The importance of new product development for food and drink businesses

_{A new product development chef at work in the kitchen.}

In today’s competitive food and drink industry, new product development (NPD) is a vital strategy for food businesses seeking to maintain relevance and meet the evolving demands of consumers. Since the launch of Kellogg’s Cornflakes in the 19th century, McDonald's fast-food burgers in the 1940s, and Nutella Chocolate Spread in the 1960s, each of these groundbreaking products transformed the food sector by offering new ways of producing, eating, and enjoying food, creating lasting impact on consumer behaviours, the food industry, and the global economy.

As the world of food continues to evolve, new innovations will undoubtedly emerge. The food and drink sector is continually marked by rapid changes in consumer preferences, dietary trends, and advancements in technology. To stay ahead of the curve, businesses must consistently innovate to create new products that resonate with customers and meet market needs. The importance of NPD cannot be overstated, as it plays a key role in the growth, profitability, and sustainability of food and drink businesses.

Meeting changing consumer demands

Consumer preferences are constantly evolving, influenced by factors like health trends, sustainability considerations, and lifestyle changes. As consumers become more health-conscious, there is a rising demand for products that align with specific dietary requirements, such as gluten-free, plant-based, or low-sugar options. Government legalisation like the newly introduced HFSS (High Fat, Sugar and Salt) regulations are forcing manufacturers to create products that support the consumer to make healthier choices. Likewise, ethical concerns about sustainability are shaping product choices, with consumers seeking out foods that are organic, locally sourced, or free from artificial ingredients.

For food and drink manufacturers, NPD offers the opportunity to address these shifting demands. By continuously developing new products that cater to health, wellness, and sustainability trends, companies can stay competitive and meet the expectations of their target market. Without innovation, food businesses risk becoming outdated and losing consumer trust, which can have a long-lasting impact on sales and brand loyalty.

Differentiation in a packed marketplace

The whole industry is highly saturated and competitive, with countless brands offering similar products. In such a crowded market, differentiation is crucial for standing out from the competition. New product development allows manufacturers to offer something different—whether it's a novel flavour combination, ingredients which showcase sustainability, a product with added nutritional benefits or a product emphasising local provenance. These innovations help businesses carve out a market for themselves and attract consumers who are looking for something new and exciting.

For instance, the rise of plant-based alternatives has led to the creation of new products, ranging from plant-based milks to meat substitutes. Companies that recognised and acted on this trend early on and developed new offerings have gained a significant market share. Recently we helped to develop a vegan blue cheese using cashew nuts and fermented seaweed and a vegan kuku (egg free frittata) in order to support a customer. In this way, NPD enables businesses to differentiate their brand and maintain a competitive edge.

Capitalising on market trends

Every year, the food and drink industry witnesses emerging trends that shape consumer behaviour. Trends like "free-from" foods (e.g. gluten-free, dairy-free), and functional foods (e.g. probiotics, superfoods) have gained significant traction. Manufacturers who are quick to develop new products that align with these trends are more likely to benefit from increased consumer interest and demand. The popularity of kombucha in recent years is a direct result of consumer interest in functional beverages. In Scotland, the development of seaweed and rosehip kombuchas and milk kefirs that offer consumers a healthy drink with added gut health benefits has been an interesting project for our team. Food and drink manufacturers that embraced this trend early on were able to capture the customer base and build brand recognition.

Improved profitability and growth opportunities

Developing new products often leads to increased sales and profitability. When a company introduces a successful new product, it can attract a broader customer base, increasing its market reach. Additionally, new products can be sold at premium prices if they cater to new markets or offer unique benefits. This creates an opportunity for manufacturers to boost revenue and improve their financial performance. Moreover, NPD can help food and drink manufacturers tap into new or strategic distribution channels. For instance, health-oriented snack products are well-suited to convenience stores, gyms, or health food shops. For example, we recently helped to create an energy bar targeting the cycling market using by-products from hemp oil production to support a customer.

Enhancing brand loyalty and consumer engagement

When manufacturers invest in NPD, they show their commitment to innovation and their consumers’ evolving needs. This fosters brand loyalty, as consumers are more likely to engage with a brand that consistently offers new and exciting products. NPD also provides opportunities for consumer interaction, such as through product tastings, feedback surveys, and social media campaigns.

The importance of taste

While health-conscious, sustainability and ethically mindful consumers are increasingly seeking nutritious and different options, taste remains a key factor in whether these products will be embraced or discarded. No matter how healthy or functional a product may be, if it doesn't taste good, consumers are unlikely to make it a regular part of their diet.

In today’s food market, where flavour and texture often influence purchasing decisions, food and drink businesses must find a balance between health benefits and taste appeal. Products that combine both elements are more likely to create lasting customer loyalty and repeat sales.

Whatever stage you’re at in your food and drink business journey, Food & Enterprise team at SAC Consulting can help. Get in touch with us on foodanddrink@sruc.ac.uk

Posted by SAC Consulting on 10/03/2025