Beverage Industry

Ingredients and Marketing: Teamwork Results in New Products

November 1, 2004

Ingredients and Marketing: Teamwork Results in New Products

By JAMIE POPP
Looking at the myriad colors, flavors and nutrients beverages offer, it makes one wonder how new beverages formulations could exist with so many already available. It is true that beverage companies are notorious for coming up with wild ideas, spurred by consumers and made reality by ingredient companies. However, sometimes sales and marketing come up short in their creative endeavors, and that is when ingredient companies step in with their own ideas. The relationship between sales, marketing, R&D and an ingredient company can be structured in many ways.
“It’s hard to generalize. Depending on each company’s retail size, not all of them have R&D groups,” says Walt Postelwait, vice president and general manager at Blue Pacific Flavors, City of Industry, Calif. “In that case, the company may use ingredient suppliers to do all of the development. It depends on the size of the company
and its development strategies and philosophies. Some companies bring an ingredient company in to the product ideation phase, which is very beneficial because we work in many different finished application areas and this broad knowledge of food and beverage development may be useful in developing a new product concept.”
But it’s not only the size and philosophy of the company that determines how R&D, sales and marketing split up the tasks of developing a new product with an ingredient company.
“Ingredient company involvement can happen a couple ways,” says Greg Andon, business development manager at TIC Gums, Belcamp, Md. “There are times when a manufacturer will find itself short of resources and in need of an answer, and it downloads the complete development to an ingredient manufacturer. At other times, the customer has done some basic development and they call on us to help them refine it.”
In addition to generating ideas with sales and marketing professionals, ingredient companies are also dependent on them for establishing a budget. The importance of understanding the sales and marketing goal of a product is paramount when discussing budgets — and sticking to them. However, it’s not only a concept that determines the budget. Sometimes an ingredient is used as a marketing tool, and can affect the budget.
“In the case of replacing an ingredient such as high fructose corn syrup, it’s the marketing team that can determine the need,” Andon says. “When possible, we always try to determine a manufacturer’s budget for stabilizers and their ultimate goal for the project. Is it a functional improvement at the same cost, or a similar product with a different cost?”
The finished product’s price point also dictates how an ingredient company may initiate a beverage formulating solution.
“Before we work on a project, we want to know on a case-good basis, or finished product basis, what cost range the product needs to be in,” Postelwait adds. “Then we know what ingredients we can work with as far as beverage formulation and flavor are concerned.”
As the beverage industry becomes increasingly competitive, ingredient companies also take the initiative to come up with new products that hit on trends in the marketplace. For example, Blue Pacific developed a solution to allow juice and milk or juice and soy to be combined in a stable beverage in a shelf-stable package, responding to the focus on wellness in the industry. According to Postelwait, the product “doesn’t need to be retorted; it needs to be hot-filled and can be put into PET or glass.”
Working with a number of customers with the same goal, TIC discovered it could replace HFCS with gum Arabic and developed TIC Pretested Pre-Hydrated LC Corn Syrup Replacer as a replacement for high fructose corn syrup in nutritional bars, according to Andon.
Packaging also plays a role in ingredient innovation. Blue Pacific has teamed with Sonoco, a retortable plastic bottle manufacturer, to handle new self-heating cans that require new beverage formulations.
The role an ingredient company plays in the R&D process can take a reactive or a proactive approach, depending on the manufacturing company’s product development and philosophical goals. Whether ideas are generated by ingredient manufacturers and introduced to producers or vice versa, the relationship results in a two-way street for new product concepts. BI