With a bevy of new bakery and snack products launched in 2023 and 2024, it would appear that product development has recovered from its pandemic slump from 2020. Major companies like Flowers Foods, Thomasville, Ga.; Campbells Snacks, Camden, NJ;  and Hostess Brands, a subsidiary of J.M. Smucker Co, Orrville, Ohio, have made headlines by expanding into new categories with existing brands or completely inventing a new product altogether. 

In Baking & Snack’s 2024 Trends in Commercial Baking Industry Product Innovation & Development study, Cypress Research surveyed 111 baking industry professionals — including R&D and operations professionals and corporate level executives at a wide range of companies — to understand exactly how prolific product development currently is, the challenges R&D professionals face and where their focus is when it comes to new products. 

The study breaks new product development into three categories: Invention, Innovation and Renovation. Invention is a truly breakthrough product that has never been seen before, such as Hostess Brands’ Kazbar or Reading, Pa.-based Unique Snacks’ Puffzels. These products may require a new brand or even processing approach. Innovation refers to new products within existing brands and categories, such as line extensions or Flowers Foods extending the Dave’s Killer Bread brand into bars. Renovation was defined as reformulating existing products. This could be for a number of reasons including cleaning up an ingredient list or reducing sugar. 

“The goal is to look at the changes in product development very broadly at an industry level,” said Marjorie Hellmer, president, Cypress Research. “Where are bakers’ focusing their attention? Where are they getting their inspiration? What role do ingredient suppliers have? Right out of the gate we are seeing changes over time in the focus of what kinds of R&D initiatives are happening within the baking industry.” 

Baking & Snack also conducted this study in 2022 to see the impact the COVID-19 pandemic had on product development initiatives, and the two studies reveal an industry all in on product development in 2024. As survey respondents revealed though, there are still lingering effects of the pandemic and the crises that followed that are putting significant pressures on R&D professionals. 

The COVID-19 pandemic certainly slowed baking companies’ product development plans, sometimes halting them all together. Lack of foodservice business and empty grocery store shelves kept bakers focused on baking as much of their top-selling retail products as possible, leaving no space for new product development and small runs. 

In the 2022 study, Innovation and Invention definitely took a backseat in priority for baking companies compared to their self-reported pre-pandemic numbers. For example, 88% of respondents said Innovation was a priority pre-pandemic while 76% reported it as a priority in 2022. Seventy-three percent reported breakthrough Invention as a priority pre-pandemic, which dropped to 59% in the 2022 survey results. In 2024, both of these have recovered with 84% of respondents reporting Innovation as a priority and 67% focused on Invention. 

Renovation has also grown in the minds of bakery professionals as a necessary part of product development. While Innovation and Invention took a hit due to the pandemic, supply chain challenges put Renovation front-and-center. Pre-pandemic only 58% of respondents reported that Renovation was a company priority, but that percentage grew to 71% in 2022 and 73% in 2024. 

“We see significantly more focus in reformulation of products compared to pre-pandemic,” Hellmer explained. “That’s a direct result of COVID disrupting the industry. A focus on cost savings and supply chain disruptions made Invention and Innovation much more difficult.”

Bakers’ appetites for risk in product development has held steady for Invention, but there’s been some shifts in their approach to risk regarding Innovation and Renovation initiatives. In 2022 only 16% of baker respondents reported that their companies had a high risk tolerance for Innovation, but in the latest study, 23% said they had a high risk tolerance. 

Renovation saw the opposite. The share that reported a high risk tolerance fell by 12 points to 17% in 2024 compared to 29% in 2022, while low risk tolerance gained more traction with a third of bakers saying they had a low risk tolerance for Renovation in 2024 compared to 18% two years ago. 

“Renovation has been an important lever during and after the pandemic,” said Penny Patterson-Smith, chief innovation officer, Flowers Foods, during Baking & Snack’s free webinar, “State of the Baking Industry: Product Innovation & Development,” available on-demand at www.bakingbusiness.com. “If you can reimagine or re-energize something consumers already know and like, that can be a good quick win for companies and consumers. … When the marketplace changes, needs change. Being insights driven — understanding those needs better and being more agile without losing our disciplined approach — is how we’ll increase the likelihood of innovation success.” 

Product development may be ramping up over the past two years, but concept-to-shelf timelines are shrinking. In 2022, one-third of professionals reported that timeline as being six months or less. In 2024, that percentage jumped to 41%. At the same time the percentage of professionals reporting a seven- to 12-month product development timeline — 34% in 2024 — decreased. 

This article is an excerpt from the September 2024 issue of Baking & Snack. To read the entire feature on State of the Baking Industry, click here.