other equipment and ingredients are the type of things only found in Mattson's lab. The company established a shuttle, which moved ingredients and equipment from Mattson's lab to different employees' homes.
"It would just circle around, kind of like a shuttle that drops people off at the airport, and then picks them up, and then drops them off," Stuckey said. "And so we had that running, and that was a huge help to our developers, who then didn't have to inventory all their own ingredients. Also, if they were in the process of moving from product design into development, and they realized, 'Hey, you know what? I'm gonna need a specific piece of equipment,' we could get that to them."
Mattson started to do in-person consumer testing events last month. They have rented alternative facilities for them — nobody from the general public has had access to Mattson's development facility, Stuckey said. The research is conducted using the protocols of the times: More space, sanitized rooms, mandated social distancing with individual booths six feet apart, everyone in masks. Stuckey said the new processes have still yielded quality research.
Birch Benders, a better-for-you breakfast mix company, used similar methods to continue to innovate during the pandemic. Raj Babu, the company's chief operating officer, told Food Dive stopping the process of creating new products was not an option.
"Innovation is in our DNA, right? It's who we are and what we're really known for," Babu said. "We've had seven first-to-markets over the past few years and we want to continue to do that."
In the recent past, Birch Benders has had the goal of doing many product launches each year. Under this plan, each year will have a big game-changing product launch, while the others are new products that extend current lines. This year's larger launch came in January, with Birch Benders' microwaveable keto-friendly cups that make muffins, baked goods or pancakes. But the company has stayed on its aggressive innovation schedule with new frozen keto-friendly waffles, which launched last month. Babu said the company is working on its 2021 concepts now.
Usually, Birch Benders uses a lot of in-person collaboration to come up with its products, Babu said. Company employees brainstorm and put together a product charter with big ideas for what it will accomplish. They talk to customers — both at the retail and consumer level — about the type of products they would like to see. And then they start developing product prototypes and relying on feedback from everyone who tastes them to come up with the best options.
After the threat of coronavirus was apparent, Birch Benders shut down its main office in Denver. Next, they filled the truck belonging to the company's head of operations with ingredients, kitchen lab equipment, waffle makers and griddles. All of that went to the apartment where Birch Benders' head of R&D lives, Babu said
Product development is now going forward in two main different ways, Babu said. One is similar to the way they usually do it, with a socially distant twist.
"I will give her guidelines, she'll mock up a bunch of different products, and then we'll kind of have a distribution network within our own city of Denver, where she'll leave some stuff outside her door," Babu said. "We'll grab it and then we'll hand out samples to each person's house for the people there tasting it. They'll try it out. They'll put notes together, and we'll get into a call and compare notes a little bit later."
The other way they do it is much like Birch Benders founders Matt LaCassee and Lizzi Ackerman did when they first started the company. LaCassee and Ackerman founded Birch Benders after wanting a simple-to-make gourmet pancake for breakfast, and they started experimenting with ingredients in their own kitchen. Babu said the R&D manager sometimes gives team members the recipe of what she's made, and then they all get the ingredients together and make it at their own homes.
"Making products from scratch in your own kitchen, there's a different connection to the product and the business, and you really see the consumer journey a lot more," Babu said.
Funds are still flowing
Not only are companies continuing on the path to innovation, but many funders are putting a lot of money toward it. Since the pandemic began, Impossible Foods, Perfect Day, Apeel Sciences, Oatly and Nature's Fynd have all received funding infusions of $80 million or more.