Food firms: cash number one barrier to innovation

By Lindsey Partos

- Last updated on GMT

Related tags Cent Innovation

More than one in two food and beverage businesses cite cash as the number one barrier to innovation, finds a survey of decision-makers.

Operating in a tough economic context, financing innovation is the key challenge to new product design for 55 per cent of the 355 global food and beverage firms surveyed for SIAL's first 'Barometer Innovation' study.

This challenge weighs against food businesses overwhelming belief that they must innovate today to generate fresh revenue, differentiate and add value.

"Ninety-eight per cent of food and beverage firms believe a company is more successful when it innovates,"​ claims the Sial report, with 94 per cent of companies questioned – producers, processers and retailers - claiming now is the moment to do so.

Their sentiment supports the notion that investment in innovation is crucial to boost margins and beat a challenging economy.

"As a market becomes more difficult, so innovation is increasingly necessary,"​ Xavier Terlet, CEO of trend tracking agency XTC, told this publication recently.

And innovation, it seems, is more accessible for some than others. Once a marginal player, since the economic downturn private label has emerged as a major innovative player competing with the brands.

In France, for example, while private label injected about 8 per cent of new products onto the marketplace in France several years ago, today this figure stands at 23 per cent.

Barriers to innovation

While cash is the key concern for food firms looking to invest in innovation, a lack of people on the ground rates as the second biggest challenge for businesses in Sial's survey.

According to the Barometer data, 36 per cent of respondents cited a shortage of human resources as putting a break on innovation.

In third place are technical and technological difficulties, that challenge innovation for 35 per cent of decision-makers questioned in the survey that occured from 10 to 18 september this year.

Growth areas for innovation

SIAL's figures underline the value of exports to food businesses: they found that a considerable 83 per cent of innovations in 2009 were launched onto the international market. Further, in the coming year, 67 per cent of respondents intend to launch their innovations onto the international market

According to the SIAL data, 30 per cent of the annual turnover for the food and drink firms questioned currently hail from exports.

Health and sustainability hold the biggest potential for gains, predict the decision-makers.

"For the next five years, industrialists count on developing their sustainability axis as well as new technologies or processes that will allow them to reduce costs,"​ states the report.

In terms of partnerships in innovation, for nearly a third of respondents - 31 per cent - those between other food makers are the most efficient. In second place (21 per cent) are retail partnerships and finally, for 20 per cent of the survey respondents, link-ups between universities and research institutes.

SIAL presented the findings of their first 'Innovation Barometer' study at the ADICT innovation conference organised by SIAL in Paris on Tuesday.

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