Rising costs driving CPG companies to adapt recipes, change approach to innovation: TraceGains

Rising costs driving CPG companies to adapt recipes, change approach to innovation: TraceGains
Prices for buckwheat, rising prices for crops. Global food crisis, rising prices in the US. Market for financial derivatives.

Higher costs are driving CPG companies to review their products and operations, according to: TraceGains’ Report on Supply Chain Disruption in 2022. The survey of more than 300 food, beverage and nutritional supplement professionals found that companies are not only changing their current products, but are also adapting their approach to new product development in the face of higher ingredient costs.

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Key findings from the study:

  • Nearly 9 in 10 respondents said higher prices have changed the way they do business. Nearly two-thirds have modified six or more recipes or product formulas, while nearly half have completely discontinued production of some products.
  • CPG companies take different approaches to innovation in response to supply chain disruptions – 35% of respondents said their organizations have cut back on R&D, while a nearly equal proportion said they have accelerated innovation.
  • To prepare for the future, CPG companies are increasing their supplier diversity. More than two-thirds plan to expand their supplier networks, while a quarter plan to restore their supply base.

“As consumers, we feel the pain of supply chain problems every time we walk out of a supermarket,” TraceGains CEO Gary Nowacki said in a press release. “This research immediately sheds light on the issue from a CPG brand’s perspective, letting other food and beverage companies know they are not alone in this battle. Forward-thinking brands have used this unfortunate time as a wake-up call to modernize legacy operations, and those that have already done so are much better positioned to mitigate disruptions with the least impact.”

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