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FDA issues anti-terror food guides
Five firms win half of $14bn industry
How to find your innovation sweet spot
Food safety
FDA issues
anti-terror food guides
The US Food and Drug
Administration (FDA) has issued four guidance documents to help
manufacturers reduce the risk of tampering or
other malicious, criminal or terrorist actions.
Publication of these voluntary
action guides is part of the US’s Operation Liberty Shield (www.dhs.gov),
a “comprehensive national plan designed to increase protections for
America's citizens and infrastructure while maintaining the free flow of
goods and people across our border with minimal disruption to our economy
and way of life.”
The FDA also announced increased
surveillance of domestic and imported foods, and enhanced collaboration
with other government agencies, as part of its Liberty Shield initiatives.
For details please see
Fact
Sheet
Food
Security Preventive Guidances Federal Register (PDF)
·
Final
Guidance--Importers and Filers
·
Final
Guidance--Food Producers, Processors, and Transporters
Food
and Cosmetic Security Guidances Federal Register (PDF)
·
Draft
Guidance--Retail Food Stores and Food Service Establishments
·
Draft
Guidance--Cosmetics Processors and Transporters
For background please see http://www.fda.gov/bbs/topics/NEWS/2003/NEW00881.html.
Flavours
& fragrances
Five
firms win half of $14bn industry
On-going consolidation means that
five firms now control 50 percent of the $13 - $14 billion global flavour
and fragrance market, says market researcher Frost & Sullivan in a new
state of the industry review.
Low growth in the food market,
high product development costs and highly fragmented regional markets and
tastes suggest a difficult future for the business.
The United States and Western
Europe account for 58 percent of the global market, having one-third and a
quarter of the market respectively.
The fragrance industry has four
types of companies: major fragrance houses, regional fragrance houses,
small fragrance suppliers, and commodity suppliers.
The majors like IFF, Givaudan and
Quest International compete for the largest customers and account for
approximately 50 percent of the worldwide fragrance sales. The rest of the
market is split between much smaller suppliers.
The flavour business has only
global and local flavour suppliers. Consolidation here means the top five
global suppliers account for about half of total flavour sales. But
localised taste preferences mean that more than 500 suppliers of local
flavours can eke a living in their home markets.
Barriers to entry
The winning businesses have
decades-long cultures of successful product innovation. It is hard to
replicate the processes needed to develop unique flavours and fragrances.
Further, firms depend on access to a very large range of standard and
exotic raw materials, as well as access to new raw material formulations
and additions. It is hard for new entrants to build these capabilities
quickly.
The fragrance markets are highly
specialised, and success in one does not guarantee success in another.
Therefore a large and efficient fragrance business is strong in many small
markets.
Stunted growth
The top question for flavour and
fragrance companies is the lack of growth. But it is not clear whether the
root cause is slow population growth, consumer boredom or something else.
The late 1990s saw much
consolidation among food manufacturers. They use their size to increase
their purchasing power. But food retailers have grown even faster than
food companies, and are squeezing them on price. This pressure will
continue to be passed back to the flavour and fragrance companies.
Similarly, the packaged food
companies have lost brand-pricing power as retailers’ private label
brands have improved in quantity and quality. Price pressure is therefore
likely to be a normal state of affairs in the US and Europe. Market
share gains will depend largely on product innovation.
For long term growth suppliers
should look to the Asia-Pacific region and South America. Asia Pacific has
3.2 billion people, of whom only 20 percent spend at Western levels.
Food service companies are another
potential source of growth. The
convenience trend is just starting. Quick service restaurants, such as
McDonald's and Pizza Hut, today represent a fraction of total food
consumption. Moreover, their production processes are relatively
primitive. This market has room for higher value flavours.
Review
How to find your
innovation sweet spot
By Gail Purvis
Start with the product and its
characteristics rather than customers and unmet needs! This
unconventional advice comes from the March issue of Harvard Business
Review.
How can product developers hit the
innovation sweet spot, far enough from the existing products to attract
real interest, but close enough to fall within a company's existing
positioning and capabilities?
The secret is systematic inventive
thinking. Start with an existing product and its characteristics rather
than customers and their unmet needs. Don't listen to your customers,
listen to the voice of your product.
-
List the essential elements of
a product, its physical components and its attributes (colour,
expected useful life)
-
Identify physical components
and attributes (temperature and type of user)
-
Follow one or more of five
generic innovation patterns, and manipulate these elements to come up
with something new.
These patterns or 'templates of
innovation' emerge from an historical analysis of product development
trends. The research is based on the work of Russian engineer Genrich
Altshuller, born in 1926, who received his first patent aged 15. He began
to examine his own and other inventions to see patterns in how people
solve the contradictions that are at the heart of the innovation process.
After criticising the Soviet approach to science innovation, he was jailed
and denied sleep because he refused to sign a confession. Legend has it he
made two eye shapes out of scrap paper, drew pupils with a charred match,
stuck the paper to his eyelids with spit, and calmly fell asleep. He died
in 1998.
Altshuller categorised more than
200,000 patents in identifying an Algorithm for Inventive Product Solving
(in Russian ARIZ). His students moved on to apply his ideas on
problem solving in other areas.
TRIZ (Theory for Invention
Problem Solving)
Altshuller found the most successful product innovations fit into at least
one of five patterns. Understanding these patterns can help predict the
emergence of new products before the market signals its demand. The
patterns are:
Subtraction.
Instead of adding components or attributes, remove them, particularly
those that seem desirable or even indispensable. Having done so,
developers often see a way to replace it with something better, but one
that should be within the closed world of the product and its immediate
environment.
Multiplication.
Make one or more copies of an existing product component but then alter
those copies in some important way eg Gillette's dual (now three-)
blade razor.
Division.
Divide the product into its component parts and you can see something that
was integrated into the whole in an entirely different light. This change
in perspective can lead you to reconfigure the parts in unanticipated
ways or even keep the parts separate in a way that offers unforeseen
benefits. For instance, the old hi-fi or music centre morphs into separate
amplifer, receiver, power unit, player and modular speakers.
Unification.
Much innovation happens by assigning a new task to an existing element of
the product or its environment, so unifying two tasks in a single
component. A classic example is the now ubiquitous suitcase with wheels.
Attribute Dependency Change.
This involves the dependent relationships that exist between attributes of
a product and attributes of its immediate environment, for instance,
spectacles whose lenses change colour when exposed to sunlight.
Where to start?
Where the product is complex,
start with subtraction. For cost control, look to unification. When
looking for quantitative improvements, go to multiplication. Attribute
dependency is the most fruitful pattern but the most difficult to apply.
It may be useful to create a
matrix with columns for six internal attributes and rows for the same
internal attributes and six external ones. Patterns can be also used in
conjunction with one another.
Finding your innovation sweet
spot. Jacob Goldenberg, Roni Horowitz, Amnon
Levav and David Mazursky. Harvard Business Review, March 2003.
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