Organic market drives innovation spending

Consumer preferences are having a dramatic impact on research and development (R&D) in the Fast Moving Consumer Goods (FMCG) industry, according to a recent Deloitte survey of Australian manufacturers.

The movement towards a healthier lifestyle, for instance, means manufacturers are focussing their R&D on fat-free, low-carb, reduced-salt, nutritious foods. “The trend away from highly processed, salted and sugared products has led the way for the R&D budgets of the FMCG industry,” Deloitte R&D Tax Partner Karen Stein said. “80% of manufacturers surveyed said they have had their R&D impacted by the change to organic and natural products.

The organic market is currently estimated to be worth $450 million per year and is growing at 14% per annum.

“Many R&D teams are focussing on the benefits of low or no trans fat products, as well as gluten and other allergen-free products,” Stein said.

Deloitte’s survey, Innovation from the inside out — R&D in FMCG looked at the drivers of innovation in the industry.

“Competition is incredibly high as the 20 largest manufacturers make up 50% of the industry with only a couple of food and beverage companies owning 50% of the product categories,” Stein said. “This means that innovation plays a key role in helping manufacturers meet constantly changing consumer needs, while driving down costs.”

According to the company, 60% of manufacturers are now using R&D to see how they can better meet the needs of the ageing population by developing easy-to-open products as well as functional foods, like cholesterol-lowering spread and vitamin-packed fruit juice.

Price of confectionery expected to rise

The Confectionery Manufacturers of Australasia (CMA) predict a combination of local and global pricing pressures on a range of ingredients will raise the price of confectionery in the near future.

“During the past 12 months there have been significant increases across a range of raw materials that make up the core ingredients in confectionery,” CMA’s chief executive officer David Greenwood said. “As with many other food products which have had their prices raised in recent months, it is no longer possible to prevent the costs of confectionery inputs from being passed on to retailers and consumers by manufacturers in Australia and New Zealand.”

Price increases are said to vary from product to product, depending on ingredients and quality.

Continuing civil war in the Ivory Coast has contributed to price spikes in cocoa and milk production has been affected by severe drought conditions in 2006 and 2007. “Milk production is expected to be down 9.4 billion litres with no reduction in overall demand and stock feed bills are estimated to have increased by as much as 43%”, Greenwood said.

An increased demand in nuts such as almonds over the past year has also led to significant increases in global pricing, according to Greenwood.

Green measures today ensure business success tomorrow

In these times of drought and gobal climate change what is being done by the Australian food and beverage industry?

Well, manufacturers are doing their bit, often in small ways, but every little bit helps.

From using ‘green’ ink to print labels and packaging, through incorporating bio-degradable materials into product packaging, to recycling of ‘grey’ water and other water-saving measures, manufacturers from small SMEs to large multinationals are trying.

It is worth doing as much as possible to minimise a business’ impact on the environment.

There is growing concern that as climates change across the world growing seasons are being impacted and ingredients may not be readily available.

Costs could rise as a result of supply chain challenges and these would hit manufacturers, who in turn might have to pass them on to consumers in the form of price hikes.

Decreased consumption of processed foods could result and this would really hit manufacturers where it hurts.

If initiatives are not already underway, now is the time to act.

Time must be made for a review of processes and systems, and changes made no matter how painful it might be to do so.

Money and time invested now in addressing the impact of environmental damage and change on a business will safeguard that business’ future.

On reading through the FOOD Challenge Awards entry forms, it was clear that many businesses are embracing change in favour of more sustainable business practices.

It is good to see that some business owners and manufacturers are aware and acting.

Of course, more always can and should be done, and as time ticks business pressures will cause even the slow and careless to take action.

But those who do not wait will reap the rewards.

High-quality grains research supports food industry

Australian agrifood industries could soon benefit from the development of genomics technologies used in selection and development of high quality grains, after grains expert and molecular biologist, Professor Rudi Appels, was awarded a Visiting Fellowship with the Food Futures Flagship.

Through this fellowship, Professor Appels will bring together the research of CSIRO and Agricultural Research Western Australia, and work with cereal researchers to determine the quality of grain required for specific end-products.

Use of genomics technologies will allow the identification and development of desired attributes in grains, increasing overall wheat quality and Australian export opportunities.