A boost in FY2000.

Teamwork and investment highlight R&D trends.

Food industry R&D investment trends suggest a healthy up-tick this past year. Twenty-one percent of respondents indicated that their R&D budgets for FY 2000 bad increased by 6 to 20 percent, with another 9 percent indicating

Raw numbers don't tell the whole story, of course. It has long been the opinion of this editor that the food industry is notorious for understating its true R&D investments. For one, companies differ in how they allocate R&D. New product investments can fall, in toto or in part, within marketing budgets, while process developments can fall under operations budgets. Many companies also delegate their R&D requirements to their suppliers, through joint ventures or guaranteed purchase commitments.

Companies have also become more efficient at leveraging the R&D dollar. The tremendous gains in productivity that drove the dot-com revolution also benefited food companies: Companies have become far more efficient in how they funnel new products into the market. Product developers, engineers, quality assurance personnel and marketers today benefit greatly from new software tools, and they are far more likely to work together in cross-functional teams (83 percent of respondents rely on cross-functional R&D teams). Companies are more efficient in their use of consultants and research institutions to bypass internal manpower bottlenecks or to reduce overhead costs. Fifty-two percent of respondents indicated that they outsource R&D to contractors. While 9 percent of respondents indicated that they had increased outsourcing of R&D projects, none of the respondents reported decreases. The business of R&D has become more efficient.

For an industry whose R&D investments have been stuck in the doldrums since the fading NLEA-inspired product development boom, these results lend themselves to cautious optimism. Are these trends a blip, or do they signal the beginning of a new golden age in food industry R&D? Read on!

Talking heads

R&D heads speak on trends.

BORDEN FOODS

Kamal Aboschamaa, vice president of research and development

Q: Is the realm of research and development expanding?

A: "Yes. In order for companies to stay competitive, they have to develop new products and reduce costs at the same time."

Q: What trends do you see emerging on the horizon?

A: "The key is the trend toward meal solutions. This is definitely No. I. Ingredients are trending downward. People do not have the time to cook The opportunity is in pre-prepared meals."

AGRILINK FOODS

Chuck Fuhrmann, vice president of research and development

Q: What trends do you see emerging on the horizon?

A: "I see the trend continuing where the 'R' is getting relatively smaller and the 'D' is getting relatively bigger. It is difficult to protect food technologies. Companies are less willing to make a long-term research investment. The consumer's need for new products is changing. The consumer is less and less loyal to brands and more and more loyal to novelties. The company that makes the wave will be the one to thrive. The pressure is on to develop products that are closer to the consumer and develop them in a quicker amount of time."

ADM

Tom Binder, president of research and development

Q: Does your research and development team work with chefs to develop new products?

A: "We have chefs in-house that are part of research. They are involved in baking applications. The chefs are involved with product formulations. These people (the chefs) provide a lot of training for technical service/salespeople. They inform them about the functionality of the ingredients they are selling so that they can enter the field well-informed with a thorough knowledge of the product they are selling."

Q: What trends do you see emerging on the horizon?

A: "A. lot of larger companies are involved with spending money on the marketing side of things. This means that we have to show them exactly how the ingredients will work within their flavor systems. We see much of this practical application technique happening within the arena of functional foods."