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Multinational Food Companies Relying on Specialist Suppliers for R&D


In an April 2nd article by Carol Ryan in The Wall Street Journal, it was noted that multinational food manufacturers are relying on specialist suppliers for research and development and innovation. Nestle and Kraft Heinz are losing market share to upstarts with new products appealing to Millennials.

Ryan attributes the decline to failure to innovate as a result of low R&D expenditure. Package food companies spend between 0.5 to 2 percent of sales on new product development. This expenditure can be compared to R&D invested by pharmaceutical companies in the range of 10 percent of revenue.

Ingredient suppliers such as CHR.Hansen and Barry Callebaud are now relied on to provide formulations and products to enhance flavor and organoleptic attributes to rejuvenate existing product.