Innovation in Prepared Foods:Trends, Technologies and Tactics for Optimizing Your

Success

CSP Foodservice at Retail Expo August 12, 2008

Lou Cooperhouse, Director

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Agenda

• Consumer Food Trends: Top Ten Trends Affecting our Food Industry, and their Impact on New Product Innovation

• Hurdle Technologies:Food Safety Technologies from “Farm to Fork” that will Enhance Quality and Safety

• Organization Optimization:Optimizing Organization Resources into Innovative Teams

Consumer Food Trends

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1. Convenience

• Time-starved consumers looking for foods that are convenient to locate, convenient to buy, convenient to prepare, and convenient to eat

• Various preparation & “involvement” alternatives exist for consumer

• Ready-to-Eat (RTE) – greatest convenience• Ready-to-Heat (RTH) – “heat and eat”• Ready-to-Cook (RTC) – now “scratch” cooking

• Many products can now be eaten directly out of the container and fit in a cup holder.

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Convenience

• Supermarkets expanding their prepared meal offerings, and more restaurants are adding pickup lanes, cellphone ordering, wireless ordering by waiters, and tableside wireless credit card swipers.

• Online grocery businesses are beginning to catch on as delivery service improves; fully prepared healthy meals are being delivered to schools.

• Meal Assembly Centers first appeared in 1999 and now there are more than 330 companies with over 950 locations in North America. Supermarkets are starting to enter this business by opening centers in their stores.

• New smaller format stores are being created

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Value-Added Prepared Foods-Refrigerated Foods-

• Value-added prepared foods category began with items that could not be offered in other forms (canned>frozen>fresh)

• Increased consumer demand for convenience and quality has resulted in a redefinition of these terms, and perception that refrigerated foods can deliver this best most of the time.

• Advantages– Visual appeal that drives trial– Taste, Value, “Experience” that drives repeat

• Disadvantages– Quality not static, and continually changing over its shelf life

Issue: Safety issues dramatically more significant, particularly for Ready-to-Eat products

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Refrigerated Prepared Convenience Foods

• Precut Fruits • Precut Vegetables• Produce (cut) salads• Entrees/Meals• Entrée salads• Side dish salads• Component salads and

entrees• Sandwiches

• Dips• Spreads• Salsas• Salad Dressings• Puddings/Gelatins• Baked desserts• Beverages/Smoothies• Cooked Meat, Poultry and

Seafood Entrees

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2. Premium/Specialty/Differentiated

• Regardless of demographic, consumers will continue, in growing numbers, to pursue premium products and experiences. Consumers no longer feel a need to justify premium, they expect it and feel they deserve it.

• Perception drives trial, affects first purchase– Appearance, packaging help captivate senses

• Reality…Clearly affects the repeat purchase…Has the promise and experience been fulfilled? – Taste (with bold flavors) is most powerful criterion for repeat

purchase, but consistency is critical• Sales of specialty food grew 22.1% between 2004 and 2006

whereas sales of all food grew just 4.7%Issue: As products become increasingly differentiated, new types of

food items are being offered that have not been marketed before, and a product that has been “typically” safe, e.g. cole slaw, may be

so altered as to create a far greater level of risk

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3. Adventurous/Bold

• Celebrity chefs are encouraging more adventuresome cooking

• Shoppers want, and are getting, bolder flavors, more spices, stronger cheeses, more adventurous and unique entrees, and more crisp and crunchy textures – due in part to changes in taste attributed to the dulled taste buds of an aging population.

• Mentions of the word “spicy” for new foods & beverages doubled between 2003 and 2006 (Datamonitor)

• Bold flavors are poppng up in brand new areas. In addition, sales of hot and spicy salsas are rising, as are bolder cheeses.

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4. Ethnic

• Immigrant population, “globalization” of Americans, and increasing world travel are expanding consumers’ food horizons– The Hispanic population continues to be the fastest-

growing demographic group in the U.S. and is expected to reach the 50 million mark by 2010.

– Indian, Indian-fusion and Japanese fare are moving toward the mainstream

– We are beginning to see an influx of African ingredients like shea butter and baobab oil into new non-food items like skin creams and cosmetics. For foods, hot peppers like African Birds Eye Chili – also known as Peri-Peri – are beginning to appear in new sauces and condiments. And flavors from North Africa like couscous, for instance, are also gaining ground.

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5. Authentic/Natural/Artisanal

• New twists on already popular items, giving people more flavors and options for the foods they love.

• Companies will be more aggressive in removing additives, preservatives, artificial colors or flavors and "otherwise unknown ingredients" from products to have "clean labels" and to make no additive claims. Expect to see more products with ingredient labels that read like "a home recipe”

• About a quarter of new food products last year made claims of being additive- and preservative-free.

Issue: Consumer demands for “cleaner” labels provides even greater challenges for food manufacturers, as they seek

assurance for food safety and extended shelf life for their products

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6. Health • Portion Control

- Portion control has become a priority for many people who want to lose or maintain weight, but there is an overall lack of understanding of what constitutes a “serving”.

- A restaurant meal with an entree and two side dishes is being replaced by sampler dishes that offer smaller portions while providing greater variety, and appetizer-sized meals.

- Industry is responding by providing 100-calorie packs, single-serving entrees, and half-size soda cans

- As many of us eat as often as 5+ times/day, we will start seeing 150- to 200-calorie hot and cold options (one step above the 100-cal snack packs). Right now the 100-cal options are more like snacks than meals, while the 150-200-cal options will be actual mini-meals

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Health

• Avoidance, Satiety and “Natural nutrition”- Consumers will learn to "budget" calories, and fad diets

will be overshadowed by sensibility. - Doing Without – Avoidance behavior is accelerating, and

products without undesirable ingredients are viewed favorably, e.g. low-carb, low-fat, low-calorie, low glycemic index, zero trans fats, etc.

- Foods with fullness - Some companies are banking on satiety as the new diet buzzword. Look for more foods to promote hunger control and showcase their rankings on the satiety index to help dieters stay on track.

- Naturally nutrient-rich - Even though sales of fortified and functional foods and beverages have been soaring, a backlash against heavy fortification may be brewing. Desire for authentic nutrition is what has driven popularity of pomegranates, blueberries, the acai berry, mangosteen, and yumberries as “superfruits”, high in antioxidants.

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Health

• Nutrition indexing/counseling- Topco, an Illinois-based supermarket cooperative, is

due to launch a universal system that rates the relative nutritive value of foods, in 2008. Called the Overall Nutritional Quality Index (ONQI), it will use a 1-to-100 food-scoring index

- Hannaford markets in Maine has its own system, Guiding Star, with ratings from 1to 3 stars.

- Ukrop’s, Richmond, VA, is now offeringnutrition counseling by dietitians for a fee

- In the UK, manufacturers use Traffic Light Labeling on food packages to help consumers quickly identify basic nutrition information. Red, amber, and green respectively designate high, medium, and low levels of fat, saturated fat, sugars, and salt in a portion of food.

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7. Functionality

• Lower Health Risk- Dairy Products- Cholesterol-reducing plant sterols added to fluid

milk. - Incorporation of Omega-3 fatty acids, which

support heart, brain, and nerve health (to milk and yogurt). Breyers Smart! Yogurt fortified with DHA omega-3

- Dreamerz Foods has capitalized on milk’s reputation as a sleep remedy by creating a milk-based drink that also contains melatonin and hydrolyzed milk casein, which are thought to promote sleep and relaxation.

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Functionality

• Lower Health Risk- Digestion, Memory and Inflammation- Ingredients to Treat Digestion - Nearly 200 new products

touting digestive health benefits were introduced in 2007, according to Datamonitor. Once limited to yogurt, these beneficial bugs are now in cheese, milk, smoothies, juice, snack bars, cereals and chocolate.

- Brain food - Omega-3s in fish oils to flavonoids in cocoa -- may have the ability to improve memory, sharpen concentration and even reduce the risk of Alzheimer's disease.

- Inflammation - Aging Baby Boomers are driving demand for "joint health" foods and beverages. Stores will likely be stocked with more products promising pain relief, either from arthritis or exercise. The popular arthritis supplement glucosomine is already showing up in beverages, including Minute Maid Active orange juice.

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Functionality

• Functional Foods that Enhance Lifestyle:- Linkage of diet and mood- Linkage of diet and youth

• A big trend in Europe, “beauty foods” may soon be alluring U.S. consumers. Beauty-from-within products (dubbed nutricosmetics or cosmeceuticals) are claiming to erase wrinkles, give you shinier hair and even make your lips look fuller. A collagen-injected marshmallow in Japan promises the plump without the pain. Borba Skin Balance waters started it all in the U.S. A new beauty drink has been planned for release in 2008 from Coca-Cola and L'Oreal called Lumae.

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8. Local, Seasonal, Natural

• Food safety and ecology/environmental issues continue to make headlines, causing many Americans to rethink where their food comes from.

• As a result, the “Local” trend is going mainstream – “locavore” has even been designated Word of the Year by the New Oxford American Dictionary.

• As people seek fresher foods, they have begun to connect in increasing numbers with local family farms, CSA programs, and farmers’ markets.

• Restaurants have responded with more local ingredients, more natural and organic menu items and more sourcing information on the menu.

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Local, Seasonal, Natural

• The trend for local is being picked up by food manufacturers as well. Prepared foods made with ingredients, from the same region in which the product is sold, are hitting stores.

• Locally grown fruits and vegetables often have a nutritional edge over produce raised on "factory" farms. The latter, which constitutes most of the produce grown in the US, is picked about 4-7 days before it arrives on supermarket shelves, and shipped for an average of 1,500 miles before it's sold (per Local Harvest).

• Mintel International Group, which monitors the food industry, predicts that labels also will become more informative, listing where ingredients come from as well as processing and packaging notes.

Issue: New competition is originating from much smaller suppliers in local markets, that may lack adequate product safeguards, and potentially create some negative publicity for the refrigerated

foods category in the event of a product recall incident

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9. Varietal

• Where once it was enough to say where and how a food was produced, consumers are finding more value in products that identify the specific varieties of ingredients, and breeds of animals, it was produced with.– Were Macoun or Red Delicious

Apples used to make an applesauce?

– Which breed of cow produced the milk used to make a particular cheese?

– What variety of olives were pressed to make an olive oil?

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10. Green/Sustainable/Organic/Eco-Friendly

• The rise of ethical considerations, a growing sustainability consciousness, and increased focus on “unprocessed” foods, food miles, carbon footprint, wild-caught, etc. is inspiring new approaches to eating and will increasingly capture the interest of mainstream consumers.

• “Green-itude” is rampant. The National Restaurant Association has set up a Green Task Force, which will lead to menus printed on recycled paper, uniforms made out of wholly natural materials, and a decrease in bottled waters.

• Fair Trade: Big in Europe already (with coffee, chocolate, and table textiles), fair trade foods will become as big of a buzz word as organic.

• Organic food sales projected to reach $23 billion in 2008 and the Organic Trade Association projects that sales of organic foods will increase 18% annually from 2007 to 2010

• Farmers have the potential to be the New Celebrity Chefs

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Trends SummaryProducts That Are...

1. Convenient2. Premium/Specialty/

Differentiated3. Adventurous/Bold 4. Ethnic5. Authentic/Natural/

Artisanal

6. Healthful/Nutritious/ Filling/Portion-Controlled

7. Functional8. Local, Seasonal,

Natural9. Varietal 10.Green/Sustainable/

Organic/Eco-Friendly

Hurdle Technologies

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Food Safety and Quality Challenges

• Pet food, Peanut butter, Chili Sauce, Fresh Spinach… 2006 and 2007 were not great years for food safety. 2008 has begun with tomatoes > serrano peppers. We will continue to see more of the same, due to:– New types of food items that have not been marketed before– Improved detection systems and lower detectable limits– Enhanced regulatory focus– Increased urbanization in America > blending of rural and

urban landscapes > potential for contamination from field, runoff, etc.

– An increase in global trade, and extensive food distribution systems that have resulted

– An aging population that is more susceptible to foodborne illness

– Emergence of new pathogens, pathogens not previously associated with food, in addition to antibiotic-resistant strains

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Safety – Growing Requirements by Retailers

• February 4, 2008: Wal-Mart Stores, Inc. has become the first nationwide U.S. grocery chain to require suppliers of its private label and other food products such as produce, meat, fish, poultry and ready-to-eat foods to have their factories certified against one of the internationally recognized Global Food Safety Initiative (GFSI) standards.

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Technology Innovations and Solutions

• Good news: Variety of technologies exists to enhance food safety and extend product shelf life

• Sobering news: For every food product, assume preventative technologies may be– Absent– Inadequate– Incapable of withstanding

significant abuses in time, temperature

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HACCP and Hurdles

• Primary Objective of a HACCP program is to establish processes to inhibit or destroy microorganisms capable of causing foodborne illness.

• Every organism has defined growth parameters, and the ability of an organism to pose a hazard can be inhibited, and potentially eliminated, by a number of factors, such as:– Nutrients– Water Activity– pH– Atmospheric conditions– Presence of inhibiting substances, such as preservatives, microbial

interactions, and competition from other bacteria– Stress on the bacteria– Heat, Pressure– Time, Temperature

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Hurdle Technologies Definition

• A Hurdle Technology may be considered as:– A potential Critical Control Point (CCP) in your process, and/or – A weapon in your arsenal of technologies that provides

enhanced food safety and/or enhanced food sensory characteristics for a greater period of time, and/or

– A technology that provides your company with a distinct competitive advantage

• Hurdle Technologies are proactive and preventative tools to extend the bacteriological and/or the sensory shelf life of a food product.

• Application of hurdle technologies will minimize risk, but will not eliminate it. However, synergistic results are typically achieved when hurdles are used in combination

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Hurdle Technologies: From Farm to Fork

A.Good Agricultural PracticesB.FormulationC.PackagingD.ProcessingE.Distribution/Merchandising/Home Preparation

Synergistic results are typically achieved when hurdles are used in combination

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A. Good Agricultural Practices

• GAP Field Audits!• Segregated area for sanitizing produce with low risk

and high risk processing operations• External surface blanching/pasteurization (steam or hot

water) of raw materials (e.g. whole melons), if possible• Abrasive scrubbing and/or aggressive agitation• Extreme sanitation of cutting equipment, which can be

notorious as source of cross contamination• Chlorine, Peroxyacetic acid, ozone, UV light and/or

other chemical aids in washing solution before and/or after cutting

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A. Good Agricultural PracticesFresh-Cut Dilemma

• Microbial variability on produce is significant and can vary – within inches in the field – by product– by degree of product maturity – by season, and – by point of origin

• Pathogens can be internalized via roots, flowers, stem scars, pores, channels, bruises, air cells, temperature differentials

• Biofilms protect pathogens against bactericidal agents

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B. Formulation Hurdles

• Acidulants- Natural or Synthetic• Antimicrobial agents

– Sodium benzoate, potassium sorbate, sodium nitrite, etc.– Sodium lactate, nisin, liquid smoke, sodium propionate– Salt, Natural spices, e.g. rosemary

• Pre-treatment of components used in process– Irradiated spices– Blanching of vegetables– Chemical/preservative dips

• Water Activity Control• Antioxidants• Competitive Microorganisms

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C. Packaging Hurdles

• Clean Room Environment

• Modified Atmosphere Packaging

• Barrier Packaging Materials

• Active Packaging Systems

• Intelligent Packaging Systems

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D. Processing Hurdles

• Thermal Processing– Hot Fill, Quick Chill (Cook>Package)– Post Pasteurization (Package>Cook to surface or

internal temp), including sous vide– Retort sterilization

• Non-Thermal Processing– Irradiation– Pulsed Light and Pulsed Electric Fields– Ultra High Pressure

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E. Distribution/Merchandising Controls

• Immediately following packaging• Manufacturing plant holding coolers• Loading Docks, Trucks, Loading Docks• Distribution centers/depots coolers• Loading Docks, Trucks, Loading Docks• Retail/Foodservice holding coolers• Store Merchandisers/display cases

– Affected by display case design, sunlight, defrost, air circulation, product location…

• Between store and home• Home refrigeration and preparation

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E. Distribution/Merchandising ControlsSuperchilling

Storage temperature just above the freezing point of the product or raw material…for value-added produce and meat/poultry/pasta products, this would equate to a holding temperature in the range of 32-35°F.

Shelf life shown to be 1.5 to 4 times greater for products consistently stored at these temperatures versus those stored at conventional refrigeration temperatures of 40–45°F.

Results in dramatically reduced chemical and biochemical processes, and provides opportunities for significantly improved product quality as well as microbiological safety.

Organization Optimization

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Organizational Needs

• Consumer Understanding - Qualitative and Quantitative Consumer Research

• Product Design and Development: A Disciplined Process from Concept to Commercialization

• Culinary, Nutritional, and Food Technology Expertise

• Packaging Design and Development

• Cost and Quality Optimization

• Food Processing Expertise and Short Shelf Life Manufacturing

• Distribution and Logistics • Microbiology, Food Safety

and Food Security Expertise

• Shelf Life and Preservation Systems

• Specification and Controls Development, including GAP’s, GMP’s, SOP’s, and HACCP

• Crisis Management Critical to develop a flexible, nimble, cross-functional, empowered, and passionate team!

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Strategic Alliance DevelopmentPartnering for Success

• Manufacturer and retailer alliances• Manufacturer and Manufacturer Joint Ventures to

– Better understand international trends– Expand distribution into new geographic markets and/or– Enable complementary products, resulting in more

complete range of products available to the customer

• Manufacturer and Supplier/University/Service Provider Joint Ventures

Alliances provide access to customers, and enable a more compelling value-added solution to customers and create

synergy and efficiency in marketing and development efforts

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For Further Information

– Lou Cooperhouse– Cooperhouse@njaes.rutgers.edu– 732-537-1901– Web:

www.foodinnovation.rutgers.edu