What is one of the biggest trends in consumer packaged goods (CPG)? In a word: reformulation. In fact, a recent survey by Consumer Goods Forum found that 98% of CPG companies are reformulating at least some of their products.
“The C in CPG stands for consumer,” said Rik Pepermans, an independent consultant who focuses on the digitalization of research and development, and the former IT innovation lead at multinational CPG firm Unilever. “Consumers decide in-shop what they want to buy, and that’s a fast decision. The CPG industry spends a lot of effort understanding consumers. This evolving insight has to be translated into an evolving product – and this often means reformulation.”
Two strong consumer trends are driving the changes: health and sustainability. For example, Kerry Group, a global taste and nutrition company, in a report titled “Sustainability in Motion,” observed that almost half (49%) of global consumers today prioritize sustainability. In fact, it’s estimated that these customers will have spent more than $150 billion on sustainable products by the end of 2021.
Juan Aguiriano, group head of sustainability at Kerry, believes that to achieve such goals, the food and beverage industry has a responsibility to reformulate its products in a way that will meet these growing demands – and that it needs to do so as fast as possible.
“The food and beverage industry uses a lot of planetary resources and is responsible for over 25% of greenhouse gases,” he said. “At the same time, there are 2 billion people who are either overweight or obese, and 700 million that go to bed undernourished. We need all stakeholders to be committed to overcoming hunger and malnutrition. However, this is not only about securing enough food for our global population; we also need healthier and more sustainable food.
“Today, 30% of food is wasted,” Aguiriano continued. “If, as a society, we can reverse the trend of food waste, there would be more than enough food to feed the world. Consumers are waking up to these facts,” and Kerry addresses the challenge with a range of natural preservatives.
THE REFORMULATION IMPERATIVE
Reformulation is the key to making food and beverage CPG products last longer, be more nutritious, and use sustainable ingredients and production methods.
“In the food and beverage industry, we need to reduce the sugar, salt and fat in a wide variety of products, but without impacting the flavor,” Aguiriano said. “There is a growing awareness of food waste and a need for the food industry to do more. Most of our customers would like to extend their shelf life and, in doing so, reduce waste, but this is not a simple task. Changing one ingredient can have a significant effect on food safety and the food’s overall organoleptic properties. We also need to replace less sustainable ingredients and processes with ones that are fully traceable and that are produced with less energy and minimal resources.”
The sustainability challenge is particularly difficult.
“One might think that sustainability expectations just add a series of additional acceptance criteria to a long list: use only ingredients that are sustainably sourced; limit energy consumption; limit waste, and so on,” Pepermans said. “Of course, this is the case; but when products don’t meet expectations, they must be reformulated.”
P&G, for example, has launched a new Tide Eco-Box laundry detergent that contains 30% less water and uses 60% less plastic than its conventional product. Because of its smaller size, more of the product can be shipped with fewer trucks – resulting in a lower carbon dioxide (CO2) impact.
Consumers welcome such changes, but many also are paying more attention to the ingredients inside the package.
“Many consumers are now requiring sustainable ingredients that support a circular economy, healthy living and protect our planet,” said Robyn Mandalakis, an independent CPG consultant who spent 29 years with Colgate-Palmolive. “As we know, competition is all about speed. In order to achieve speed, roughly 90% of CPG product development is reformulation, while only 10% is delivering truly new products.”
CREATING A NEW RECIPE FOR SUCCESS
But how can firms be sure of optimal results? And how can they arrive at those results faster, to deliver the products that customers are demanding now?
“There are so many choices,” Pepermans said. “Which ingredients do you change? How much of each ingredient do you use? Which production process uses the least resources? What packaging is optimal? The number of combinations of these choices is far too big to be explored manually. There are simply not enough experienced formulators to keep up.”
Reformulation is a complicated business. Success requires firms to first understand their products, ingredients and processes.
“That makes it easier to take the product apart and reformulate it,” said Therese O’Rourke, Kerry’s chief technology officer for Europe and Russia. “It is all based on the expertise of our development and application team, backed by analytical, taste, nutrition and sensory expertise.”
Kerry’s scientific expertise helps its teams to understand not only the ingredients used, but also the interactions between them.
“Our regulatory department has a deep understanding of food legislation and they are very future-focused, scanning impending changes so we can proactively support our customers,” O’Rourke said. “An example of this was the recent introduction of EU legislation, which limits the amount of acrylamide, a chemical that naturally forms in starchy food products during high-temperature cooking. We anticipated this change in legislation and, in response, we launched Kerry’s Acryleast, a natural ingredient, which can reduce acrylamide levels in baked goods by up to 90%.”
Kerry also has taste experts, flavorists, sensory and analytical scientists responsible for ensuring that the company can reformulate without compromise. “Our panel of expert tasters provides in-depth information about sensory profiles to ensure reformulation does not have an impact on product signature taste,” O’Rourke said.
But how can firms be sure of optimal results? And how can they arrive at those results faster, to deliver the products that customers are demanding now?
“Changing one ingredient can have a significant effect on food safety and the food’s overall organoleptic properties.”
Juan Aguiriano
Group Head, Sustainability, Kerry Group
“There are so many choices,” Pepermans said. “Which ingredients do you change? How much of each ingredient do you use? Which production process uses the least resources? What packaging is optimal? The number of combinations of these choices is far too big to be explored manually. There are simply not enough experienced formulators to keep up.”
THE DAWN OF DIGITAL
As with so many complex challenges, digital technology can lend a hand. With capabilities that include molecular modeling, digital simulation helps researchers to accurately predict the properties of an ingredient, how that ingredient will interact at a molecular level with the other ingredients, and the best processing methods to achieve the desired results – without the need for extensive and costly lab testing, and in a fraction of the time of physical tests.
“Companies can develop products even faster if they have the ability to predict formula performance when swapping ingredients, without having to do any physical testing,” Mandalakis said. “If you manage to eliminate testing you not only gain speed to market, but also huge cost savings. Testing is both expensive and time-consuming. Sustainability demands and speed to market are the biggest use cases for reformulation technology today.”
With a digital solution that predicts successful results in less time, Mandalakis said, researchers can model many more formulas than would be possible with physical experimentation. “You can also optimize the ingredients in new and improved ways,” she said. “It’s a key selling point for digital transformation and formulation technology.”
Convincing scientists to trust the results – particularly for new ingredients that haven’t been modeled before – will take time, however.
“In order to model a product and predict performance you need to have all the formulation data, together with all the test data on the ingredients and prior formulations,” Mandalakis said. “Only then can you apply machine learning to predict how the new formula will perform. A huge change management effort is still needed to get to this point.”
In fact, many CPG companies still work in silos that separate scientists in R&D from production and manufacturing experts, who all need to collaborate to achieve successful reformulations.
“The globalization of the industry brings a greater need for effective collaboration,” said Nandakumar Subramanian, PLM/MES/LAS Customer Success Lead for North America at multinational technology firm Tech Mahindra. “We’re often dealing with multiple processes – they could be region specific – where teams working in different countries, or even time zones, can have trouble collaborating effectively. Or they’re business-unit specific, or anything else. What researchers need to do is to break down those process silos and harmonize those processes together into a single stream of work.”
Mandalakis believes that more success stories can help accelerate digital simulation adoption.
“There’s a need for strong internal advocates who can sell formulation technology solutions to senior leaders with compelling business cases,” she said. “However, as more and more digital natives enter the scientific population, I think it’ll be an easier change-management effort to move companies into digital labs in the future.
Learn more about molecular modeling for CPG product reformulations