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Updated on 12/06/2003
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WELCOME    HEADLINE NEWS 12 June 2003
Research shows that  90 percent of new products launched in  supermarkets do not survive more than two years. The cost of failure runs into billions.

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Anyone who develops new products for a living must be aware of a multitude of influences. Acknowledging this, we cover

scientific discoveries

consumer trends

product design and formulation

engineering technology

process engineering

manufacturing

filling and packaging

logistics and distribution

retail merchandising

end of life disposal

Then there are the legal and regulatory issues, such as safety and labelling, as well as intellectual property rights, brand management, competition and international trade that we have to take into account.

But it all means nothing without the creativity and insights of men and women who can put things together in new ways to create new products that improve our lives.

We celebrate those people.

Ian Grant

Publisher

Meat market adds weight
NFPA wants relaxed bioterrorism rules
Costs outweigh choice benefits of sku proliferation
Refreshing paws?
SoBe’s summer Synergies
Ethics body calls for fresh look at GM for third world
Biotechnology heads for profitability
Stork brings home bacon

For the record

US Agriculture Secretary Ann Veneman will host government ministers from more than 100 countries at the Ministerial Conference and Expo on Agricultural Science and Technology in Sacramento, California from 20-25 June. The US is expected to use the meeting to pressurise developing countries to accept genetically modified crops as seed and food aid.

Veneman told reporters existing and emerging technologies in food and agriculture "can help feed the hungry, improve nutrition, raise living standards and narrow the gap between the haves and have-nots, while protecting the environment for future generations."

Germany’s top research establishment, the Max Planck Society, is to shut 12 research departments and one institute, mostly in medical fields, because of funding cuts.

Two US firms, Manhattan Associates and Alien Technology, have brought out a joint product "RFID in a Box" to get retailers up and running quickly on the radio-based item identification technology.

Meanwhile software firm Microsoft said it will join AutoID, a joint venture of the Uniform Code Council and EAN International, to develop and oversee commercial and technical standards for the RFID-based Electronic Product Code (EPC) Network. Earlier this year, Microsoft announced its BizTalk Toolkit for UCCnet, which allows retailers and their suppliers to connect quickly and cheaply to the UCCnet trading network.

US food firms Hellmans and Best Foods have launched a new line of snack dips in chilli, ham & mustard and barbeque flavours.

Air Products kicked off its consolidated product range for the food and beverage sector under the Freshline brand. It combines processing equipment (including tunnel freezers), modified atmosphere packaging, equipment maintenance, process monitoring, data collection and factory information technologies.

Food allergens, especially peanuts may cause severe asthma in children, according to research to be published in the July 2003 Journal of Allergy and Clinical Immunology (JACI).

After testing 12 women, researchers at Maastricht University say that food cooked or made with cooking oil made mainly from diglycerides, such as the ADM Kao’s Enova, rather than the more common triglycerides may boost fat burning and reduce appetite. Details were published in the May issue of American Journal of Clinical Nutrition. A different project reported in the same issue said substituting cis unsaturated fatty acids for trans and saturated fatty acids may reduce the risk of coronary heart disease (CAD) in consumers. It added the effects of carbohydrates and of lauric acid–rich fats on CAD risk remain uncertain.

The British government has backed a proposed new recycling law that requires local councils to collect at least two types of waste for recycling from every home in England. Friends of the Earth, an environmental activist organisation that drafted said the Bill now an “excellent” chance of becoming law.

Australian-US biotech firm Proteome Systems has hired former Millipore executive William Emhiser to head its North American operations.

The UK’s Food Standards Agency's nutrition division wants proposals from potential contractors to undertake two reviews, one into local nutrition, diet and health initiatives that involve and/or affect children and young people, and the other covers those in a leisure service setting. The deadline is 27 June 2003.

Nutrition

Meat market adds weight

The world's appetite for meat continues to soar, with 242 million tons produced in 2002, up 2.5% from 2001, says the Worldwatch Institute’s Vital Signs report. Meat production doubled from 1997 and rose five-fold over the last 50 years. From 1960 the number of livestock rose 60% from three billion to more than five billion, and the number of fowl has quadrupled, from four billion to 16 billion.

Most of the corn and soybeans harvested in the world go to fatten livestock. One calorie of flesh (beef, pork or chicken) requires 11 to 17 calories of feed, so a meat eater's diet requires two to four times more land than a vegetarian's.

Economic differences skew meat consumption; in industrial nations, consumers eat more than 80 kg of meat per person per year, but in developing countries, consumption sits at just 28 kilograms.

Regulations

NFPA wants relaxed bioterrorism rules

The US National Food Producers Association has told the Food & Drug Administration that present proposals to limit the risk of a bioterrorist attack on the American food chain is unworkable, unmanageable and too costly. Instead it recommends expanding existing product recall procedures.

In a nine-page letter to the FDA, the NFPA’s chief science officer Rhona Applebaum said “NFPA believes FDA significantly underestimates the economic impact of the proposed rules for records establishment and maintenance… We believe the regulations: (1) will introduce a higher burden than estimated; and (2) are not practical or manageable and therefore cannot be implemented without imposing unnecessary high costs.”

Marketing

Costs outweigh choice benefits of sku proliferation

More and more products mean fewer and fewer jobs, says Forte Industries marketing director Rodger Roeser. “SKU (stock keeping unit) proliferation is wreaking havoc on the economy.”

Roeser argues that the continued growth of product lines is detrimental to an already soft economy. A low product turnover and an increase in warehouse inventory increases the costs of goods sold, leading to less return for companies and their shareholders, and inflates consumer prices artificially, he says.

"Managing the complex flow of products and information resulting from SKU proliferation is a significant strain of already overtaxed warehouse systems and distribution operations," Roeser said. "Warehouses are forced to maintain higher inventories and product mix. This leads to limited visibility throughout the warehouse, stock obsolescence and a huge negative financial impact."

Increases in SKUs lead to more shipments of fewer products. This requires more handling capabilities, which raises shipping and handling costs. The knee-jerk reaction for most organisations is to raise prices and lay off labour, both of which harm the economy.

Water

Refreshing paws?

The K9 Water Company of California (where else?) has introduced a range of vitamin-enhanced flavoured bottled waters for dogs under the brand names Toilet Water, Puddle Water, Hose Water and Gutter Water. The flavours are chicken, beef, liver and lamb, and bottles come four, 12 and 24 packs.

Beverages

SoBe’s summer Synergies

PepsiCo subsidiary South Beach Beverage Company said it will add a new family Synergy family to its range this summer. Aimed at vending machines, Synergy in 340 ml cans in comes five new flavours: Kiwi Strawberry, Fruit Punch, Mango Orange, Lemonade and Grape. Each has 50% real juice and is fortified with vitamins, calcium and zinc, giving 80 calories per 236 ml serving and lower sugar content compared to 100% juice products.

GM

Ethics body calls for fresh look at GM for third world

“Discussions about the benefits and risks of genetically modified (GM) crops are as much about politics and economics as they are about technological issues. Thus, whether or not the use of a GM crop will be beneficial will depend on many factors.”

This view is driving a move by the UK’s chief ethics body on genetic engineering, the Nuffield Council, to reassess the effects of the technology. The council this week issued a 104-page discussion document, The use of genetically modified crops in developing countries, as a follow-up to its 1999 view that the use of GM crops in the third world was “a moral imperative”.

The council has not yet changed its mind; it still believes GM crops could help small-scale farmers in developing countries. But it is being more cautious as evidence emerges of intercrop and possible interspecies transmission and massive short term changes in labour practices, among other things.

The council said European agricultural policy is likely to restrict freedom of choice of farmers in developing countries. “Many do not have the infrastructure to meet strict EU requirements for labelling and traceability of GM crops. Additionally, even planting GM crops only for domestic use might jeopardise an export market for non-GM crops,” it said.

The council plans to include comments on its views in a report to the British government. It hopes this will form part of the government’s current public debate on the topic.

Copies of the Discussion Paper are available from the Council's website: http://www.nuffieldbioethics.org. The report, Genetically modified food: ethical and social issues, was published in May 1999 and is available from the Council's website at: http://www.nuffieldbioethics.org/gmfoods.

Biotechnology heads for profitability

Despite challenges posed by politics, regulations, recession, technology and management, the biotechnology sector could be in profit by 2010, reports audit firm Ernst & Young.

It has published two new reports, Beyond Borders: The Global Biotechnology Report 2003, and Resilience: Americas Biotechnology Report 2003, that show an industry simultaneously struggling and succeeding. Overall global biotech revenues increased 15% to more than $41 billion, but R&D expenses jumped 34% to more than $22 billion; more than half of revenues were reinvested in R&D.

Ernst & Young's Americas biotechnology director Michael Hildreth said "Based on the industry's revenue growth, robust pipeline, more efficient product development, and belt-tightening in the face of the current cash crunch, the biotech industry as a whole could within five years have its first profitable year overall since the industry began more than 25 years ago."

More than 50 companies, or about 15% of publicly traded US companies, posted profits in at least one year during the past three years. In the same period more than 20 companies recorded sustained profitability over all three years.

Jurg Zurcher, Ernst & Young's Biotechnology leader in Switzerland, said "The biotech industry is at the beginning of its technology curve, and innovation is accelerating. Biotechnology is the driver of innovation not only in health care, but also agriculture, industrial production, and environmental management. Over the past five years, revenues in Europe have soared 845%, nearly 200% in Canada, and more than 80% in the US."

Although 2002 was the industry's third-best financing year ever, investors are more selective about where and how to invest. The competitive financing environment is forcing companies to merge with partners with complementary technologies. Big biotech and big pharma still rely on genomics innovation for new products, and this continues to drive investment in emerging biotech companies. During the market downturn, biotech companies with proven product development capabilities have negotiated mega-deals from pharmaceutical companies. The resultant capital infusion, a combination of equity investment, R&D funding, and profit sharing in marketed products, is creating a new model for biotech business development.

Globally, the number of biotech companies grew about two percent but the number of publicly traded companies actually dropped three percent, and fewer new companies formed. Zurcher noted "Europe may be the hardest hit. The market                                   capitalisation of Europe's publicly traded companies dropped more than half in 2002. Total market caps for the US industry were down 35% percent; Canada was down 31%, and Australia 18%. Asia/Pacific was brighter with revenues up 28%, staff up 24%, and the number of companies up by 17%."

A key challenge is the high cost and complexity associated with addressing the regulatory hurdles of different countries. Efforts to harmonise regulations worldwide will overcome this. Ongoing critical drivers furthering the globalisation of biotechnology include

Biotech and pharmaceutical companies are spanning the globe for partnerships, R&D alliances, and engaging in outsourcing to help bring products to market more efficiently.

  • Governments are staking much of their 21st century economic development on biotechnology innovation.

  • Venture capital investors are seeking new opportunities with less of an emphasis on location and more attention paid to the experience of the people involved and the quality of the intellectual property.

  • University scientists have increased access to rich public databases of biological information, which also enhances researcher-to-researcher collaboration

Sales

Stork brings home bacon

Dutch food processing equipment maker Stork has won orders worldwide for its new high capacity hot-air SpiralOven, which combines steaming, roasting and grilling of a wide range of meat products. The first systems will go to the Netherlands, Sweden, Thailand, Turkey and Brazil.

The PLC-controlled SpiralOven has a precise climate control system to give the desired product characteristics. This allows highly efficient roasting and grilling of chicken, chicken fillets, bone-in and other products. The oven is also suitable for roasting preformed products such as burgers and nuggets, as well as composite products or for steaming products like chicken fillets.

 
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