1. FOOD INDUSTRY RESEARCH AND DEVELOPMENTBy
Professor Hassan A. Al-Kahtani
Food Science and Nutrition Department,
College of Food and Agriculture Sciences, King Saud University
Prepared for
The Sixth Saudi Conference on Food and Nutrition,
Helton Hotel- Jeddah, Saudi Arabia
17-19 November, 2015

2. Structure of Presentation
What is R&D and its importance?
R&D in food and agriculture sectors
R&D expenditure
Research and development issues
R&D in food industry
R&D in food system
Government involvement in food industry R&D
Consumer product research
Product development process stages
Consumer role in product development
Management of product development
Perspectives on R&D in food industry
Summary and recap

3. What is R&D?
“R&D is the purposeful and systematic use of scientific knowledge to improve man’s lot even though some of its manifestations do not meet with universal approval.” (Twiss, 1992)
“To develop new knowledge and apply scientific or engineering knowledge to connect the knowledge in one field to that in others.” (Roussel et al., 1991)

4. Why is R&D important? Crucial to survival Fast changing environment
Continuous technology change
Competition
Changing consumer preferences
Fundamental to “marketing”
Advantage is markets come from:
- Understanding what markets need (MR)
- In case of technology –selling what is possible to make
- Efficient production processes

5. Food Industry Research & Development (R&D) Aims
Basic Aim
To create new products and launch them successfully on the market
Specific Aims
Reduce costs (lower prices)
Enhance sensory properties (more attractive)
Improve Nutritional value (dietary needs)
Improve food safety
Add convenience
Offer greater choices of food items to consumer
The end is always consumer satisfaction

6. Q. Is the ultimate aim (effective product development and successful launching of new products) of all food companies R&D the same?
A. Yes, but their knowledge and resource bases are very different
Small Companies
Usually concentrate their R&D where they have strong specialist knowledge
Large Companies
Need research in many areas and face with problems of integrating the research and coordinating it with the company’s operating sections

7. Research and Product Development Issues
Balancing new product failure with product obsolescence
Balancing cots with overall financial setbacks
Consumer concerns (media & advertising)
Pesticides
Food chemical additives
Regulations
Food industry is one of the more heavily regulated industries. General regulations (health, safety, labor, factory control, and waste treatment), specific regulations (food hygiene, standards, materials, packaging, labelling). This makes innovation and introduction of new products difficult, long time for government acceptance

8. Minimal level of high technology
Food industry grew differently from other industries – (Electrical Engineering started by applying basic knowledge of physics to create electric light and motors – but food industry accumulated a vast resource of empirical knowledge, craft knowledge gained in actual life experiences of food preservation, preparation and cooking (only outstanding innovations, canning, refrigeration, and irradiation)

9. Lack of funding of R&D in food industry
Food industry has always been among the low spender on R&D related to sale
Recessions and takeovers (common phenomenon) cause R&D cutbacks and combinations of R&D dept.
Difficulty of controlling intellectual property in the food industry (difficult to secure patent and profit from many foods because small adaptations outside the patent can give similar products)
This has provided a basis to produce large quantities of a product as cheaply and quickly s possible (profits are made from handling large sales volumes)

10. R&D in Food and Agriculture Sectors
Crop protection chemicals (herbicides, insecticides, fungicides)
Crop seed and biotechnology (conventional and GM seeds)
Farm machinery (tractors, harvesting, planting, fertilizing machinery)
Fertilizers (N, P2O5, K2O)
Food and animal health (pharmaceuticals, vaccines, medicated food additives)
Animal breeding and genetics (poultry, pigs, cattle, aquaculture)
Animal nutrition (nutrition feed additives, medicated feed additives)
Food manufacturing

11. R&D in basic & minor biological food components
Proteins
Carbohydrates
Lipids
Flavor compounds
Colors
Minerals
Vitamins
R&D in chemical industry research
Flavors
Emulsifiers
stabilizers

12. Who are the Key Players? Companies Governments e.g., CSIRO
Universities
Future oriented
Long-term activities

13. Research in Food System
The food system includes
Production input people
Farmers and fishers
Processors
Manufacturers
Wholesalers
distributors

14. Food Research Disciplines and Organizations
Food industry R&D need knowledge and expertise
Always need for contract research from outside organization (university depts., government research institutes, private consultants, market research companies, and biological testing laboratories)

15. University vs Industry Research
Universities provide the fundamental and basic research, which tends to be more general
Universities concentrate on pursuit of knowledge
Industry research focuses more on:
Product development
New technologies
Understanding of technologies in existing products
Technologies in manufacturing
Application of knowledge for commercial purpose

16. Key factors driving private companies to invest in R&D are;
Private sector has become a major player in developing new innovations for food and agriculture
Key factors driving private companies to invest in R&D are;
Emergence of biotechnology & nanotechnology
Emergence of new scientific development
Strengthening of intellectual property rights (IPR) over innovations (patents, trade mark protection)
Global market expansion for improved agricultural and food products
Consumer demands for more diverse kinds of food products

17. Integrating R&D to Overall Business Strategy
R&D should not be independent of business strategy
R&D is part of the business support infrastructure
AIMS:
Provide support of existing businesses by keeping them competitive and supporting efficiencies
Drive new businesses and opportunities e.g., 3M’s discovery of temporary adhesive led to creation of Post-it notes.
Broaden and deepen technological capability for long-term benefits

18. Private sector spent $ 19.7 billion (56% in food manufacturing and 44% in agricultural input sector) on food and agricultural R&D in 2007 (50% of total R&D spending in high income countries)
Large firms (multinational operations with global R&D and market networks ) – 4-8 firms accounted for 75% of the R&D in each sector
Globalization of food & agricultural R&D may accelerate the international technology transfer, reducing productivity difference across nations and regions

19. Sales and R&D for Leading Food Manufacturing Companies in 2008
n.a. = not available; Source: USDA, Economic Research Service using company annual reports and fortune, 2008

20. R&D Expenditure (mean) across Industries
Industry
Percent (%)
Pharmaceuticals 15
Aerospace 5
Automotive
Chemicals 8
Electrical & Electronics 7
Food
1.5
General Manufacturing 6
Computers 12
Source: UK R&D scoreboard 2001, DTI (2002)

21. Q. Should government have a part in food industry R&D?
A. Yes, because of three main interests
Government is responsible for the protection of public health
The creation of wealth ,food industry is an important part of gross domestic product (GDP)
The enhancement of scientific knowledge
All people are food consumers, and most should be aware of the risks and benefits of food research and its technological applications

22. The food industry is always a substantial component of any country’s industrial base and export potential
So government and trade concerns
Concerns activated by hunger, famine, contamination problems, and the complexities of modern food science & technology

23. Role of Government in Food Industry R&D
Varies from country to country and from economy to economy
From time to time with the urgency of problem
Create the climate (develop a national strategy and framework for food research by discussions with industry, science providers, and consumers (direction for national companies but may not compatible for multinational companies)
Governments can facilitate entry of new foods into the food system by creating a regulatory protocol for new foods
Government encouragement by reducing the financial costs of developing new foods by providing or ensuring finance at low interest rate, tax incentives (giving $ 1 rebate for every dollar spent on R&D)
Government can help small companies in developing patents
Establishing linkage program between industrial companies and universities (funded 50/50 by government and industry)
Internationally, governments could form joint research centers on food safety, nutrition, and other consumer concerns

24. Consumer Product Research
Past
overtime
Now
Consumer requiring enough raw food items for their kitchen
Mandating certain characteristics in food items
Attractive
Appearance
Acceptable eating quality
Convenience
Value for money
Nutrition
Safety
Environmental and social acceptability

25. Political pressure has been exerted:
For over 150 years to provide inexpensive and abundant food
For over 75 years to provide safe foods
Within the last 25 years to produce food while sustaining the environment

26. Each product combines the above features require a multidisciplinary group of scientists and technologists from consumer science, sensory science, nutrition, product development and process engineering
Companies develop their methods and system for this type of research called “Product Development”

27. Convenience Foods Canned foods Fully prepared Foods
Partially prepared Foods
Snack Foods
Fast Foods
Health foods
Organic Foods
Natural Foods
Ethnic Foods

28. Recent or modern research under consumer pressure
Replacing basic fats and sugars to create low-calorie foods (texture of fat and the sweetness of sugar)
Food manufacturers cut-back in their research and rely on specialized food ingredient processors who have broadened their research programs (product innovation)
Product innovation
Concentration of food structures, flavors, appearances, and nutrition even development of final consumer products (new ingredients, new formulations, and innovative processing method)

29. Food Production Research Includes
Design of the final foods
Design of the raw materials to satisfy the next consumer link in the food chain
Control of the production to give consistent quality and food safety

30. Design in the field Consumer demands for natural and fresh foods
Multidisciplinary research by molecular biologist, plant breeders, food scientists (food chemistry, nutrition, food physics, and food engineering) to develop specific foods
High-protein wheat for bread making
Weak-protein wheat for cookie-making
Canola oil for nutritional foods
Special maize for fiber production
High solid tomatoes for tomato paste
Sheep breeds for low-fat meat products

31. Ingredient Research Industry
Process engineering research base
Grow through three stages:
Extraction and purification of raw plant, animal, and marine materials
Separation of the total material into fractions
Treatment of fractions to give specific ingredient properties
Example
Hydrogenation (firm fat)
Vegetable oils
Refining to remove gums, colors, odors
Separation into fat & oil fractions
Cooking and salad oils & fats

32. Product Development Aim
Develop and launch products onto the market according to the company’s business strategy (R&D activities)

33. Product Development Process Stages
Business analysis
Product idea generation
Screening
Product concept development
Product design
Product testing
Production and marketing development
Commercialization
Market introduction
Post-launch analysis

34. Evaluating R&D Projects

35. Factors Determining Success in New Food Product Development

36. Consumer Role in Product Development
Active consumer participation is integral to total product development
Consumer surveys and focus groups study
Analysis of consumer needs and new product ideas
Developing acceptable product concepts in “consumer language” and then develop technical design specifications
Product prototype is tested by consumer (a large-scale consumer test)
After the launch – who is buying the product, repeat buying patterns, how consumers actually like the product

37. R&D Team Multidisplanary Qualification Skills Harmonization
Joint effort
Groups:
1- Maketing group 2-Analytical group
3-Formulation and processing group
4-Sensory evaluation group packaging group
6-Microbiology and Quality control group( proper methodology , HACCP,….)

38. R&D Team Operations Selected Ideas Benchtop Pilot plant
Commercial operations
Identification( Identical samples at each stage) is a must

40. Management of Product Development
Management can control the research quality, outcome, time, and costs
Management needs to be involved in early stage and in later stages when large investment decisions are made.
Overall project must have an objective with predicted costs and timelines from the beginning of the project
Allow researchers to work creatively and positively within each stage without need for bureaucratic controls
Management must provide an atmosphere for innovation, reduce potential staff frustration, while still providing guiding controls
Management and researchers study the outcomes of each stage so that decisions on stopping or putting more money and time can be made cooperatively, constructively, and quantitatively (systematically decisions not just by “gut feelings”)

41. Perspectives on R&D in the Food Industry
The food industry needs to cut costs but remain innovative (innovation in bioscience)
R&D will continue to grow in disciplines of chemistry, biotechnology, and process engineering and more research in molecular biology, microbiology and biological engineering
Food ingredient processors and food equipment engineers are the major investors in R&D
Food manufacturers (companies producing final consumer products) will continue product development driven by continuing consumer market demand (increased research on food safety and nutrition)
Supermarkets (a domination part of the food industry today) have been weak in funding research but this may change (research related to food poisoning)
Future of food research and development in the next decade – multinational food companies will continue in domination food industry – they have sufficient finance for basic R&D – they will not allow the knowledge to become public (results tightly held and controlled)

42. Summary and Recap
Food industry abounds with imitators, and products change quickly (formal intellectual property protection rights play a small role in motivation research)
Failure rate of food products development is high (>70%) but original concept products are more likely to be successful than “copy-cat” or “me too” products
Managing R&D in food industry is not valued as highly as it should be (managers outside R&D unit rarely appreciate the value of R&D)

43. Firm-level data on food manufacturing R&D are limited and incomplete
con. Summary and Recap
Firm-level data on food manufacturing R&D are limited and incomplete
Expenditures on food manufacturing R&D is increasing but research intensity in food manufacturing is low compared in other agricultural input industries
Consumer demands product characteristics (convenience then quality then value) and expect many new products
Most of the R&D in the industry appears to be directed to product, as opposed to process innovations

44. Thanks for Your Attention