The agri-food industry is becoming more globalized. It has complicated supply chains and seeks to satisfy consumer demands such as cheap, healthy and fresh food and year-round. I see that manufacturing companies deal with the shrinking margins. Because they are strongly influenced by short-term demand from powerful retailers and consumers that influence them in today’s complex business world. I know that tighter margins leave a small room for investment.
Food and beverage companies only invest 1-2% of their sales turnover in R&D (Arthur D. Little’s most recent Global Innovation Excellence Survey). All of these challenges can be solved through innovation.
I believe that agri-food industry needs to realize a technological step change to increase productivity and meet consumer demand through launching new products, entering new markets, using new technologies and respecting to the environment and society.
Traditional industries such as food manufacturing, retail and agriculture continue to suffer in the current economic climate and the role of innovation is being a key competitive factor for future local and global competitiveness. In order a company to compete on the local and global stage, not just on price but also quality, consistent, fresh and new ideas and their execution are key to achieve customer benefits.
World economy and population are in continual growth and this creates rising in disposable income and changes in consumption patterns. All of these developments are leading to an increase in interest to consume packaged and processed foods, ready-to-eat meals, frozen food, and also eating at outside.
There is also an increasing interest in healthy eating due to the increasing chronic diseases, its cost to consumers and governments. Of course, people must make exercise at least 30 minutes five days per week to stay healthy. They have to apply a healthy active living style!
Create New Challenges in the Agri-Food Industry
- Ensure food authenticity and avoid food adulteration.
- Create new packaging to prolong the shelf life and reduce the spoilage and oxidation.
- Provide long shelf life and maintain freshness and minimize the use of additives.
- Improve the cold chain and prolong the shelf life of products and reduce the energy consumption.
- Enter farming systems and practices that use low agrochemicals.
- Increase efficiency in processes and energy use.
- Improve water use efficiency in food manufacturing.
- Reduce waste and reusing of waste material.
- Create products for healthy aging.
- Introduce nutraceuticals and healthy foods.
- Introduce low salt, low fat and sugar foods.
- Launch products for specific consumer groups.
- Perform overall increase in plant and animal productivity and farm output.
- Enter to the markets of developing countries.
- Increase the growing fields of the fruits and vegetables
- Increase plant and animal production in urban or enclosed environments.
- Develop and launch high quality convenience foods.
- Educate the people and extend agricultural activities and developing countries to increase the supply.
- Establish an innovation department, strong R&D and customer immersion lab. Hire and work with well experienced people who have strong know-how, personal skills and excellent customer focus. Encourage and nurture disruptive individuals also.
- These people should know the local and global markets, supply chain, operations, process, regulations, quality, new product development, marketing, sales, power branding, customer demands, finance, talent management, technology, collaborators, competitors, and last and important one"Innovation Management".
- Effectively finance innovation activities. For example, top 20 spenders for innovation are spending 8.3% (average value) of their annual sales to R&D.
- Incorporate CEO ownership. Innovation people should report directly to CEO.
- Go to new markets (local and international), and also bring and create new technologies, new products, new concepts, and new services.
- Create openness to new ideas from competitors, customers, collaborators, suppliers, other industries and your company. Produce prototypes, test, improve, launch and improve them.
- Customize your products to local markets and geographies.
- Create human behavior change, commitment and a collaborative culture across functions, networks and geographies.
- Create a passion for and pride in your products and services offered to customers.
- Strongly identify customer experience and make necessary reconfigurations on time.
- Always offer advantaged products and services better than competitors.
- Produce prototypes faster than competitors and test them with real customers.
- As a leader, develop and implement a culture of innovation that ensures that your chosen innovation strategy is clearly aligned with your overall company strategy.
- The key finding is that culture is key to innovation success, and its impact on performance is measurable.
- Follow and understand emerging technologies and trends and also apply faster than competitors.
- Generate customer insights and engage with customers effectively.
- Make a market potential assessment.
- Make a technical risk assessment.
- Use internal and external sources (local and global) for excellence in innovation.
- Innovators should be in every phase of innovation such as ideation,project selection, product or servicedevelopment and also
- Effectively manage product life-cycle.
- Innovation success is not easy. Consider different factors, including your company’s openness to new ideas, its ability to manage innovation projects from conception to market launch, to kill projects early on, if necessary, and to tie new product and/or service development tightly to specific your companies' competitive financial, sales and marketing goals.
- Most important criteria for food purchasing are quality, price, safety, appealing packaging, brand, low additives and others.
- Be close to customers or users. Catch their unmet and unarticulated needs, and experiment them.
- Consider always the social and environmental impact of new launches.
- Take calculated risks.
The adoption of an innovative culture in an organization is a crucial parameter for successfully implementing new technologies, services, product designs and relationships through truly effective competitive leadership aimed at improving customer value, growth, profit and company competitiveness in the agri-food industry.
Work with the well experienced, innovative, authentic, result oriented and consumer focused leaders and discover the opportunities and create your profitable and competitive business.
So that you can increase productivity and meet customer demands in a competitive manner.
Yusuf Tokdemir is a high-performing senior executive with thirty-two years of experience and know-how in agri-food and pharmaceutical industries.