Start-up success: “Think audaciously, be bold and take risks,” says Practical Innovation
23 Jul 2018 --- The role that start-ups have in future product development success was a key theme at IFT in Chicago where inspiring innovation “to feed the future and beyond” was in the spotlight. Continuously evolving consumer demands, together with the need to achieve a sustainable future, are helping to fuel start-ups with convention-challenging innovation, Innova Market Insights reported at the event.
Only 0.5 percent of food product launches achieve success in the marketplace, claims Practical Innovation, itself a starter company that helps food and food ingredient companies develop innovative products. It says that real innovation is a key factor for food companies to beat those odds and achieve real success.
But there is a huge gap between start-ups that launch innovative products and traditional companies who don’t, irrespective of company scale. Utilizing the multidisciplinary expertise of professional innovators is necessary to drive the changes required and launch win-win products.
Practical Innovation claims that it has the recipe for successfully bringing a product from concept and ideation to launch – and one of the key drivers is to show a willingness to take surprisingly bold risks.
“Gambling your reputation in the market with a new product that might not survive on-shelf is a huge impediment,” says Tal Leizer, CEO of Practical Innovation. “If you want to succeed in the competitive food market, the very first step is to take failure off the table and start thinking audaciously, like a start-up.”
While groups of entrepreneurs and start-up businesses developing some of the most innovative products and solutions in the food science industry showcased their products at IFT, Innova Market Insights highlighted some of the key areas where start-ups are big business.
These include the global meat substitutes market which is forecasted to be worth USD$4.2bn in 2022. One early big player in the field is Beyond Meat which has a total funding of US$72m achieved from a diverse cast of backers that includes Tyson Foods, Humane Society, General Mills and the actor Leonardo DiCaprio.
Impossible Foods has already achieved funding of US$396m. The company is focused on the production of a plant-based burger created with synthesized heme to replicate bleed. The company says it uses cutting-edge technology to create wholesome food, restore natural ecosystems and sustainably feed a growing global population. Funders have included Open Philanthropy Project, Bill Gates, Horizons Ventures, Trinity Capital, UBS, Khosla Ventures, Google Ventures and Viking Global Investors, and some of its newest investors include Temasek and Sailing Capital.
Innova Market Insights demonstrated how major players like Kraft Heinz, General Mills, Danone, Unilever, Kellogg’s and Nestlé are investing in some of the most promising start-ups of the day.
It also showed some of the categories where start-up innovation is making real strides such as cold brew coffee where there has been a 76 percent increase in launches (CAGR, 2013-2017, Global), 52 percent average annual growth in new dairy launches with vegan claims (Global, 2013-2017) and 33 percent average annual growth in kombucha launches (CAGR, 2013-2017, Global).
For example, High Brew Coffee raised US$17m in 2017 by Boulder Investment Group Reprise (BIGR) while Humm Kombucha raised US$8m last year by VMG Partners.
What today’s food companies can learn from start-ups
Many established food companies want to develop new products and increase sales and revenues, but to do so involves harnessing tremendous efforts and resources that are not always available to traditional companies such as bakeries and sweetener companies, says Practical Innovation.
Starting an innovation process in an existing company that has produced the same products over many years is fraught with stumbling blocks, it says, and with so much at risk, older and larger companies are persistently driven toward making only minor changes rather than true innovations. Being inherently risk-averse, they might only add a new flavor, improve packaging, or simply cut costs. Creating innovation from inside presents multiple challenges.
Leizer also has some tips on how to revive the innovation process in your company which include thinking like a start-up, searching for creative ideas even if those ideas seem impossible; carrying out research, identifying important food trends, and knowing what the market wants now as well as five years from now; setting SMART goals: Specific, Measurable, Attainable, Relevant, Time-bound; making a concept feasible and scalable; developing a complete plan from concept to market (and beyond); making sure the product meets the genuine needs of the target consumer and solves real problems for which they are seeking solutions and getting help from a professional innovation company.
“When a company approaches us, in many cases they already are losing market share and have hastily responded with price drops to try and hold their brand in the marketplace,” adds Leizer.
“Building a robust plan is crucial to maintaining any new strategy and to assess its feasibility for implementation. Such a plan should also encompass areas of large-scale production, developing niche markets, and assessing prospects for international export.”
“Even more pertinent is to guide all the product characteristics, from texture, taste, and functionality through to packaging, as well as crafting an indulgent flavor while being sure the concept meets the real demands of the consumer.”
“We don’t just develop different packaging or a new flavor, but reinvent every aspect of a product, from concept to product launch, all while encompassing formulation with simple, natural ingredients according to the current food trends. And, we make sure our innovative products have patentability.”
Practical Innovation collaborates with Lampados Ltd.
Recommendations to reduce sodium, sugar, and fat in the diet established by the global health bodies the US Food and Drug Administration and World Health Organization (WHO) spurred Leizer to see the challenge as a great opportunity for clients to develop new ingredients and products to meet the growing demand for healthy, tasty products.
Recognizing the consumer quest for healthier sugar alternatives, Practical Innovation reinvented the sweetener category by developing Liteez, a dual-purpose, sugar-free, vegan meringue “kiss” sweetener for sweetener company, Lampados Ltd. The product is composed of the natural sugars inherent in prebiotic vegetable fibers, and that can dissolve in and sweeten a hot beverage or be enjoyed as an ultra-low calorie sweet treat.