In our last story, I addressed that a food chain is a complex organization, and showed how innovation is important to keep a food chain competitive, discussing the agenda for farmers and input supply companies, at the beginning of a chain. Now I will move forward in the chain discussing the innovation agenda for food industry and for retailers in order to attend our demanding consumers. Since the food industry is in close contact with consumers' needs and desires, it is where most innovation is taking place. Consumers' needs and desires have been changing in a faster pace.

The industry must offer to us a healthier food, food products that act on beauty and longevity, to promote consumers welfare, offering more than products (convenience, culture, joy, fun). Examples are the movement of "slow food" and "fun and food". The food industry also needs to attend to the environmental concerns by promoting product recycling and substitution, fitting to the "food miles" movement, and to attend to the social concerns by promoting inclusion, wealth distribution and fair trade.

Feeling the pressure for more environmental friendly, healthier, and distinguished products, the agro-food industry has invested in an extensive agenda of innovation, and I would list some points that should be on the day to day thinking of these companies…

To develop recyclable and biodegradable packaging materials towards environmental concerns of buyers is a major point. Consumers don't want to see all this non recyclable packages all over. Another point being stronger developed is innovation regarding conservation, for instance, in order to increase shelf-life of products and reduce lost (in fruits and vegetables, more than 30 percent is lost).
Food flavor improvement is one of the most important parts of research. There is also a continuous look for innovation in facilitating storage of products and the bundle of innovation that lead to the reduction of transportation costs. Food transport is a concern due to losses, costs and environment.

In other hand, there is the innovation in food industry to develop processes that require less water usage and the need to reduce losses and wastes. One way of doing it is through promoting the use of byproducts.

New organizational forms are being created by food companies together with medicine companies and cosmetic companies to innovate on nutra-ceutics and nutri-cosmetics, which is a merge of segments. There is also a growing attitude towards business to business relationships and innovation on contractual arrangements that benefit the chain as a whole and consequently the consumers.

A lot of research is also dedicated to new technologies of industrial optimization and firms are developing new marketing channel opportunities, such as door to door distribution, outlets and other forms that I will come back in a future article.

This is not an exhaustive list of points. But for strategists of the food industry reading this article, these points raised definitely should be considered on the agenda.

Now we come to the final agent of a chain: the retailer. The retailer will receive more of our attention in the future, but really is the most important participant, since the retailer has one of the most valuable assets of a food chain: information, due to permanent contact with the final consumer. Supermarkets nowadays must be promoting new buying experiences, such as tasting areas. They should also search for continuous new ways to offer the products, increasing the benefits for consumers.

There is a trend also for supermarkets to offer complete solutions for consumers. Among other challenges, supermarkets are becoming a communication tool, a place of knowledge transfer, where the consumers learn about the products they eat, becoming a place where the industry communicates with its final consumers. Supermarkets are trying to regain some market share that they have been losing to foodservice, such as having a restaurant or selling ready to eat food, what has been called as "home meal replacement (HMR)" movement.

Supermarkets are also increasing services, innovation in terms of delivery, express food, coffee shops and others. These two articles addressed innovations in food chains. I will come back to this point, since it is one of the most exciting areas in food marketing and strategy, and we have enormous amount of people working all day to create good things for us. So consider these points here just a starting list for food industry and retailer strategists to work with.

The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker.

(Source: China Daily)