Mapping current innovation and emerging R&D needs in thefood and drink industry required for sustainable economic
growthFinal Report

Report to Defra

May 2013

Arthur D. Little Limited
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London WC1B 3AU
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Reference P12001690_024rep.docx

NoticeThis project has been funded by Defra. However, the content and any recommendations contained within
this report do not necessarily reflect Defra’s views.
This report was commissioned by Defra on terms specifically limiting the liability of Arthur D. Little Limited.
Our conclusions are the results of the exercise of our best professional judgement, based in part uponmaterials and information provided to us by Defra and others. Use of this report by any third party forwhatever purpose should not, and does not, absolve such third party from using due diligence in verifying thereport’s contents.
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Table of Contents
0.

1.

Executive Summary

60.1

Introduction to this study

6

0.2

Drivers for technological innovation

6

0.3

Priorities for technological innovation

7

0.3

Barriers to technological innovation

9

0.4

Areas for further consideration

10

Introduction

12

1.1

Definitions used in this study

12

1.2

Scope of this study

13

1.3

Approach used in this study

14

1.4

Structure of this document

15

2.

A brief overview of the food and drink industry in the UK

16

3.

Drivers for technological innovation

19

4.

Priorities for technological innovation

23

4.1

Working effectively at the farm gate interface

24

4.2

Manufacturing healthy and differentiated food products

27

4.3

Changing manufacturing and supply chain efficiency

30

4.4

Reducing and reusing waste materials

33

4.5

Opportunities for technology transfer from adjacent industries

37

4.5

Summary of priorities for technological innovation

38

5.

Barriers to technological innovation

39

5.1

Obtaining funding for technological innovation

39

5.2

Shortage of relevant skills in technology and engineering disciplines

40

5.3

Internal priorities and culture

41

5.4

Consumer demand for, and acceptance of, technological innovation

41

5.5

The ability to make and register health claims

41

5.6

Forming consistent relationships associated with technological innovation
throughout the supply chain

42

Summary of barriers to technological innovation

42

5.7
6.

Areas for further consideration

43

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3

List of Tables
Table 1:

Applicability of challenges to different sub-sectors in food and drink

24

Table 2:

Opportunities for technology transfer from adjacent industries

37

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4

List of Figures
Figure 1: Overview of drivers influencing technological innovation in the UK food and drink
industry

7

Figure 2: Study scope: The UK food and drink value chain

13

Figure 3: Overview of the approach used in this study

15

Figure 4: UK manufacturing sector: Change in turnover by segment (2008-2011)16

Figure 5: New product variants by country (2005-2011)17

Figure 6: Non-exhaustive overview of the UK food and drink R&D landscape18

Figure 7: Overview of drivers influencing technological innovation in the UK food and drink
industry

19

Figure 8: Top ten drivers for technological innovation in the UK food and drink industry

20

Figure 9: Selected global agricultural commodity prices (2000-2020)

21

Figure 10: Challenges to be addressed through technological innovation – Summary

23

Figure 11: Influence of drivers on challenges associated with working effectively at the farm gateinterface25
Figure 12: Influence of drivers on challenges associated with manufacturing healthy anddifferentiated food products

27

Figure 13: Influence of drivers on challenges associated with changing manufacturing and supply
chain efficiency
30
Figure 14: Influence of drivers on challenges associated with reducing and reusing waste materials
33
Figure 15: Summary of free-text responses to the question: If you were in Defra’s position, what
R&D would you fund to encourage the production of environmentally sustainable food?
34
Figure 16: Top 10 barriers to R&D and innovation

40

Figure 17: Summary of recommendations

43

Figure 18: Food responsibilities across Government, Devolved Administrations and ResearchCouncils

45

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50. Executive Summary
0.1

Introduction to this study

Government priorities set out in Defra’s current business plan1 seek to support British farming andencourage sustainable food production by enhancing the competitiveness, resource efficiency and resilienceof the food chain to ensure a secure supply of environmentally sustainable and healthy food. Defra has,
identified a gap in understanding of how the post-farm gate food and drink industry can use technologicalinnovation (research and development – R&D – and more incremental new product development – NPD) toaddress the technological solutions needed to achieve this ambition.
This study seeks to fill this gap. It provides an assessment of current technological innovation activity in theUK, and the drivers which influence it. It shortlists nine “hot spot” challenges – long term opportunities orproblems that can be solved through technological innovation. It also identifies those areas of technologicalinnovation which could address the challenges, and the barriers which are preventing this from happening
today.
The work has involved a literature review of around 50 existing studies and policy documents andconsultation with 65 experts from industry, cross-industry bodies, Government and its agencies and the
public science base. A core component of this study concerned a cross-industry survey which drew on theopinions of 280 respondents from the UK food and drink industry. This was valuable to inform priorities,
whilst recognising that it did not form a statistically significant sample of industry perceptions from across the
UK. A horizon scanning exercise involving 10 senior experts from industry, academia and from Government
and its agencies was also conducted to help identify future areas for technological innovation.
Both Defra and the authors of this study, would like to express their sincere gratitude to all those who havemade contributions.

0.2

Drivers for technological innovation

The food and drink sector is the largest manufacturing industry in the UK and contains a high proportion ofsmall and medium sized enterprises (SMEs). R&D expenditure is low compared to other manufacturingsectors, and the majority of effort is focused on the incremental development of new product variants,
involving innovation in packaging and reformulation and improvement of existing products and brands, which
is a key strength in the UK compared to other countries. However, there are some noticeable gaps comparedto other countries, particularly in the food and drink machinery and automation sectors, where there are a
multitude of smaller businesses and some strong networks, but few international scale players.
Technological innovation in the food and drink industry is primarily driven by consumer demand, and involves
making largely incremental developments to make products: more convenient and attractive; healthier; morenatural; better quality, and above all, less expensive, as summarised in Figure 1. Further drivers areassociated with the increasing costs of doing business, due to rising and fluctuating costs of agriculturalcommodities and animal feed, and of utilities, including energy and water.
Regulatory drivers also play a role - for example the food labelling requirements for products seeking to
make health claims are currently considered to be particularly difficult to meet. Taken together these drivers
have a significant influence on the extremely tight margins that many of the actors experience within the
post-farm gate supply chain – even for those which do not seek to differentiate on price, such as artisan
biscuits, cakes & breads and other premium products.
1

Department for Environment, Food and Rural Affairs Business Plan 2012-2015, 31 May 2012
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6

Figure 1: Overview of drivers influencing technological innovation in the UK food and drink industry

Source: Arthur D. Little analysis

0.3

Priorities for technological innovation

The above drivers influence hot spot technological challenges which will continue to be of importancebeyond 10 years into the future. These challenges will require a step change in current technology
development which may not be achieved without coordinated effort, in a world where achieving shorter term,incremental improvements is the norm.
Nine challenges have been identified, in four main categories:

Working effectively at the farm gate interface



Manufacturing healthy and differentiated food products



Changing manufacturing and supply chain efficiency

Reducing and reusing waste materials

Working effectively at the farm gate interface
Working with primary producers presents opportunities for the food and drink industry to maintain andimprove food quality and authenticity, meet consumer demand for “natural” foods, and respond to volatility inthe cost of raw materials, as well as safeguarding food security. The key challenge in this area concerns
sourcing environmentally sustainable and resilient raw materials – the highest priority challenge
associated with environmentally sustainability identified in the cross-industry survey.
This challenge is of greatest significance to those sectors which are closest to primary production and rely on
bulk commodities, such as biscuits, cakes & breads, fruit & vegetable processing and oils & fats.
Technological innovation to address this challenge will involve: further effort in plant breeding to enhancecrop resilience, nutritional value and the processability of raw materials; the identification and sourcing ofalternative raw materials with lower environmental impact; the development of means to monitor and detect
food quality and contamination online; and enhancing understanding the impact that animal nutrition canhave on food products.

Manufacturing healthy and differentiated food products
Current consumer demand for healthier food products is focused on macronutrient requirements as acomponent of a balanced diet, rather than the development of “functional” foods and nutraceuticals. The
development of the latter is made difficult by current regulatory requirements on claims, and consumer
perceptions over what is considered “natural”. This is against a backdrop of an ageing population withincreasing incidence of nutrition-influenced disease, together with increasing consumer awareness of thelinkages between diet and health. This challenge also presents an opportunity for the UK to become a leader
in offering a diversified range of higher value products.

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7

Specific challenges in this category include further reducing salt, sugar and fat content of products
processed and including healthier components such as fibre. This challenge was identified by many of
the sectors, and amongst all sizes of company, as the highest overall priority for technological innovation. It
was of particular importance for the biscuits, cakes & breads, ready meals and meat processing sectors.
Much of the incremental development possible in this area has now been achieved, and a step change intechnological innovation is required. Further effort to reduce salt, fat and sugar content must be balanced
against the need to meet consumer demands for taste and product quality, avoiding the substitution ofcarbohydrates for fats. This can be achieved through technological innovation in areas such as: formulationengineering; improving understanding of sensory science and taste perception; and the identification of novel
substitutes for salt and sugar.
A further challenge concerns the development of new products aimed at specific consumer groups, inparticular, personalised nutrition to support healthy ageing and lifestyles. This can be achieved through:improving the diagnosis and prediction of nutrition-related illness to help guide programmes of healthyeating; and the development of products targeted at reducing the risk of developing nutrition-relateddiseases.

Changing manufacturing and supply chain efficiency
Drivers to improve efficiency in both manufacturing and supply chains are closely associated with the need toreduce costs in response to tightening margins. The main factors at play are a combination of consumers(and retailers) requiring cheaper food, and the rising costs of raw materials, animal feed and utilities.
Improving energy and process efficiency in the food manufacturing environment focuses on reducing costsby minimising processing steps and increasing throughput in order to reducing energy
consumption, as well as seeking opportunities to reduce overall energy consumption through, for example,
improved plant design. Efforts here are hampered by the significant capital outlay required for new process
technology, which is beyond the reach of many SMEs. In addition, the UK is not an international leader infood process technology – although there are pockets of excellence. Opportunities for technologicalinnovation include: new means of cooling the ambient factory environment; designing factories which are
more energy efficient; and the development of new technologies for energy intensive processing steps, suchas freezing, chilling and cooking, as well as better use of low grade heat. This will require technology transferfrom other geographies (e.g. Italy and Germany) as well as other industries (e.g. the civil engineering or
automotive sectors).
Making improvements to the cold chain to prolong shelf life and reduce energy consumption also
represents a significant challenge, as the majority of energy used in the distribution component of the foodand drink supply chain is associated with chilling and freezing, particularly for ready meals, dairy and softdrinks & beverages. There is a general lack of evidence around what the optimum temperature requirements
for chilled or frozen foods should be to maximise safety, and opportunities exist to reduce energy
expenditure by developing an improved evidence base. Other opportunities for technological innovation
include: reducing energy losses within the retail environment, particularly in chiller cabinets, without creatinga barrier between the consumer and the product; and reducing the need for chilling throughout the foodchain by improving supply chain efficiency.
Achieving greater efficiency in water use is not currently primarily driven by efforts to reduce costs, though
this remains an important consideration, and is likely to become increasingly important in the future as
demand for water increases and consumption is monitored more closely. This challenge is of particularimportance to the dairy industry, and one where significant progress has already been made. Technologicalinnovation opportunities include: the development of low water cleaning technologies; and identifying
cheaper and more effective measures for water and effluent clean-up, and the recycling of non-potablewater.
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8Reducing and reusing waste materials
Waste reduction and reuse is primarily driven by economic issues associated with maximising efficiency andreducing operating costs. Technological innovation in packaging to prolong shelf life and reduce foodspoilage and wastage is a key current priority for businesses in the food and drink industry. This includes
lightweighting (tempered against lower packaging robustness) and recycling, though the vast majority ofcurrent effort involves incremental improvements to packaging to make it more attractive and convenient for
consumers, and to reduce costs. Smart packaging – which can signal when food is no longer fit for
consumption – also represents an opportunity for technological innovation.
As well as improving packaging, there are opportunities to modify the products themselves to prolong shelf
life whilst maintaining freshness and minimising the use of artificial additives – particularly for chilled
ready meals and biscuits, cakes & breads – though this must be tempered against the desire of consumers
for increased freshness, and their desire for less processing which they often believe reduces nutrient
content. Identifying alternative means of controlling spoilage organisms could be one way of addressing thisFinally, finding new applications for off specification and residual products, particularly those arisingfrom fruit & vegetable processing, dairy, and other primary processing applications, represents a significant
opportunity. This includes: converting food manufacturing and domestic waste to non-food materials;
decontaminating waste streams for food or feed use; and improving connectivity with small-scale waste
production, both within the supply chain and within individual businesses.

0.3

Barriers to technological innovation

Delivering the technological innovations to address these challenges requires a number of barriers to be
overcome. This study has identified that obtaining funding for technological innovation is the mostsignificant barrier for both companies large and small. In general this is more an issue of access to, rather
than availability of funding, although there is a key barrier in the ability of both large and small companies tosecure the necessary capex outlay for commercially available new technologies, including scaling up andturn-key plant.
A shortage of appropriately skilled staff was the second most frequently cited barrier. This concerned theability to attract scientists and engineers to the food and drink industry. Internal priorities and culture – forexample the focus on short term NPD at the expense of longer term or more disruptive technologicalinnovation - was highlighted as key barrier. Food manufacturers tend to focus on “fire-fighting” short term
requests from retailers and consumers, and there may be a lack of company buy-in to the businesssignificance of longer-term technology development, leading in some cases to perceived lower status oftechnologists and lower salaries. There are also difficulties in crossing the “valley of death” between a pieceof applied research and a packaged up, deployable new piece of technology.
Whilst consumers are the primary driver for technological innovation, consumer acceptance oftechnological innovation – in terms of a reluctance to move away from familiar products and buying habits,
together with a reluctance to “pay for new technology” and the perceived health and safety risks associatedwith novel food products - can be a barrier. Further barriers concerned the difficulty of being able to makehealth claims – which appears to be one of the main factors constraining the development of nutraceuticals
and functional foods. Further difficulties are highlighted in terms of improving collaboration within the
supply chain to solve common technological problems.

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9

0.4

Areas for further consideration

The recommendations summarised here are aimed at implementing the findings of this study. They seek tofurther develop the evidence base in this area, address and further diagnose the barriers to technologicalinnovation which have arisen as part of the consultation programme and cross-industry survey, and to findways to collectively address the set of nine challenges identified in this work.


Recommendation 1: Create technology roadmaps to set R&D objectives which will address the“hot spot” technological challenges. This involves identifying what activities would need to takeplace, in what order, and by when, to address each of the nine “hot spot” challenges. The roadmaps
should be facilitated by Government but industry-led, and should take into account disruptive
technologies, as well as those from other industries. They should also seek to draw on different scientificdisciplines to address the technological challenges: enabling the further reduction of salt, fat and sugar
content of products, for example, is likely to require a combination of sensory science, psychology,
formulation engineering and chemistry, amongst others.



Recommendation 2: Improve the way in which Government funding regimes for technologicalinnovation are defined, coordinated and then communicated to industry. There is an urgent andwell-characterised need to better coordinate government funding priorities across the currently
fragmented funding landscape and to make these as widely known as possible. The industry also needs
to be given as much advance warning as possible of each planned new funding initiative to ensure thatcompanies have the opportunity to put in well-considered bids when the call for applications arises. The
BBSRC-led Global Food Security Programme (GFS), the role of which is to better coordinate thedelivery of multidisciplinary research in all aspects of food production from farm to fork, involves many of
the Government departments and agencies tasked with funding technological innovation in the food anddrink sector, and could lead this activity, together with the Food Research Partnership (FRP).



Recommendation 3: Find ways to attract individuals with technical and engineering skills to thefood and drink industry and better understand the skills landscape. Access to technical andengineering skills of both direct and indirect relevance to the food and drink sector was highlighted
consistently across all sectors as a barrier to innovation. This appears to be an issue associated withattracting scientists and engineers to the food and drinks sector, and is primarily an issue for industry to
explore further in terms of better understanding the skills landscape. There is also scope forGovernment and industry to work together in, for example, the co-development of training courses andprovision of work experience for science and engineering training courses more broadly.



Recommendation 4: Enable technology transfer into industry from the public science base,adjacent industries, and other countries. Technology transfer is key to enabling technologicalinnovation, but much of the industry appears to lack the capacity at present to be able to do thissuccessfully or to seek novel solutions outside of the food and drink industry, or outside the UK where
the UK’s science base is less strong than that of other countries. Government and industry need to work
together to identify ways to address this important issue.



Recommendation 5: Stimulate collaboration within the supply chain to address priority areas oftechnological innovation. Many of the challenges identified in this study will require a coordinatedeffort across the supply chain. In addition, barriers have been identified in terms of the ways in which
different parts of the supply chain work together – particularly in terms of the way in which food and drink
manufacturers and retailers share technology needs. This gives rise to near-term “fire fighting” asmanufacturers seek to address customer and consumer demand, at the expense of longer-term R&D.
One way to do this would be to create challenge- or sub-sector specific “innovation ecosystems” orclusters, involving multiple members of the public science base, and multiple companies who canprovide a route to market through their supply chains.



Recommendation 6: Develop initiatives aimed at helping consumers to understand, appreciate
and accept new food technologies and drive new innovation. Despite consumer requirements being
the primary driver for technological innovation, this study has found, somewhat paradoxically that
consumer perception and acceptance of new technologies is a barrier. This may go some way to
explaining why much technological innovation focuses on incremental new product development, rather
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10than more radical innovation. There are opportunities for Government to work with industry to better
understand consumer perceptions of technological innovation, as well as those associated withenvironmental sustainability, such as energy efficiency in cooking and refrigeration and waste reductionin the home and to identify ways of raising consumer levels of understanding.


Recommendation 7: Build a better evidence base to support minimum temperature requirements
for chilled and frozen products. This study has identified a need to better characterise minimum
temperature requirements for frozen and chilled foods across all sectors. The rationale for thisobservation is that foods are often chilled or frozen to default temperatures (e.g. zero degrees
Fahrenheit is considered the standard for frozen foods) whereas in reality achieving temperatures thislow is not always required. Increasing the required temperatures for freezing by only 1-2 degrees
Fahrenheit could achieve a considerable energy saving during storage, transport and distribution. This
could be an area for Defra to consider together with the Food Standards Agency.

Recommendation 8: Create universally agreed standards for environmentally sustainable raw
materials There is currently a wide array of different mechanisms which can be used to assess theenvironmental sustainability of raw materials, including those managed by independent organisations,and those developed internally by companies to control their own supply chains . However, there is nouniversally agreed set of standards for what should be considered as sustainable. There is scope
therefore to agree some basic principles to minimise the amount of effort that individual businesses –particularly SMEs – need to invest in selecting the right systems and processes to use to ensure thatraw materials are sustainably sourced, particularly in the event of increased availability of novel raw
materials.



Recommendation 9: Expand Government’s evidence base further to include other sectors of thefood and drink industry which are known to be innovative. The present study focused on sevensectors of the food and drink industry which were selected on the basis of making a substantive
contribution to the UK economy and showing a relatively high level of technological innovation.
However, there are other sectors which are also highly innovative and could make a material impact on
producing more environmentally sustainable, healthy food. These include, in particular, the snacks,
confectionary and cereals sectors.

Government should consider addressing these recommendations jointly with the food and drink industry inorder to facilitate a significant increase in the amount of technological innovation currently undertaken in thisimportant sector.

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11

1. Introduction
This document sets out the results of a Defra funded study to map the current innovation landscape in the
UK’s post farm gate food and drink industry. It also identifies the gaps and opportunities which technologicalinnovation could help to address in order to encourage sustainable economic growth through the productionof environmentally sustainable and healthy food products.
This study arose from current Government priorities set out in Defra’s current business plan2 which seeks tosupport British farming and encourage sustainable food production by enhancing the competitiveness,resource efficiency and resilience of the food chain to ensure a secure supply of environmentally sustainable
and healthy food.
The UK food system will not be able to meet the challenge of increasing food production and improving theenvironment over the next 30-40 years in its current form3,4. Indeed, meeting food demand without damaging
the environment is identified by the Royal Society of Chemistry’s 2009 report “The Vital Ingredient” as “thegreatest technological challenge that humanity faces”.
The role of technological innovation in primary food production (i.e. farming) has been the subject of recent
focus through studies such as The Foresight Report on the Future of Food and Farming3, the Royal
Society’s 2009 study on the Sustainable Intensification of Global Agriculture5 and the Government’s
proposed ‘Agri-Tech Strategy’, due to be launched in mid-2013. However, the role of technologicalinnovation in the food and drink industry in increasing food production whilst simultaneously reducing
environmental impact has not been well characterised.
Initial work through a post-farm gate workshop, held by Defra in 2010 with the food industry, retailers,
funders and consumer groups, began to identify broad challenges which could be addressed throughtechnological innovation – but a need for more work to prioritise these challenges and better understandindustry needs was required.
This study is the realisation of this requirement. It answers the following questions:

What are the main business trends and drivers for the food and drink industry where innovation can help
support growth while reducing environmental impact?

What are the biggest technological challenges which need to be addressed?

What are the barriers to innovation?

What are the technical gaps and hence the opportunities for innovation?

1.1 Definitions used in this study
The following definitions have been used within this study:Driver: Drivers influence the focus and direction of technological innovation. Drivers may include, forexample, consumer preference, regulation or economic performance

Challenge: Problems or opportunities that require technological innovation in order to be solved or
exploited. Challenges may be linked to one or more drivers. They may include, for example, the need to2

Defra Business Plan 2012-2015, 31 May 20123

Office for Government Science, 2011. The Future of Food and Farming: Challenges and choices for global sustainability. Foresight report

4

Defra, 2012. Green Food Project

5

Royal Society, 2009. Reaping the benefits: Science and the sustainable intensification of global agriculture
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12improve energy efficiency in food manufacturing operations, prolong shelf life of food products or
improve the nutritional composition of food ingredientsTechnological innovation: Activities associated with research and development (R&D) andincremental innovation (new product development, or NPD) which can address one or more challenges

Barrier: An obstacle which is preventing organisations from addressing the challenges. Barriers may not
be a specific technology issue. Instead they may include broader issues such as access to funding or
appropriate skill sets

1.2 Scope of this study
The scope of this study covers the UK post-farm gate food and drink industry, from the farm gate interface
through to consumption, recycling and reuse, as shown in Figure 2. There is a lesser focus on the foodservice sector, as Defra is currently undertaking other work to examine opportunities here6. Pre-farm gateactivities are largely excluded, although the influence that the post-farm gate food chain at the “farm gateinterface” has on farm are taken into consideration. The scope of this work includes both large companies
and small and medium enterprises (SMEs) and sets out explicit implications for smaller businesses where
relevant.
Figure 2: Study scope: The UK food and drink value chain

Source: Arthur D. Little analysis

6

Personal communication with Defra, March 2013
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13

The food and drink sector is large and diverse, and to focus the study, seven key sectors were identified by a
Defra steering group at the outset of this work. These sectors were selected on the basis of a relatively highsignificance to the UK economy, a high R&D spend and a potentially significant impact on creating a greener
supply chain, as well as the areas where Defra needed to further inform its existing evidence base. The
sectors are:

Biscuits, cakes & breadMeat processing



Dairy



Fruit & vegetable processingOils & fats

Ready meals

Soft drinks & mineral waters

Despite this sector focus, in reality, the findings of this study – particularly in terms of drivers, challenges andbarriers – are considered to be applicable to a much wider audience.

1.3 Approach used in this study
This study took place between November 2012 and April 2013 and used an approach summarised in Figure
3 and expanded on in Appendix 1. It involved inputs from an extensive period of one-to-one consultation
between November 2012 and February 2013 with over 65 stakeholders from both large and small
companies, trade associations, higher education institutes and research and technology institutes.
The work also involved an online survey administered during January 2013 which was completed by 280
industry respondents. The purpose of the survey was to prioritise drivers and challenges, and to ask for
widespread views on what the main barriers to innovation were from the perspective of industry. The survey
did not aim to draw on a representative sample of respondents from across the UK and the findings from it
are not therefore statistically significant. Nevertheless, the survey results provide a balance of opinion on
where gaps and opportunities lie. The results of the survey are provided in Appendix 2 of this document.
The Defra steering group that selected the sectors to focus on then prioritised the challenges based on the
results of the consultation and survey programme. The challenges were subsequently validated with a panelof leading science experts drawn from industry and academia, who then participated in a horizon scanning
exercise to identify areas of technological innovation which would have a high impact on addressing these.
It should be noted that the majority of consultations and the survey took place before the well-publicisedmeat authenticity and traceability issues associated with horse meat which emerged in February 20137 – andhence these do not feature significantly in the analysis.

7

Defra processed beef products and horse meat portal. Available at: http://www.defra.gov.uk/food-farm/food/labelling/processed-beef-horse-meat/

accessed March 2013
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14

Figure 3: Overview of the approach used in this study
Tasks:

1: Start-up andinitial sector
prioritisation

Activities:
Workshops withDefra

2: Map current
food and drink
industry
activity intechnologicalinnovation

X

Literature review
SurveyX

Horizonscanning
Timings:

November2012

4: Identification of
barriers, gaps
and opportunities

5: Capture
examples ofgreen
manufacturing
excellenceoutside the UK

X
X

Consultations

3: Identification ofhigh level drivers andchallenges toinnovation

December
2012

X

X

X

X

X

X

X

X

January – March 2013

March 2013

Source: Arthur D. Little analysis

1.4 Structure of this document
The remainder of this document sets out the results and findings of this study. It contains the following
sections:

Section 2: A brief overview of the food and drink industry in the UK, providing an introduction to thesector and the levels of technological innovation currently taking place within itSection 3: Drivers which our analysis suggests are the strongest influences over technologicalinnovation

Section 4: Priorities for technological innovation, in terms of the top challenges which need to beaddressed to enable the environmentally sustainable production of healthy food and areas of long term
technological innovation which could address themSection 5: Barriers which are preventing these challenges from being overcomeSection 6: Recommendations for Defra to move forwards

This document is accompanied by six appendices which contain:Appendix 1: Methodology used for this study. Further details on how the results of this study weregeneratedAppendix 2: Survey results. Analysis of the cross industry survey

Appendix 3: Examples of international good practice. Examples of successful initiatives from
Australia and Ireland to support the recommendations of this study

Appendix 4: Definitions used in this study. This section describes what is, and is not, included withineach of the seven sectors covered in this study

Appendix 5: List of consultees. Groups and individuals who we have engaged with to develop this
study



Appendix 6: Assessment of the current UK landscape in technological innovation in the food anddrink sector. Background data to further support some of the findings in this document
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15

2. A brief overview of the food and drink industry in the UK
This section provides a short overview of the current state of play in the UK food and drink industry in termsof its size, structure and turnover, and the current levels of technological innovation taking place within it.
Supporting evidence is provided in Appendix 6.
The food and drink sector is the largest manufacturing industry in the UK. Nationally, the food and drink
industry generates a turnover of some £76 billion, as shown in Figure 4. It employs 15.6% of the UK’s overall
manufacturing workforce8. The industry is dominated by SMEs, which account for 95.6% of food and drink
manufacturing businesses – though this varies from sector to sector9: the bread, biscuits and cakes andmeat manufacturing sectors, for example, contains a very high proportion of SMEs, whilst the dairy sector isconsiderably more consolidated.
Elsewhere in the supply chain, particularly in raw material processing and retail, the picture is more
consolidated – indeed, some 80% of the retail sector being represented by four retailers10. Of the sectors
considered in this study, biscuits, cakes & breads and meat processing are the largest. The ready meals
sector is growing the most rapidly.
Figure 4: UK manufacturing sector: Change in turnover by segment (2008-2011)

Source: Office of National Statistics, Annual Business Survey 2011

R&D spending amongst food and drink producers in the private sector is dominated by a small number oflarge companies (e.g. Unilever, Arla Foods, Danone and Heinz). Many of these multinationals have their
R&D headquarters located outside the UK, with subsidiary R&D functions – in some cases focused on local
markets – based in the UK.

8

Office of National Statistics, Annual Business Survey 2011

9

Office of National Statistics, UK Business: Activity, Size and Location, 2012. SMEs defined in this case as those businesses which have less than 250

employees in the UK
10

British Frozen Food Federation, Personal Communication, December 2012
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16Perhaps not surprisingly, it has been assumed that larger companies spend the most on R&D. However, thecross-industry survey conducted as part of this study suggests that expenditure in smaller businesses ishigher relative to sales – though this only covers a snapshot of UK businesses (see Appendix 2).
Technological innovation activities amongst food manufacturers in particular are focused primarily on theincremental development of new product variants, involving innovation in packaging and reformulation andimprovement of existing products and brands. This is a UK strength: compared to other countries, UKbusinesses produce the second highest level of new product variants per year, as shown in Figure 5. Manycompanies focus the majority of their resources on near term, new product development such as incremental
improvements in packaging, rather than longer term R&D which is further from commercial reality. Comparedto other manufacturing sectors, overall expenditure on R&D and NPD is relatively low11.
Figure 5: New product variants by country (2005-2011)

Mintel NPD database, 2011. From: Food and Drink Federation, 2011. Sustainable growth in the food and drink manufacturing industry

The industry is supported by a strong publicly funded science base, as depicted in Figure 6. This is highly
diversified, covers a wide range of disciplines and is characterised by pockets of excellence, especially in theacademic sector and at the food and agriculture interface. Many food and drink manufacturing companies,
especially the smaller ones, conduct their R&D through specialist third party organisations such as Campden
BRI and Leatherhead Food Research, which operate membership based systems.
Industry R&D is also supported by key initiatives such as the knowledge exchange networks run by the
Biosciences KTN and the Food and Drink Innovation Network; those run by a wide range of cross-industry
trade bodies such as the Food and Drink Federation; and sector-specific trade associations such as theSociety for Dairy Technology. Key Government R&D funding measures include the Technology Strategy
Board’s (TSB’s) Sustainable Agriculture and Food Innovation Platform (SAFIP) and the Biotechnology andBiological Sciences Research Council Diet and Health Research Industry Club (DRINC).
There are, however, some noticeable gaps compared to other countries, particularly in the food and drink
machinery and automation sectors, where there are a multitude of smaller businesses and some strong
networks, but few international scale players, with many manufacturers sourcing their process technology
and equipment from companies with their production and R&D facilities domiciled in other countries.
11

BIS R&D Scoreboard, 2010
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17Figure 6: Non-exhaustive overview of the UK food and drink R&D landscape

Source: Arthur D. Little analysis

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18

3. Drivers for technological innovation
This study has found that the strongest drivers for technological innovation are those that arise from the needto respond to tighter margins, provide price-conscious consumers with cheaper, healthier food products andaddress the rising costs of raw materials. Consumer demand also drives short term technological innovation
associated with new product development, as organisations seek to differentiate their products in a fast
moving and competitive marketplace.
Regulatory issues and the requirement to maintain and improve food quality and authenticity also drive
technological innovation targeted at producing healthier and more traceable foods. Improving environmental
sustainability is also a key driver, where it can show a material reduction in cost and provide further
differentiation from the perspective of increasingly informed consumers. As well as these common drivers,
SMEs are also strongly influenced concerns about regulations associated with food labeling and quality
Figure 4 summarises the priority drivers identified by the survey and consultation exercise, classified in termsof regulatory, consumer and economic influences. The drivers are broadly consistent across all of the sevensectors considered as part of this study and are further developed in the rest of this section.
Figure 7: Overview of drivers influencing technological innovation in the UK food and drink industry

Source: Arthur D. Little analysis

Drivers specific to the food and drink industry are influenced by ‘mega-drivers’ concerning
natural resource availability, changes in population and demographics, and the global
economic downturn
The drivers are influenced by a complex array of ‘mega-drivers’, wider market conditions which are notspecific to the food industry. The mega-drivers are shown in the upper part of Figure 7, above. A rising global
population is a key mega-driver. This is expected to reach 8 billion by 2030, requiring 50% more foodproduction12. This increase will be coupled with the development of economies and changing patterns ofconsumption as societies become more affluent1314. Affluence is associated with an ageing population, which
combined with a rise in lifestyle related disease such as obesity, diabetes and heart disease puts pressure
on healthcare systems15 and an improvement in the understanding of the link between diet and health has

12

Beddington, J., 2009. Food, energy, water and the climate: a perfect storm of global events? Office for Government Science

13

Office for Government Science, 2010. UK Cross-Government Food Research and Innovation Strategy

14

FoodDrinkEurope, 2012. Environmental sustainability vision: towards 2030

15

Campden BRI, 2011. Scientific and technical needs of the food and drink industry – 2012-14
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19stimulated a wide range of Government initiatives associated with healthy eating and other lifestyle factors(for example, 5-A-Day, Change4Life and the Department of Health’s salt and saturated fat campaigns16,17).

The strongest drivers for technological innovation are those associated with the need torespond to ever tighter margins, whilst providing price-conscious consumers withcheaper, healthier food products and dealing with the rising costs of raw materials
The impact of the increasing costs of raw materials, coupled with increasing price consciousness amongst
consumers, creates strong drivers for technological innovation associated with cost reduction, with the aim of
meeting consumer expectations for cheaper food, whilst maintaining or where possible improving margins.
This was evident in the results of the cross industry survey. Figure 8 shows that, based on the views of the
280 respondents who completed the survey, the costs of raw materials and increasing price consciousness
amongst consumers have the strongest influence over technological innovation activities.
Figure 8: Top ten drivers for technological innovation in the UK food and drink industry

Source: Arthur D. Little industry survey, January 2013. In response to the question: “From the following total list of drivers, please indicate the top fiveacross all of the following categories that are influencing the focus and direction of your organisation’s R&D / innovation activities in the UK”. Drivers falling
just outside the top ten focus on issues associated with regulatory compliance and cost reduction, including waste minimisation and food safety.

In terms of the increasing costs of raw materials, global agricultural commodity prices are expected tofluctuate but generally remain on a high plateau throughout the next decade, as shown in Figure 9. This isespecially the case for meat products, reflecting reduced livestock inventories and producer margins whichhave been squeezed over several years by high grain and protein meal prices18. Fluctuations in prices forgrain and vegetable products have also been apparent, primarily due to swing in climatic conditions and, asa result, variation in the size and quality of harvests and to an increasing worldwide demand for meat.
These fluctuations give rise to concerns over security of food supply – particularly during 2012 where poor
UK wheat harvests resulted in significant additional imports from other markets, for example. Food security inrelation to changing climatic conditions is of increasing importance amongst Governments, particularly interms of improving crop yield and resilience and improving the robustness of supply chains19.
16

For examples, see http://www.nhs.uk/LiveWell/Goodfood/Pages/Goodfoodhome.aspx accessed February 201317

FSA (2008) Consumer Attitudes Survey

18

OECD-FAO Agricultural Outlook 2012-2021

19

For further information, see http://www.foodsecurity.ac.uk/research/future.html, accessed February 2013
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20

Figure 9: Selected global agricultural commodity prices (2000-2020)

Source: OECD-FAO Agricultural Outlook 2012-2021

Simultaneously, consumers expect cheaper food, particularly as household incomes are being squeezed –and price is a key area of differentiation for retailers. This is particularly apparent for those parts of the supply
chain which address retailer own brand products, and more so for larger companies. However, some SMEs
(such as artisan bakeries, for example) do not seek to differentiate on price, although their markets still tend
to be small.

Consumer demand drives short term technological innovation associated with new productdevelopment, as organisations seek to differentiate in a fast moving and competitivemarketplace
In the food and drink industry, the consumer is the most immediate driver of all. The cross-industry survey
revealed that half of the top ten drivers for technological innovation are associated with meeting consumer
demand (Figure 8) in a fast moving and competitive marketplace. In addition to cheap food, consumers also
require convenient, fresh and appealing products, and raw material processors, distributors, retailers and the
packaging sector seek to respond to new ideas and consumer needs as quickly as possible to generate apoint of difference.
This creates a requirement to fulfil short term demand whilst responding to competitive pressures, which inturn leads to a focus on short term new product development – an area where the UK is an international
leader (see Section 2 Figure 5, above). However, this focus is often at the expense of longer term, moreradical “step changes” in innovation activity.

Government regulation, voluntary, industry-led targets and consumer demand drives
technological innovation targeted at healthier and more traceable foods
An increasing focus on diet and health also emerged as a top driver for technological innovation. Consumers
are becoming better informed about the links between diet and health, and are increasingly demanding
healthier, fresher food20. In a recent Food Standards Agency survey21, 99% of respondents said that eating
20

This view is supported by multiple similar studies, for example: Office for Government Science, 2010. UK Cross-Government Food Research andInnovation Strategy; Campden BRI, 2011. Scientific and technical needs of the food and drink industry – 2012-14
21

FSA Food and You survey, 2010
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21

fruit and vegetables was very or fairly important, 94% said that eating less salt was important and 92% said
that limiting foods high in saturated fat was important. An increasing focus on diet and health, together withdemand for more naturally sourced foods, are highlighted as some of the most important drivers fortechnological innovation, closely coupled with a requirement to meet increasingly demanding regulatory
requirements, such as those associated with food labelling.
Food and drink traceability is also an issue. Much of the research and consultation for this study took placeshortly before well publicised developments emerged around traceability of meat products in the food chain22
and issues associated with traceability did not feature highly in either the cross-industry survey orconsultations – though it was observed to be of a priority from the perspective of grain traceability. It is likelythat in the future, traceability will appear much higher on the agendas of both industry and Government.
Improving environmental sustainability is also a key driver, where it can show a material reduction in costand provide further differentiation from the perspective of increasingly informed consumers. The costs ofenergy, transport fuels and raw food and feed ingredients are rising, further impacting on margins of
manufacturers and distributors23. Consumers are also increasingly aware of the importance of environmental
sustainability, and the cross-industry survey indicates that this has become a key point of differentiation in
the market for manufacturers – in fact, more so than the costs of energy and water24.
Retailers in particular set priorities around improving the environmental performance of their supply chains bysetting corporate social responsibility targets such as those contained in Sainsbury’s 20x20 Sustainability
Plan and Marks & Spencer’s Plan A, which cover aspects of energy consumption and carbon emissions, andwater use, amongst others. In addition, many of the top food manufacturers and retailers sign up to the
Courtauld Commitment, which sets target to reduce the amount of waste and the environmental impact of
products through the supply chain25. These initiatives – though tempered by what is technologically andcommercially feasible within the supply chain – are a major force behind technological innovation.

The technological innovation activities amongst SMEs are driven by similar factors,
although SMEs are more strongly influenced by a wider range of drivers including
regulation associated with food labelling and quality
Looking at SMEs in isolation, the same drivers are at play. However, there is some variation in terms of theirrelative importance. In particular, SMEs attach importance to a wider range of innovation drivers. The
economic issues described above are still present, with competition being the number one driver, but
regulation concerning food labelling and food quality tends to be higher-rated, as is consumer demand forboth healthy and ‘natural’ foods.

22

See http://www.defra.gov.uk/food-farm/food/labelling/processed-beef-horse-meat/, accessed February 2013

23

Ofgem, 2011. Why are energy prices rising? Factsheet 108

24

The industry survey received 70 responses indicating that environmental sustainability was a priority (ranked 10th out of 22 drivers) versus 36 responses

for increasing cost of utilities (ranked 18th out of 22 responses). See Appendix 2 for further details
25

The Courtauld Commitment. See http://www.wrap.org.uk/category/initiatives/courtauld-commitment, accessed May 2013
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22

4. Priorities for technological innovation
The R&D drivers described above in Section 3 influence the direction of technological innovation. In
particular, they give rise to specific technological challenges - problems or opportunities that require
technological innovation in order to be solved or exploited. Given that most existing technological innovation
activity focuses on delivering against shorter term goals through the incremental development of new
products, the challenges seek to identify those areas which will require more of a “step change” intechnology development to overcome.
This study has sought to prioritise “hot spot” challenges. A hot spot is a specific opportunity or problem which
is of importance today, and is likely to remain important in the future, beyond a 10 year time horizon. Hot
spots represent areas of unmet need or technological difficulty. The approach used to identify these hot
spots is described in Appendix 1.
The nine hot spots which have emerged from this analysis are summarised in Figure 10. For clarity, they
have been divided into four categories. All of these challenges will become, or remain important in the longer
term (i.e. 10-15 years). They concern a range of issues which concern working effectively with primary
producers at the farm gate interface, manufacturing healthy and differentiated food products, improving
supply chain and manufacturing efficiency, and reducing and reusing waste materials.
Figure 10:Challenges to be addressed through technological innovation – Summary

Source: Arthur D. Little analysis

The extent to which these challenges are applicable to each sector varies considerably, as summarised inTable 1. This section of the document describes each of the hot spots, and how they link to drivers, and theirapplicability to each sector of the food and drink industry. It also highlights specific areas of technologicalinnovation which would benefit from further near term effort to help to address these challenges in themedium to long term (i.e. 10-15 years plus). Recommendations have been made in Section 6 to developthese areas into a series of industry led technology roadmaps. The implications for inward technology
transfer from adjacent industries are considered in Section 4.5.

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23

Table 1:

Applicability of challenges to different sub-sectors in food and drink
1. Sourcing environmentally sustainable and resilient
raw materials

2. Further reducing salt, sugar and fat content andincluding healthier components such as fibre

3. New products aimed at specific consumer groups

4. Greater efficiency in water use

5. Improving energy and process efficiency in thefood manufacturing environment

6. Improvements to the cold chain to prolong shelf
life and reduce energy consumption

7. Packaging to prolong shelf life and reduce foodspoilage and wastage

8. Modifying products to prolong shelf life whilst
maintaining freshness and minimising the use of
artificial additives

9. New applications for off-specification and residual
products

Biscuits, cakes &
bread

H

H

M

L

H

L

H

H

H

Meat processing

M

H

L

M

M

H

H

M

M

Dairy

M

H

M

H

H

H

M

H

M

Fruit & vegetableprocessing

H

M

M

M

M

M

H

M

H

Oils & fats

H

H

L

L

M

L

L

L

H

Ready meals

M

H

H

M

H

H

H

H

M

Soft drinks & mineralwaters

M

H

M

H

M

M

H

M

M

Sector:Source: Arthur D. Little analysis and consultation with industry stakeholders. Legend: H: High applicability of challenge to the industry sector. Key area of
focus or area of unmet need. M: Intermediate, or secondary priority; other challenges take precedence. L: Limited applicability of this challenge to theindustry sector. - : Not applicable to this sector

4.1 Working effectively at the farm gate interface
Food industry sector engagement with the pre-farm gate is driven by a need to maintain raw material andfood quality and ensure that those materials which are sourced from farms or groves are traceable, nutritious
P12001690_024rep.docx

24and fit for purpose. A further driver is associated with ensuring that raw materials are “natural” from a
consumer perspective (e.g. to meet the demand for organic products). Economic drivers associated withfinding ways to handle the rising or fluctuating costs of both raw materials and animal feed are also a key
influence (Figure 11).
Figure 11:Influence of drivers on challenges associated with working effectively at the farm gate interface

Source: Arthur D. Little analysis

Challenge 1:

Sourcing environmentally sustainable and resilient raw materials

The sourcing of environmentally sustainable and resilient raw materials was flagged up in the crossindustry survey as the highest priority challenge associated with raw material processing – and the second
highest overall (Appendix 2). For the UK, this challenge will become increasingly important as a componentof improving food security as supply chains become increasingly complex26. For individual companies thisalso has significant implications for securing their own supply chains. The issue is of high priority for – inparticular – the biscuits, cakes & breads sector, and the oils & fats and fruit & vegetable processing sectors.
Businesses must be able to handle increasing volatility in raw material prices, which are generally expected
to remain under pressure due to a variety of factors including increasing usage demands (e.g. for biofuels),
increased input costs (e.g. for fertiliser and chemicals), and pressures on resources, such as water and landavailability,27. In most areas the effects of climate change will further exacerbate the supply situation byplacing stresses on crop plants, potentially leading to catastrophic yield reductions28.
Simultaneously, consumers – and in response, retailers – will increasingly demand the ability to assure theauthenticity and traceability of raw materials. This is especially important at the moment in the meat
processing sector. Whilst well publicised issues around meat authenticity and fraudulent food labelling arose
after the majority of the work in this study was completed, traceability and thereby confidence in the supply
chain is likely to remain a priority throughout the industry29. The meat and dairy sectors face slightly different
issues, in terms of understanding the implications of animal nutrition and welfare on meat tenderness andmilk composition.
There are currently a wide array of different mechanisms which can be used to establish whether raw
materials are environmentally sustainable, including those managed by independent organisations, and26

Sellahewa, J.N., Martindale, W., 2010. Delivering Food Security with Supply Chain Led Innovations: Understanding supply chains, providing foodsecurity, delivering choice. Aspects of Applied Biology 102, pp91
27

OECD/FAO Agricultural Outlook, 2012 – 2021

28

Royal Society, 2009. Reaping the benefits: Science and the sustainable intensification of global agriculture, pp11

29

Defra processed beef products and horse meat portal. Available at: http://www.defra.gov.uk/food-farm/food/labelling/processed-beef-horse-meat/

accessed March 2013
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25those developed internally by companies to control their own supply chains30. However, there is nouniversally agreed set of principles for what should be considered as sustainable – though efforts areunderway at European level to do this for raw materials used for non-food purposes such as biofuels31.
Specific, long term opportunities for technological innovation which could help with the environmentally
sustainable sourcing of raw materials can draw on the UK’s strengths in plant breeding and in adjacentindustries, particularly the pharmaceutical and medical technologies industries. They include:

Plant breeding to enhance crop resilience, nutritional value, and the processability of raw
materials: Plant breeding offers an opportunity to make raw materials more sustainable throughdeveloping increased resistance to swings in climatic conditions, reduced need for high inputs such as
fertilizers and pesticides, and reduced variation in nutritional content. Examples include the developmentof crops which exhibit enhanced tolerance to physiological stresses (e.g. tolerance of drought, extremesin temperature, soil salinity and nutrient deficiency32). Other opportunities include crop breeding to makeraw materials easier to process, especially in the biscuits, cakes and breads sector (e.g. grain with ahigher gluten content for improved bread-making; which is more consistent and better targeted toprocesses to avoid the costs and extra process steps associated with grain blending; or spherical grain
more suitable for milling). This was also reflected in the oils and fats sector, where there is interested inusing conventional plant breeding to modify fatty acid profiles in oilseeds to favour long chain
polyunsaturated fatty acids, and in fruit and vegetable processing in, for example, producing tomatoes
with a lower water and higher nutrient content. The UK has a world class plant research base33,34 and iswell positioned to deliver further technological innovation in crop breeding by exploiting increased
knowledge of their genetic characteristics and ways to manipulate these

Sourcing alternative raw materials with lower environmental impact: The identification ofalternative raw materials presents opportunities to improve environmental sustainability by decouplingproduction from land use. These may include the use of marine resources, such as algae and thedevelopment of meat analogues to further supplement products such as Quorn and act as an alternative
source of protein - a recent focus for the Gates Foundation in the United States35. This presents anopportunity for greater flexibility for feedstock use, and would need to be coupled with appropriate
process technologyOnline monitoring and detection of food quality and contamination: There is a need to be able toundertake real time assessment of food quality, authenticity and contamination throughout the supply
chain. Several examples were cited where the ability to be able to quickly and cheaply assess thequality of raw materials and to grade them for different uses, would help to reduce waste and reduce
costs36. In the meat processing sector, improving consistency in meat tenderness and taste was
highlighted as the leading technological challenge, one which is strongly influenced by animal nutrition
and a topic which has achieved little attention in terms of technological innovation. Opportunities wereidentified in terms of developing new methods of predicting meat tenderness cheaply and detecting thisat the meat cutting stage using techniques such as near infra-red scanning were highlighted as potential
opportunities in the meat processing sector37. In oils and fats, methods of continuously detecting

30

For example, Fair Trade products, and the Royal Society for the Prevention of Cruelty to Animals’ Freedom Foods scheme

31

For example, the Global-Bio-Pact Global Assessment of Biomass and Bioproduct Impacts on Socio-economics and Sustainability(http://www.globalbiopact.eu/, accessed May 2013)32

Royal Society, 2009. Reaping the benefits: Science and the sustainable intensification of global agriculture, Chapter 3

33

Office for Government Science, 2011. The Future of Food and Farming: Challenges and choices for global sustainability. Foresight report

34

Arthur D. Little, 2009. BBSRC/HEFCE Study of Land-Based Facilities and Resources

35

See http://www.thegatesnotes.com/Features/Future-of-Food, accessed April 2013

36

Arthur D. Little workshop with the Food and Drink Federation’s Sustainability Steering Group, November 201237

Consultations with EBLEX and Hilton Meats, November 2012
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26contaminants such as dioxins and mycotoxins were also identified as technology needs38. From theperspective of the biscuits, breads & cakes sector, traceability of grain and avoiding contamination frommycotoxin infections was identified as a priority. Online monitoring and detection was also highlighted asa key opportunity where technologies could be transferred from sectors such as the medical technology
and pharmaceutical sectors using technologies such as PCR39 and high throughput screeningAnimal nutrition and understanding its impacts on food products: Dairy and meat processing
companies, as well as retailers, highlighted the importance of technological innovation in animal nutrition
and the impact this can have on food products. In dairy, ruminant feeding regimes were highlighted as
an important influence on milk composition, particularly in terms of mineral, protein and saturated fat
profiles. Some retailers (e.g. Sainsbury’s) are working directly with farmers to address these issues

4.2 Manufacturing healthy and differentiated food products
The challenges associated with the manufacturing of healthy and differentiated products are driven by
consumers and Governments becoming increasingly aware of the importance of diet and health, and ageneral desire for products which are healthier – though this is tempered against them being appealing,
attractive, convenient and flavoursome. Driving down product costs is also an issue here, as summarised in
Figure 12. The challenges associated with this theme concern optimising macronutrient balance, specificallythe further reduction of salt, sugar and fat content whilst increasing the content of healthier ingredients andthe development of new products targeted at specific consumer groups. The development of “functional”
foods or nutraceuticals which aim to demonstrably convey health benefits barely featured in either the survey
or consultations. This is primarily due to difficulties in making the health claims needed to differentiate theseproducts in the marketplace, an issue which is discussed further in Section 5 of this document.
Figure 12:Influence of drivers on challenges associated with manufacturing healthy and differentiated foodproducts

Source: Arthur D. Little analysis

Challenge 2: Further reducing salt, sugar and fat content and including healthiercomponents such as fibre
The further reduction of salt, sugar and fat was identified consistently by many of the sectors, andamongst all sizes of company, as a high priority for technological innovation. This was considered to be
especially important for biscuits, cakes & breads, ready meals and meat processing. This is an area ofparticular importance to the Government because of its likely impact on diseases such as diabetes, heartdisease and stroke40.
38

Consultation with SCOPA on behalf of AAK, Archer Daniels Midland and Cargill, December 2012

39

Polymerase chain reaction, a means of amplifying and detecting trace levels of DNA

40

As set out in the Department of Health’s Public Health Responsibility Deal, available at www.responsibilitydeal.dh.gov.uk, accessed March 2013
P12001690_024rep.docx

27

Efforts to reduce salt intakes have been a priority for Government since 200241. The population averageintake has decreased over recent years but still remains above the 6 grams per day target considered byexperts to be desirable. Manufacturers believe that further reductions in foods will present a significant
technological challenge, as many of the “quick wins” (particularly in highly processed foods and ready meals)
have now been achieved.
As well as salt, Government’s Responsibility Deal voluntary commitments with the food sector also include
targets for reducing the fat and sugar content of foods42. Meeting these as well as reducing the overall caloric
content of food whilst ensuring consumer acceptance will require further technological innovation. Continued
fat reduction was highlighted as a particularly significant challenge as fat is an important ingredient inproducts such as biscuits, cakes and breads, and for meat quality. The need to maintain taste is also likely toprovide a significant challenge to reducing fat levels much further. There is a danger that replacing fat withcarbohydrates, could lead to an undesirable increase in the overall calorific value of food. A related challenge
is how to produce foods with a high content of healthier components such as fibre, which emerged as an
issue during the horizon scanning component of this study.
Specific areas of technological innovation which could have a substantial impact on solving these challenges
include:

Formulation engineering: Formulation offers an opportunity to reduce the levels of components whichmight impact adversely on health whilst enhancing those such as fibre, vitamin or minerals. Thereremains however a need for more on research into the structure of foods and the means to alter thebioavailability of nutrients43 as well as opportunities to further modify the composition of processed foods
to reduce their calorific value whilst maintaining taste and increasing satiety, or using more high fibre
ingredients in biscuits, cakes & breads, where formulation activity is one of the most significant areas oftechnological innovation today (Appendix 6). The cross-industry survey indicated that the consumer
perception of taste versus health was a particular challenge in terms of maintaining appetite appeal in
healthier products, and formulation could play a role in this

Sensory science and taste perception: Better understanding of the impact of smell, taste, texture andvisual appeal of food can help to influence food consumption patterns. Sensory science can complement
product formulation and ingredient substitution to create products which are perceived as sweet or salty,
whilst having a low salt or sugar content



Identification of substitutes for salt and sugar: A significant amount of effort has already been
invested in seeking alternatives to salt and combating the impact of salt removal on flavour44. Further
technological innovation is needed to find acceptable substitutes not only from the point of view of taste
but also functionality (e.g. for bread-making). Alternatives to sugar (e.g. through the development ofedible zeolites) must also be able to meet these criteria as well as offering opportunities for calorific
reduction

41

Department of Health salt reduction targets. Available at

http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_125228.pdf accessed February 2013
42

Department of Health Public Health Responsibility Deal: Food pledges. Available at https://responsibilitydeal.dh.gov.uk/food-pledges, accessed March

2013
43

Consultations with the Biosciences KTN and Birmingham University, February – March 201344

Food and Drink Federation / Leatherhead Food Research, July 2012. Salt reduction reaching its limit. Available at

http://www.fdf.org.uk/news.aspx?article=5918 accessed February 2013
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28

Challenge 3: New products aimed at specific consumer groups
Some activity is already underway to develop products which are targeted at specific population groups suchas the elderly, infants and those engaging in sports activities; to use allergen free ingredients (e.g. glutenfree foods); and to produce products which are targeted at consumers with specific health conditions (e.g.
diabetes)45 but with, for example, an ageing population, there is potentially scope for much more to be done
here. This will however require a significant increase in technological innovation particularly to maintainhealthy ageing and lifestyles. This represents an opportunity for UK based companies to offer higher value
and a more diversified range of products to both domestic and international markets.
Longer timescale range opportunities for technological innovation may arise from the genetic screening of
population groups. Products could then be tailored to these populations and developed into programmes of
personalised nutrition. Specific opportunities include:

Diagnosis, detection and prediction of nutrition-related illness: Considerable activity is underway inthe healthcare industries in understanding genetic predisposition to certain diseases. This opens up the
possibility of being able to link genomic and metabolomics information with diet in order to predict future
nutrition related illness at certain stages of life. However, less work is currently underway in terms ofdeveloping “companion” diagnostics associated with nutrition related disease, particularly where
associated with detecting allergens in food products during the food manufacturing process (e.g. the useof swabs for detecting food allergens on process equipment lines used for multiple purposes). There arepotential interfaces with the clinical science sector through initiatives such as the joint TSB / Medical
Research Council (MRC) Stratified Medicine Innovation Platform46

Personalised nutrition programmes targeted at healthy ageing: Using genetic diagnostic techniques
might provide an opportunity to develop programmes of personalised nutrition and develop specificfoods which are targeted at clusters of individuals with the same genotype. As of January 2013, theEuropean Food Information Council has begun funding the Food4Me project to help to achieve this47.
The horizon scanning exercise conducted as a component of this study indicated that personalised
foods could be used to guide a programme of lifelong nutrition, such that particular products could be
consumed at a certain stage of life – but that would require significant technological advancement

Individual products which are targeted at reducing the risk and emergence of nutrition relateddisease: Products and dietary regimes for those already suffering from diseases such as Type II
diabetes are already commonplace. However, in a world where predisposition to certain diseases could
be diagnosed and predicted, there might be scope to develop products which could be consumed inearlier stages of life in order to reduce the likelihood of these diseases emerging in the future, or at least
are delaying their onset

Proving product efficacy quickly and cheaply: a need was highlighted for the development of faster,cheaper methods of testing new products in order to satisfy regulatory scrutiny for efficacy and thereby
to support health claims, so helping to overcome the hurdles currently faced by nutraceuticals andfunctional foods.

45

Arthur D. Little consultations with industry representatives, January – March 201346

Technology Strategy Board – Stratified Medicine Innovation Platform. Available at http://www.innovateuk.org/ourstrategy/innovationplatforms/stratified-

medicine-.ashx accessed March 201347

The Food4Me Project. Available at: http://www.food4me.org/ accessed March 2013. The UK component of Food4Me is being led by Reading University
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4.3

Changing manufacturing and supply chain efficiency

Drivers to improve efficiency in both manufacturing and supply chains are associated with the need to reduce
costs in response to tightening margins. The main factors here are consumers demanding cheaper food, rawmaterial and animal feed costs rising, and rising costs of utilities (Figure 13). Two key challenges associatedwith energy and water use lie within this theme.
Figure 13:Influence of drivers on challenges associated with changing manufacturing and supply chain
efficiency

Source: Arthur D. Little analysis

Challenge 4:

Greater efficiency in water use

The food and drink industry is a major user of water, both from direct abstraction and use of the public watersupply with a demand on the latter of about 10% of all industrial use48. Greater efficiency in water use – bothin food manufacturing and the processing of primary raw materials – is not currently primarily driven byefforts to reduce costs, though this remains an important consideration, and is likely to become increasingly
important in the future as demand for water increases and consumption is monitored more closely49. Instead,consultations and the results of the cross-industry survey indicate that reputational issues with moreenvironmentally aware consumers are the primary driver at present for efforts to reduce the overall
consumption of potable water (see Appendix 2).
The dairy industry was one sector in particular that emphasised water use as a greater challenge than othersectors. This is due to the considerable size of modern dairy facilities and the large volumes of water neededin line changeovers and for washing down process equipment. The ready meals sector also highlighted
water use in frequent line changeovers and cleaning as an issue.
Existing initiatives to reduce water use in dairy have focused on clean-in-place methods to enable cleaning
without equipment disassembly. More recently, some significant progress has been made in dairy plantdesign to reduce water use. Arla’s new dairy at Aylesbury contains inbuilt water recycling facilities targeted at
reducing the water footprint of the facility by two thirds compared to conventional dairies, and Müller –Wiseman’s new plant at Bridgewater is able to reuse treated effluent50.

48

Defra, 2006. Food industry sustainability strategy

49

Food and Drink Federation – priorities in water. Available at: http://www.fdf.org.uk/water.aspx accessed March 2013

50

Arthur D. Little consultations with dairy companies and the Society for Dairy Technology, January – March 2013
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30There have also been wider initiatives to reduce water use. For example, a voluntary commitment was
launched in 2008 by the UK Food and Drink Federation (FDF) and Envirowise to reduce water use in thefood and drink sector51. Signatories have pledged to reduce their on-site water use, excluding water
incorporated into products, and contribute to an industry-wide reduction target of 20% by 2020 measured
against a 2007 baseline52. All of the UK’s largest dairies have signed up to this initiative, measuring progressin terms of a milk:water ratio53 and the International Dairy Federation has initiatives underway to develop new
tools for water footprinting.
Technological innovation themes include the reduction of overall water use, and finding new ways to use
non-potable water. Specific opportunities included:The development of novel low-water cleaning technologies: This included furthering theunderstanding of the application of surface science (e.g. bacterial adherence to stainless steel) as wellas using developments in the field of industrial biotechnology (e.g. enzymatic technology for selfcleaning equipment)

Cheaper and more effective water clean-up, recycling and effluent treatment: This includes theremoval of extractives, from water. Phosphate extraction was highlighted as a key extractive, as overall
phosphate supplies are dwindling, and this topic is a current area for focus by the Environment Agency54

Challenge 5: Improving energy and process efficiency in the food manufacturing
environment
Efficiency improvements in food manufacturing focus on reducing costs by minimising processing steps andincreasing throughput, and reducing energy consumption. Reduction of overall energy use – and a result, therelease of carbon emissions through the burning of fossil fuels – was highlighted in the cross-industry survey
as a priority for food manufacturers of all sizes, who face increasing energy costs (Appendix 2). Government
carbon reduction mandates such as the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme
also exert an influence over large energy intensive businesses such as larger food manufacturers andretailers55.
In terms of making efficiency improvements in existing buildings where food manufacturing and processing
takes place, much work has already been achieved through, for example, integration of more advanced
heating, ventilation and air conditioning systems and introduction of low energy lighting.
Beyond this, less progress has been made – due primarily to the significant capital costs associated withintroducing new process technology and equipment, which poses a challenge both for businesses with large
or high throughput production lines, and smaller businesses which face difficulties in accessing thenecessary capex funding56.
In terms of overall efficiency, the UK’s food manufacturing industry is in general less automated than those inother countries such as Germany and Denmark57. Activity in food processing equipment and process
technology development in the UK is also limited and there is not much domestic capability in equipment
51

Federation House Commitment. See http://www.fhc2020.co.uk/fhc/cms/, accessed March 2013

52

FoodDrinkEurope,2012. Environmental sustainability vision: towards 2030

53

See http://www.edie.net/news/4/Dairy-UK-partners-with-FHC-to-reduce-water-usage/23803/, accessed February 2013

54

Personal communication with Defra, April 201355

UK Government Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. Available at: https://www.gov.uk/crc-energy-efficiency-scheme

accessed February 2013
56

Arthur D. Little consultations with Premier Foods and the National Association of Master Bakers, February 2013

57

Arthur D. Little consultations with the Food and Manufacturing Engineering Group, February 2013
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design or process control for the high speed, multiproduct manufacturing processes often seen in othercountries58. Activity which does take place is primarily within smaller businesses – some of which are very
successful, and export their technologies widely – and via specialised networks such as the Food
Manufacturing Engineering Group.
There are further opportunities to seek ways of reducing energy consumption in some of the more energyintensive steps involved in food processing – notably in terms of refrigeration when achieving rapid
temperature reduction of heat-treated foods and maintaining low temperatures during preparation,
packaging, and storage. Other energy intensive steps involve physical aggregation and disaggregation,
extraction of raw materials (e.g. protein and fibre) and cooking and thermal processing.
Opportunities for technological innovation to address this challenge include:New methods of cooling the ambient factory environment: This involves identifying entirely new
ways of chilling air, rather than modifying or optimising commercially available heating, ventilation andair conditioning systems



Design and build of energy efficient factories: This involves the design and building of manufacturing
environments which are ergonomically designed and more energy efficient. This is particularly importantin terms of minimising the cold areas of plants, improving air flow and enabling greater modularisation,
flexibility and compactness. This is especially important for the dairy sector and in the ready meals
sector – and lessons could be captured from the automotive sector in terms of efficiency with highthroughput

New processes and techniques for freezing and chilling: This involves opportunities for freezing andchilling as part of the production cycle, as well as post-process chilling for products such as readymeals. Specific opportunities include novel chilling and freezing technologies (e.g. the use of magnetic
freezing and piezo electronics) as well as super insulators and eutectics

New processes and techniques for cooking and thermal processing and capture of low grade
heat: This involves adoption of technologies which reduce the most energy intensive steps of foodprocessing, including, for example, alternatives to heat pasteurisation, UV light and the use of molecularsieves in place of boiling and thickening activity and enzyme-based alternatives to drying technologies.
There is also an opportunity for the capture and use of low grade heat (e.g. from ovens, using better
heat exchangers and cleaning processes)

Greater use of dehydration and rehydration: This allows more materials to be transported in a dry
state through the supply chain in order to better control it

Challenge 6: Improvements to the cold chain to prolong shelf life and reduce energy
consumption
In comparison with primary processing and food manufacturing, the distribution of food accounts for a
relatively small proportion of energy consumption. Of this proportion, up to 47% is attributed torefrigeration59.This creates a challenge associated with improving efficiency in the cold chain as acomponent of improving overall energy efficiency. The ready meals, dairy and soft drinks and beverages
sectors, as well as retailers, all flagged post-production refrigeration as an important challenge. Those activein the chilled foods sector observed that much cold chain technology is already available, and that new
approaches are being developed (e.g. at the Universities of Brunel and Cranfield and via the British Retail
Consortium) so the issue is as much about technology transfer as it is about technology development.

58

FDF, October 2012. Vision for innovation in food and drink manufacturing

59

Defra, 2012. Green Food Project Curry Sub Group Report, pp4
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In particular, one of the most energy inefficient components of the cold chain is energy use within the home
and the low efficiency and poor temperature control of many domestic refrigerators – the basic technology ofwhich has remained largely unchanged for many years and which has been the subject of studies by
WRAP60. However, technological innovation here is more likely to be the responsibility of the manufacturersof white goods. Domestic fridges in France are required by a Decree to have storage compartments able tomaintain the correct chill temperature and that they carry visible and legible thermometers to show this, andorganisations such as CFA are lobbying to make this the case in the UK61.
Specific opportunities for technological innovation associated with this challenge:
Reducing energy losses within the retail environment, particularly in retailer chiller cabinets anddevelopment of heat reflective packaging materials, cited as a high priority amongst retailers
themselves. This is a complex issue, as display cabinets must not create a barrier between the
consumer and the product

Minimising the need for chilling throughout the food chain: Improving supply chain and logistics
management to minimise the time that chilled foods are in transit and product innovation to develop
foods which are ambient stable to point of retail – though care must be taken to ensure that consumers
are not misled as to their freshness in line with EU consumer information requirements62

Maximising production within the supply chain: Such as, for example, labelling and packing fruit andvegetables whilst in transit and improving understanding of ripening

4.4 Reducing and reusing waste materials
Waste reduction and reuse is primarily driven by economic issues associated with maximising efficiency andreducing operating costs, as summarised in Figure 14.
Figure 14:Influence of drivers on challenges associated with reducing and reusing waste materials

Source: Arthur D. Little

Challenge 7:

Packaging to prolong shelf life and reduce food spoilage and wastage

Packaging is one of the main current priorities for technological innovation across all sectors in the food anddrink industry, as well as an important consideration for supplier selection and procurement. The crossindustry survey showed that respondents believe that packaging is one of the most significant areas forpotential Government support in technological innovation – essentially because it is one of the main areas in60

WRAP, 2010. Insights around the domestic refrigerator. Available at: http://www.wrap.org.uk/content/insights-around-domestic-refrigerator, accessed

April 2013
61

Chilled Food Association newsletter, Spring 2013, issue 39

62

EU Regulation 1169/2011 on the provision of food information to consumers
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33

which companies in the food supply chain currently seek to innovate (Figure 15). Most current technologicalinnovation in packaging focuses on:Improving packaging from a marketing perspective: Much innovation in packaging is focused on
making products more attractive and convenient for consumers – such as making products easier tocarry, take up less space when stored in the home, and able to withstand changes in temperature whenheated from frozen

Reducing production costs: Efficiency is also important in terms of developing packaging which issuitable for a wide range of products and therefore requires minimal line changeover time

Figure 15:

Summary of free-text responses to the question: If you were in Defra’s position, what R&D would
you fund to encourage the production of environmentally sustainable food?

Source: Arthur D. Little industry survey, January 2013. Image produced using wordle.net. Based on 253 free-text responses to the question: “If you were in
Defra’s position, what R&D would you fund to encourage the production of environmentally sustainable food? The size of each word is proportional to thenumber of times the word was used by the respondents

Packaging is a major source of waste, both in the home, and within the food and drink supply chain. As aresult of this, minimising or reusing packaging to reduce waste associated with the food and drink industry isestablished as a known industry challenge and has received significant attention.
Material light-weighting was a consistent near-term theme associated with waste reduction as it provides
opportunities to reducing the costs and carbon footprint associated with the transportation and distribution offood and drink products. Companies in the soft drinks and mineral waters sector, which transport large
volumes of bulk products and those companies which supply them (e.g. Rexam, Tetra Pak) highlighted thelight-weighting of packaging as a key current area for focus – though one which must be tempered against
consumer suspicion around lower robustness of packaging and the potential for damaging goods in transit
The use of reusable packaging, particularly as a means of reducing the volume of single trip packaging to
manufacturing sites was also highlighted as a priority63. A significant body of work has been focused on
initiatives to reduce packaging volumes. Commitments are in place amongst several retailers and food
manufacturers to reach a zero waste to landfill target by 2015 through the Food and Drink Federation’s Five
Fold Ambition, together with a similar agreement through the British Retail Consortium. In addition, an ongoing voluntary WRAP initiative known as Courtauld 2, due to be revised and updated in May 2013, seeks to
reduce waste arising and to reduce the environmental impact of packaging64.
63

WRAP, 2011. Opportunities for resource efficiency in the food and drink sector.

64

FDF’s Five-Fold Environmental Ambition aims to send zero food and packaging waste to landfill at the latest by 2015 and make a significant contribution

to WRAP's Courtauld 2 target of reducing product and packaging waste in the supply chain by 5% by end of 2012 against a 2009 baseline. The British
Retail Consortium’s “A Better Retailing Climate” sets out similar provisions, together with the broader environmental impact of retailers
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Packaging recycling is also a near-term priority, particularly for those in the soft drink and mineral waters andready meals sectors, which generate large volumes of potentially recyclable packaging waste (e.g. plastic
bottles, aluminium cans). WRAP’s Courtauld 2 commitments call for manufacturers to work with consumers
to increase recycling rates65. Food manufacturers in these sectors raised issues associated with obtaining aconsistent supply of recycled materials of the required quality66. To some extent this can be attributed to thefragmentation of waste collection and segregation schemes and deployment of waste separation
technologies, which have been devolved to local government. Much work is underway to improveconsistency in this area, notably through WRAP’s best practice guides for local authorities67.
The main opportunity for further technological innovation in packaging concerned its role in food waste
reduction in terms of prolonging shelf life and reducing food spoilage and wastage. Packaging is the main
defence against food contamination, spoilage and discolouration68. More candidates for protective
atmospheres in the fruit and vegetable and meat processing sectors (e.g. nitrogen or ozone richatmospheres or ethylene absorption technology, such as the “It’s Fresh” ethylene management system havebeen developed in the past), novel barrier technologies, vacuum packaging and methods of effectively
resealing opened food containers (e.g. in ready meals) were all identified as important challenges in the
consultation programme.
An area for long term focus is the development of smart packaging that can signal when food becomes unfit
for consumption, taking account of the way that it has been handled during transportation, display andstorage in the home, thus avoiding the need for the inflexible ' use by ' or ' best before’ date marking.
However, addressing this challenge through technological innovation will be difficult, for an industry
constrained by tight margins where expenditure on more technologically advanced packaging which does not
attract consumers to buy a product or reduce costs is often not an option. It is therefore unclear who might
benefit from overcoming this challenge, as those who hold, or would be required to deploy, the technology
are not necessarily those who stand to benefit from the results.

Challenge 8: Modifying products to prolong shelf life whilst maintaining freshness andminimising the use of artificial additives
The consumption of chilled foods, which have shorter shelf lives than frozen or ambient stable alternatives,
has risen dramatically in recent years. This is driven by the desire of consumers for increased freshness andless use of artificial additives, or processing which can reduce nutrient content.
Efforts to prolong shelf life without the need for chilling by modifying the properties of processed foods whilst
maintaining freshness and nutrient levels was identified as being important by those sectors which typicallyhave to work with fairly short shelf lives, especially in fruit and vegetable processing and ready meals. A wide
range of views were expressed amongst consultees about this challenge, and how to best solve it, as if
efforts to increase shelf life are to be successful they need to be able to address consumer suspicions about
the use of unfamiliar processing technology and the lack of freshness. Opinions were particularly divided on
the difficulty of doing this in the ready meals sector. Nevertheless this challenge is significant, and WRAP
observe that overcoming this challenge could have significant impact on waste reduction, and that, for

65

WRAP Courtauld 2 commitments – targets, benefits and progress. Available at: http://www.wrap.org.uk/content/courtauld-commitment-2-targets-

progress-and-benefits accessed February 2013
66

Post Farm Gate Technical Challenges Workshop 14th July 2010

67

Available at http://www.wrap.org.uk/content/technical-guides-local-authorities, accessed March 2013

68

Post Farm Gate Technical Challenges Workshop 14th July 2010
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35

example, 1-2 extra days of usable life in food products such as milk is sufficient to reduce household foodwaste by up to 40%69.
Technological innovation activities in this area covered efforts not only to prolong overall shelf life extension
but also to ensure that products are safe to consume up to and including the use by date, even if they havebeen opened and re-sealed. The way in which foods are processed can also have an impact and alternativemeans of controlling spoilage organisms are a way of addressing this. Technologies such as ultrasonics,
microwaves, irradiation and pressure can be used to do this – though these have seen a low uptake,potentially due to high costs70. A key existing initiative here is the Sustainable Shelf Life Extension (SUSSLE)
project, which sought to better understand the effects of heat processing on spore-forming pathogens71.

Challenge 9:

New applications for off specification and residual products

Challenges associated with waste reduction are largely covered in other parts of the supply chain, in terms of
optimising packaging and improved efficiency in factory operations. However, a specific challenge
associated with finding new added value applications for off specification and residual products produced
during manufacture has emerged from this analysis, particularly in terms of:

Fruit and vegetables which do not conform to European guidelines in terms of appearance and qualityOff-specification dairy products, including milk returned from retailers, end of line or start of line batchruns, mislabelled products, or those which fail quality assuranceImproving the profitability of components of cereals not wanted by food manufacturers, for example,
seeking new opportunities in developing non-food materials such as wheat husks, rather than using it foranimal feed, which can produce low – and sometimes negative – returns



Finding new applications for by-products associated with raw material processing (for example, finding
novel or high value applications for residual beet pulp following beet crushing to extract sugar)

The National Industrial Symbiosis programme, originally piloted at the regional level, and scaled up to anational initiative through Government’s Business Resource Efficiency and Waste Programme, joins up
different parts of the food and drink supply chain with other sectors72. Other technological innovation
opportunities associated with finding new applications for off specification and residual products include:Improving connectivity with small-scale waste production, both within the supply chain andwithin individual businesses: This could include opportunities to better link producers with potential
users (a specific example involving linking bakeries with a surplus of egg whites to potential users) as
well as seeking opportunities to reuse specific off-streams within or between businesses (by, forexample, finding ways to reuse gases with elevated carbon dioxide levels in covered agriculture)Conversion of food manufacturing and domestic waste to non-food materials, particularly using
applications in industrial biotechnology (e.g. advanced enzymes and associated bioprocessing) andscaling up these applications. Examples include the production of materials for use in packaging, andchemicals and fuels for use in transport and other applications



Decontaminating waste streams for food use, with specific examples including, for example, theextraction of hemicellulose from biomass to use as a food product and the extraction of functional
ingredients from off specification or residual products (e.g. soluble fibre)

69

WRAP, 2013. The Milk Model: Simulating Food Waste in the Home; Personal communication with Andrew Parry, WRAP, April 2013

70

Arthur D. Little workshop with the Food and Drink Federation’s Sustainability Steering Group, November 201271

See http://www.chilledfood.org/MEDIA/NEWS/2012/SUSSLE+Project+gets+Top+Marks+from+Defra, accessed March 2013

72

Case studies available at http://www.nispnetwork.com/about-nisp, accessed March 2013
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36

4.5

Opportunities for technology transfer from adjacent industries

Some of the challenges and areas for technological innovation present opportunities to transfer intechnologies from other sectors where the necessary capabilities are already well developed. These include
the pharmaceutical, medical device, chemistry and chemical engineering, industrial biotechnology andautomotive sectors. The opportunities identified as part of the consultation programme and also the horizon
scanning exercise conducted as part of this study are summarised in Table 2.
Table 2:

Opportunities for technology transfer from adjacent industries

Challenge

Area of technological innovation

Capability in adjacent sectors

Sourcing environmentally
sustainable and resilient raw
materials

Online monitoring and detection of foodquality and contamination

Clinical diagnostics

Further reducing salt, sugar and fat
content and including healthiercomponents such as fibre

Sensory science and taste perception

Psychological science

Identification of substitutes for salt andsugar

Microstructural engineering anddesignIndividual products which are targeted at
reducing the risk and emergence ofnutrition related disease

Personalised medicine andcompanion diagnostics

New products aimed at specificconsumer groups

Medical devices
Pathogen and allergen detection

Diagnosis and prediction of nutritionrelated illness

Greater efficiency in water use

Proving product efficacy quickly andcheaply

Clinical research

The development of novel low-watercleaning technologies

Industrial biotechnology

Cheaper and more effective water cleanup, recycling and effluent treatment
Improving energy and process
efficiency in the food manufacturing
environment

Design and build of energy efficient
factories

Automotive manufacturing

New applications for off
specification and residual products

Conversion of food manufacturing anddomestic waste to non-food materials

Industrial biotechnology

Civil engineering

Decontaminating waste streams for fooduse
Source: Arthur D. Little analysis

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4.5

Summary of priorities for technological innovation

In summary:

There is considerable further scope for technological innovation to address these challenges,
some of which will require a step change in current understanding. Further reducing the salt, fat
and sugar content of products – a top priority for healthier foods will require this in particularSome areas will require coordinated effort across the supply chain. Sourcing environmentally
sustainable and resilient raw materials, for example, will require coordinated effort on both sides of the
farm gateMuch work has been done already – and should be taken into account in future initiatives.
Examples include the array of work that has taken place in packaging minimisation and recycling
through the efforts of industry and organisations such as WRAP, as well as key projects through, forexample, the LINK programme. There is a need to ensure that these outcomes are taken into account

The challenges vary considerably from sector to sector – such that it would be unwise to attempt toaddress them collectively in a single, cross-industry initiative

In addition, many of the challenges require scientific activity from multiple disciplines. For
example, reducing salt, fat and sugar content could involve chemistry, formulation engineering,
behavioural science, psychology and sensory science to address adequately



There are multiple opportunities to transfer in technologies from other industries, and from othercountries which have stronger capabilities in some areas of technological innovation, particularly in foodprocess technology and packaging

However, there are plenty of opportunities for, and strong capability in, the UK’s science base todeliver the technological innovation required to address these challenges

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5. Barriers to technological innovation
Barriers to technological innovation are obstacles which are preventing the challenges described in Section 4
from being overcome. Those described here are mainly of relevance to companies, both large and small, butalso have implications for research and technology institutes and universities.
This study has established that access to funding is the most significant barrier to technological innovation.
This is both in terms of accessing funding for innovation activities itself, as well as funding for capex outlay
for up scaling and the procurement of new plant. Other barriers include industry’s ability to access the righttechnical and engineering skills, striking a balance internally between the immediate demands of consumers
and customers and longer term R&D, and – for smaller businesses especially – the ability to identify newtechnologies that can be successfully deployed quickly and easily at low cost whilst minimising the impact on
business continuity.
The barriers were identified through the cross industry survey and consultation programme, as well as bycomparing these findings to other similar studies73,74. This section of the document describes, and provides
evidence for each of the barriers identified.

5.1 Obtaining funding for technological innovation
Better access to funding for technological innovation from public sources was overwhelmingly top-rated in
the cross-industry survey and consultation programme, as shown in Figure 16. Both companies small andlarge observed that it was difficult to navigate their way to the right sources of funding and that funding
programmes are neither stable nor consistent, and appear to be provided by a wide range of often seemingly
disconnected bodies with little apparent coordination or co-operation between them, such that accessing
funds can be complex and time consuming.
Interestingly, availability of funding for technological innovation was less of an issue than access to it,suggesting that consultees and survey respondents felt that funding was available, but had difficulties inunderstanding how it fitted together and in being signposted to that which was likely to be most relevant tothem. All this would seem to indicate the need for action to establish an overarching funding policy for foodand drink innovation, together with a need to raise awareness of what funding is already available and tosimplify the mechanisms to access it.

73

Personal communication with the Irish Exporters Association, February 201374

Defra Post Farm Gate Technical Challenges Workshop 14th July 2010: Workshop summary
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39

Figure 16:Top 10 barriers to R&D and innovation

Source: Cross-industry survey results, Arthur D. Little analysis

One area where a gap was identified concerned the ability to fund capex outlay for commercially available
new technologies, including scaling up and turn-key plant. This concerned difficulties in justifying andcommitting funding within businesses as well as a lack of externally available funding sources. Section 2 ofthis report has highlighted the tight financial margins under which food manufacturers must operate becauseof the intense competition in this sector. A capex outlay in a new piece of technology was identified as being
extremely difficult to justify, owing to the requirement to see a guaranteed quick payback due to tightmargins. This was particularly evident for SMEs, who find it difficult to justify a high capital outlay on anenergy or water efficiency project with a long-term payback to a very short term balance sheet, but also
apparent for larger companies who – despite having access to a larger cash flow – often have to invest inmuch larger scale equipment, and sometimes across several facilities.

5.2 Shortage of relevant skills in technology and engineering disciplines
A shortage of appropriately skilled staff was the second most frequently cited barrier. Specifically, thisconcerned technical and engineering skills, in terms of both practical disciplines at the factory floor level (e.g.
meat science, butchering and baking) and also in more supervisory roles. It also concerned the skills needed
to identify and develop new innovations.
This barrier did not focus on the availability of appropriately qualified graduates in science and engineering.
Instead, it concerned the ability of industry to attract scientists and engineers from non-food industry related
backgrounds into the food and drink sector and in particular how to energise young scientists andtechnologists. Several industry consultees were keen to stress that technical skills food science are not the
only discipline required by the food and drink industry. Other disciplines such as process engineering,mathematics, physics, chemistry, biochemistry, mechanical and design engineering and materials science
also have critical roles to play in the food and drink industry.
When questioned further as to why this barrier is apparent, some consultees indicated that this was becausethat the industry was considered to be of insufficient scientific challenge and interest to those with such skills,
and to lack clearly defined scientific challenges which would enable scientists and technologists to publish in
the best journals and develop a strong scientific reputation. Other consultees observed that it could involvean unattractive working environment compared to other sectors, and that salaries were often higher in other,adjacent sectors (e.g. the pharmaceutical industry). Some organisations had overcome this barrier by
establishing their own apprenticeship schemes to train and retain technical and engineering staff, but others
indicated that they had neither the time nor the resources to develop similar programmes.

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405.3 Internal priorities and culture
The third most frequently cited set of barriers concerned internal priorities and the culture within businesses.
A focus on short term product development at the expense of longer term or more disruptive technologicalinnovation was highlighted as a key internal barrier to technological innovation. Consultees and survey
respondents indicated that most innovation activities focused on meeting short term demand fromconsumers and from retailers, and the majority of this work focused on cost reduction, as discussed in
Sections 2, 3 and 4 of this report. In some instances, food manufacturers felt that they were expected to wait
for retailers to define a technological need, and then were required to respond to it as quickly as possible.
The effect of this short term focus is that respondents indicated that they have a lack of time and capacity for
longer term technological innovation, and that they were constantly “fire fighting” to deliver incremental
benefits, often in short order.
Other barriers concerned a general lack of buy-in from the rest of the business as to the value oftechnological innovation. Some consultees observed that they did not invest in technological innovation
because other parts of the business saw insufficient benefits in terms of the costs involved relative to thebenefits which could be realised – and the amount of time taken to see a return on investment.
A further theme concerned the extent to which uptake of new technologies represent a risk to the continuityof day-to-day operations, particularly by those in non-technical positions, or those concerned with ensuringbusiness continuity. This was particularly evident for SMEs, who highlighted difficulties in being able to test
and trial technological innovations before deploying them. Consultees also highlighted that the “valley ofdeath” between a piece of applied research and a packaged up, deployable new piece of technology wasoften difficult to cross75 with the problem of scale up, both from the point of view of needing to minimise therisks involved and the difficulty of obtaining funding, being particularly acute in the current low margin
environment in which food manufacturers have to operate.

5.4 Consumer demand for, and acceptance of, technological innovation
This study has found drivers associated with consumer demand to be the strongest influence ontechnological innovation in the food and drink sector. However, reluctance amongst consumers to accept
new technologies and change existing consumption behaviours and purchasing habits was cited as a barrier,particularly in terms of how consumers perceive the risks associated with novel food products and how open
they are to embracing the use of new, unfamiliar technologies. This is one of the factors that cause
technologically innovative activities associated with developing new products to be focused more on
incremental developments which gradually influence what consumers choose to buy, rather than moreradical developments such as completely new products. Some consultees observed that the causes of thisreluctance concerned:The perceived health and safety risks associated with novel food products, particularly for those withchildren

A low consumer desire to move away from familiar productsPrice being the primary driver for food and drink purchasing, such that consumers were perceived as
being “unwilling to pay for new technology”

5.5 The ability to make and register health claims
The way in which companies can advertise health benefits has recently been tightened up to better protect
consumers from dubious or misleading claims. It is now very costly and difficult to demonstrate proven healthbenefits, such that only a small number of products (for example cholesterol-reducing spreads, yogurts anddrinks) now do so. Consultees and survey respondents observed that this had implications for stifling75

Arthur D. Little consultations with companies in the ready meals sector, December – March 2013
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innovation, in terms of the volume of expensive data required by the European Food Safety Authority, andthe risk of claims being rejected in spite of significant effort. This is part of broader concerns around the way
in which research and innovation proposals at the European level can influence businesses76. Providers of
raw materials and food manufacturers also expressed intense difficulties in making health claims for foodingredients (e.g. milk as a source of calcium and its impact on skeletal health).

5.6 Forming consistent relationships associated with technological innovation throughout
the supply chain
A final set of barriers concerned the way in which companies in the food and drink sector are able to form
relationships and partnerships with other elements of the supply chain. The linkages between food
manufacturers and retailers were highlighted as being particularly strained at times. Some manufacturers feltthat they were not in control of their own destiny, with a strong emphasis by retailers on the promotion ofown-brand products. Others observed that uncertainty was an issue in deciding where to invest intechnological innovation, and worried that the needs of retailers might change at short notice, such that asignificant investment in a new piece of equipment might become redundant if the retailers requirementschanged (e.g. for a particular type of packaging)
Other issues concerned finding the right organisations to partner with for specific technological innovation
activities, and in transferring technologies from the public research base (i.e. research institutes andacademia) to manufacturers – though membership based organisations such as Campden BRI and
Leatherhead Food Research have helped to achieve this successfully. Others observed that headway is
being made in this area – particularly in the relationships between retailers and primary producers.

5.7

Summary of barriers to technological innovation

In summary, obtaining funding for technological innovation is industry’s number one barrier. This is more
about identifying where funding is available, being able to plan in advance how best to use it, and how to go
about accessing it. A gap is evident in capex funding for businesses both small and large to take up new,potentially expensive technologies. A shortage of technical and engineering staff seeking to enter the
food and drink industry is apparent, suggesting that effort to make the industry a more attractive andstimulating place to work would be helpful. A lack of innovation culture within – particularly small –businesses can hamper technological innovation, coupled with a need to handle short term demand in favourof longer term technology development. Consumers can be reluctant to adopt new technology andchange consumption and purchasing habits, despite being the main driver for technological innovation.
Forming relationships within the supply chain to address areas of common technology need can bedifficult, and health claims for food products are difficult to make. Ways to overcome these barriers are
considered in the next section of this report.

76

House of Lords, 15th report of session 2012-13. The Effectiveness of EU Research and Innovation Proposals, April 2013
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6. Areas for further consideration
This section focuses, by way of a series of recommendations, on ways of developing the outcomes of thisstudy, overcoming the barriers identified in the cross-industry survey and consultations, and setting out next
steps for addressing the technological challenges. Figure 17 summarises the recommendations in terms of
relative ease and impact of delivery. It is assumed that Defra would be the primary delivery agent for theserecommendations, working together with other Government agencies and with industry.
Figure 17:Summary of recommendations

Source: Arthur D. Little analysis. R: Recommendation

Recommendation 1: Create technology roadmaps to set R&D objectives which will address
the “hot spot” technological challenges
Whilst the current review has identified technological challenges and proposed areas of technologicalinnovation to address them, ways of delivering this innovation will need to be identified (e.g. research
projects focused on creating specific technologies or developing capabilities). One way to do this is todevelop a series of roadmaps which would identify what activities would need to take place, in what order,
and by when, to address each of the “hot spots”.
However, when doing so, care must be taken not to “reinvent the wheel” and other existing studies will act asvaluable inputs to this exercise. An example includes the outputs from TSB’s deep-dive study on the foodsector, which contains some themes and timings which are applicable to the challenges identified in thepresent study77. A further example is the Dairy Roadmap, produced by DairyCo and Dairy 2020, which
defines targets and a potential future vision for the dairy sector associated with environmental
sustainability78.
The technology roadmaps should take into account disruptive technologies, and those from adjacentindustries. They should be led by the food and drink industry, rather than by Government, in order to ensure

77

Technology Strategy Board, 10th October 2012. UK manufacturing landscape – Food Sector Deep Dive

78

DairyCo (Agriculture and Horticulture Development Board), 2010. Dairy Roadmap: Our route towards environmental success. For Dairy 2020, see:

http://dairy2020.com/about-dairy-2020, accessed April 2013
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43that they meet industry requirements and that that there is sufficient appetite to deliver them. However, there
is a role for Government to facilitate the development of such roadmaps.
Examination of international good practice from CSIRO in Australia, who conducted a similar exercise in2011, suggests that there should be multiple roadmaps, rather than just one overall roadmap for the foodand drink industry(for details, see Appendix 3).
Each roadmap should be targeted at addressing one of the nine specific challenges identified in this study.
To help with buy-in, activities set out in the roadmaps should be focused on pre-competitive research which
benefits industry, or industry sectors, as a whole, rather than individual companies. In addition, the roadmaps
should take into account those areas requiring a multidisciplinary approach that would not be realised
through conventional R&D within a single institution. For example, a roadmap to reduce the content of salt,
fat and sugar in food products could involve activity in sensory science, psychology, formulation engineering,and chemical engineering.
This would involve a range of activities such as, for example:

Basic research into the identification of salt analogues



A programme of sensory science activity to understand what affects the perception of salt

Research into formulation engineering to identify the implications of fat reduction on increasing
carbohydrate content



A technology scan for areas of activity outside the food and drink sector to identify substances which
could provide similar properties to salt in conventional baking

Recommendation 2: Improve the way in which Government funding regimes fortechnological innovation are defined, coordinated and then communicated toindustry
Closely tied with Recommendation 1, and supported by the barriers identified in this work, a need to better
coordinate food and drink research funding initiatives across Government departments and bodies, and thencommunicate this to industry, has emerged.
The production of more environmentally sustainable and healthy food involves a wide range of very different
technologies. It therefore spans the remit of several departments and bodies, including Defra, theDepartment for Business, Innovation and Skills, the Department of Health, three of the research funding
councils and many others, as summarised in Figure 18. Many of these operate calls for funding associatedwith collaborative research in the post-farm gate food and drink industry. For example, TSB operates calls
relating to its Sustainable Agriculture and Food Innovation Platform79 and Nutrition for Life programme80,
whilst BBSRC operates the Diet and Health Research Industry Club (DRINC).
The wide range of funding initiatives available from different agencies can make it difficult for an individual
business to track the various funding initiatives available, or indeed to know what to track. At present, somefunding initiatives seem to appear without warning and often provide only a small window in which to makean application. Some of these also fix the funding for a number of years ahead so that failing to make anapplication in the time allowed can potentially restrict access to funds in a particular area for a considerable
period. The issue of communication is of particular importance to SMEs, who expressed difficulties in being
signposted to the right Government funding initiative.

79

Sustainable Agriculture and Food Innovation Platform. See https://connect.innovateuk.org/web/sustainable-agriculture-and-food-innovation-platform,

accessed April 201380

See http://www.innovateuk.org/ourstrategy/innovationplatforms/sustainableagricultureandfood.ashx, accessed April 2013
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44Together, this suggests that there is scope for better communicating and coordinating calls for funding to thefood and drink industry. Previous studies have also highlighted a need for better coordination81,82, including
in particular the Green Food Project, which identified a need for a more strategic and joined up effort in
relation to innovation, research and development83 on both sides of the farm gate.

Figure 18:

Food responsibilities across Government, Devolved Administrations and Research Councils

Source: OGC – Cross-Government Food Research Strategy, 2010. Abbreviations: BBSRC: Biotechnology and Biological Sciences Research Council;
NERC: Natural Environment Research Council; MRC: Medical Research Council; ESRC: Economic and Social Research Council; EPSRC: Engineeringand Physical Sciences Research Council; DfID: Department for International Development; Defra: Department for Environment, Food and Rural Affairs;
FSA: Food Standards Agency. Scot.Gov: Scottish Government: DH: Department of Health; DARD: Department of Agriculture and Rural Development(Northern Ireland); TSB: Technology Strategy Board

In response to these issues, the Food Research Partnership (FRP) (led by the Government Chief Scientist),
produced the Cross-Government Food Research and Innovation Strategy84, which sets out several initiatives
including formation of the BBSRC-led Global Food Security Programme (GFS), the role of which is to better
coordinate the delivery of multidisciplinary research in all aspects of food production, from farm to fork to
maximise its impact85. The central Government departments, the Research Councils and TSB are allmembers of this initiative.
New activity by a Ministerial-led Leadership Council to develop a forthcoming ‘Agri-tech Strategy’ will workwith the FRP and the GFS to improve this coordination in the pre-farm gate sector. However, there iscurrently no visibility as to how this will influence coordination in the post-farm gate food and drink sector.

81

MRC Strategic Review of Nutrition. http://www.mrc.ac.uk/Utilities/Documentrecord/index.htm?d=MRC005762 accessed March 201382

Arthur D. Little, 2009. BBSRC/HEFCE Study of Land Based Facilities and Resources

83

Defra, 2012. The Green Food Project: Conclusions. pp12 (Paragraph 4.9)

84

Government Office for Science, 2010. UK Cross Government Food Research and Innovation Strategy

85

See www.foodsecurity.ac.uk, accessed April 2013
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45There is therefore an opportunity for GFS, the organisations it represents, and the FRP to pull the somewhat
fragmented existing initiatives in food and drink more visibly together. In particular there is a need to:Seek opportunities to establish a fully transparent and well publicised overarching funding policy for foodand drink innovation



Avoid unnecessarily shifting the focus or ownership of existing programmes, but instead act as a meansof coordinating, communicating and disseminating them to industry, likely via FRPRaise awareness of coordination activity by the GFS and FRP to industry and spell out what they seek
to achieve, as very few consultees seemed to have heard of themEnsure that GFS engages with initiatives with a similar remit, such as the National Technology Platform
for Food and its members86

Ensure that efforts continue to take into account wider cross-European initiatives, as well as those taking
place in other countries

There is also an opportunity to coordinate and broadcast calls for funding in advance, such that industry canplan and align their research activities to make best use of research funding and a need for industry toensure that they are plugged in to the right communications channels and networks.

Recommendation 3: Find ways to attract individuals with technical and engineering skills
to the food and drink industry and better understand the skills landscapeAccess to technical and engineering skills of both direct and indirect relevance to the food and drink sector
were highlighted consistently across all sectors as a barrier to innovation. This appears to be an issue
associated with attracting scientists and engineers to the food and drinks sector, and is primarily an issue forindustry to explore further in terms of better understanding the skills landscape.
There is also scope for Government and industry to work together in, for example, the co-development oftraining courses and provision of work experience for science and engineering training courses more broadly(e.g. mechanical engineering, chemistry and biotechnology).
This has already been successfully done in creating food science-specific training courses Sheffield Hallam
University, which has worked together with the Food and Drink Federation and the National Skills Academy
for Food and Drink to develop an MEng in Food Engineering87.
The BBSRC Advanced Training Partnerships may also be a helpful mechanism to do this. This scheme
comprises up to £15 million of finding to support the development and delivery of postgraduate training overa five year period through partnerships between consortia of organisations, including universities, agriculturalcolleges and other research institutions, as well as, supermarkets, levy bodies, private researchorganisations and the farming community among others. Four awards cover a broad range of areas,
including livestock, crops, food science, horticulture and agricultural systems.

Recommendation 4:
Enable technology transfer into the food and drink industry from thepublic science base, adjacent industries, and other countries
Whilst much technological innovation activity takes place in the UK’s public research base (much of which isworld-class) consultees from both large and small companies highlighted difficulties in being able to transfer
technologies into their businesses. There was also an issue associated with being able to transfer in

86

National Technology Platform for food. See https://connect.innovateuk.org/web/uk-ntp-for-food/our-group, accessed April 201387

See http://www.shu.ac.uk/prospectus/course/1247/, accessed April 2013
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technologies from adjacent industries, and in instances where the UK does not have a leading presence
internationally (e.g. in food process technology equipment).
The assessment of barriers in Section 5 indicates that this is due to a range of factors, including a lack oforganisations which have the ability to act as the bridge between basic research and its application in theindustrial setting (particularly in SMEs); the short term focus of internal innovation-related activities; a lack ofresources for longer term R&D; a lack of buy-in from non-technical parts of the organisation as to theimportance of R&D; and the continuing pressure of tight margins for many parts of the food and drink supply
chain. Achieving better uptake of R&D into practice would help to overcome some of the challenges
identified in this work, particularly those associated with refrigeration and cold chain.
Areas where further activity is needed to improve technology transfer include:Providing resources to “package up” the results of research in some of the priority areas fortechnological innovation described in this study and make them more readily implementable incommon practice: This entails taking research emerging from universities and research andtechnology institutes and translating them into market ready opportunities, helping to ensure thattechnologies become commercially proven, technologically and commercially de-risked, and meet
regulatory requirements. This should include support for studies for products which could make healthclaims – potentially involving multiple organisations seeking health claims for a commonly used
ingredient, as has been the case recently in the dairy sector. Capabilities in modelling, testing, triallingand scale-up for food manufacturing already exist in, for example, the National Food Manufacturing
Centre at Lincoln University and at the Centre for Process Innovation in Teesside but need to be more
widely publicised and SMEs given help to access them. Identifying opportunities for process-based
technological innovation in smaller businesses to improve efficiency and flexibility: This involves
identifying opportunities for improving existing process technologies used in smaller businesses bydiagnosing and recommending opportunities for improvement, a service offered by only a few
organisations at present such as the Centre for Food Robotics and Automation (CenfRA)Providing access to capex for the uptake of commercially available new technologies: This study
has found access to capex associated with taking up new technologies (e.g. when procuring a newautomated piece of process equipment) to be a significant barrier due to the risk averse culture of many
lenders and the potentially lengthy return on investment and the implications of this on a sector
characterised by quick turnaround times and low profit margins. This is particularly important for thechallenge associated with improving energy and process efficiency in the food manufacturing
environment, such as accessing new food processing equipment and process technology There areopportunities for Government to influence the uptake of sustainable technologies through other
Government initiatives such as the Green Investment Bank and ensure that such investment bodies
have the necessary capabilities to assess technical proposals88

Seeking opportunities for the inward transfer of knowledge, as well as technology: Through the
expansion of initiatives such as the Knowledge Transfer Partnerships (KTPs) which involve thesecondment of post-doctoral researchers into businesses to address specific areas of technologicalinnovationSeeking more opportunities to transfer in technologies from adjacent industries or international
geographies: This is likely to be of particular relevance to challenges associated with improving energy
and process efficiency in the food manufacturing environment, which are likely to rely on activities inother countries (e.g. Germany and Italy) or from other industries (e.g. civil engineering)Providing assistance with scaling up technologies once proven: There is a need to provide
technical assistance with scaling up proven technologies, particularly in small businesses. This could bedone by expanding the remit of KTPs

88

See http://www.greeninvestmentbank.com, accessed April 2013
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

Drawing on the outcomes of research that has already been delivered and is ready to take up
into a widespread, commercial setting such as the results of former LINK projects

Recommendation 5: Stimulate collaboration within the supply chain to address priority
areas of technological innovation
Many of the challenges identified in this study will require a coordinated effort across the supply chain toaddress. For example, the sourcing of environmentally sustainable and resilient raw materials will involve
close coordination between pre- and post-farm gate. In addition, barriers have been identified in terms of theways in which different parts of the supply chain work together. In some cases, this works well. For example,
retailers are now working directly with farms to stimulate technological innovation on-farm to improve
processing efficiency, reduce waste and make raw materials more consistency. The relationship between
retailers and food manufacturers appears to work less effectively, particularly in terms of manufacturers citing
problems associated with a need to handle short-term or last-minute requests from retailers at the expenseof longer term technological innovation.
Together, this suggests a need to stimulate collaboration within the supply chain to address priority areas oftechnological innovation whilst tempering this against reducing fair trade and competition in the more
consolidated areas of the food and drink industry.
In particular, this suggests that activity associated with “socialising” new technologies between food anddrink manufacturers and retailers in order to ensure that they are acceptable from the perspectives of quality,
product control, branding and corporate responsibility technologies would help to “future proof” newinvestments in technological innovation. This also suggests that there are opportunities to establish where
payors and beneficiaries may lie when, for example, introducing “smart” packaging, which may be more
expensive than existing options.
One way to do this in practice – as well as to address some of the specific challenges identified as part ofthis study as outlined in Recommendation 1 – would be to create challenge- or sub-sector specific“innovation ecosystems” involving multiple members of the public science base, and multiple companies who
can provide a route to market through their supply chains. An example of such a successful initiative is the
Food for Health Ireland programme, which draws together industry and academia from the dairy sector toaddress a specific technological challenge associated with functional foods. Appendix 3 provides moredetails of this initiative.

Recommendation 6: Develop initiatives aimed at helping consumers to understand,appreciate and accept new food technologies and drive new innovation
Despite consumer requirements being the primary driver for technological innovation, this study has found,somewhat paradoxically that consumer perception and acceptance of new technologies is a barrier. This
may go some way to explaining why much technological innovation focuses on incremental new productdevelopment, rather than more radical innovation. There are opportunities for Government to work withindustry to better understand consumer perceptions of technological innovation, as well as those associatedwith environmental sustainability, such as energy efficiency in cooking and refrigeration and waste reductionin the home and to identify ways of raising consumer levels of understanding. Furthering the work of the IGD
New and Emerging Technologies Group89, an industry forum which builds case studies related to newtechnologies in food, could be one way to do this.

89

See http://www.igd.com/Who-we-are/Industry-working-Groups/New-and-Emerging-Technologies-Group/, accessed April 2013
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Recommendation 7: Build a better evidence base to support minimum temperature
requirements for chilled and frozen products
Several groups of consultees90 identified a need to better characterise minimum temperature requirements
for frozen and chilled foods across all sectors. The rationale for this observation is that foods are often chilled
or frozen to default temperatures (e.g. zero degrees Fahrenheit is considered the standard for frozen foods)
whereas in reality achieving temperatures this low is not always required. The increasing by 1-2 degrees
Fahrenheit of required temperatures for freezing could achieve a considerable energy saving during storage,transport and distribution. There were a number of criticisms that the evidence base in this area is not wellcharacterised, and a better understanding of safety margins and minimum temperature requirements isrequired. Defra could consider the development of such an evidence base, together with FSA.

Recommendation 8: Create universally agreed standards for environmentally sustainable
raw materials
The sourcing of environmentally sustainable and resilient raw materials was flagged up in the cross industry
survey as the highest priority challenge associated with raw material processing – and the second highest
overall. There are currently a wide array of different mechanisms which can be used to assess theenvironmentally sustainability of raw materials, including those managed by independent organisations, andthose developed internally by companies to control their own supply chains91. However, there is nouniversally agreed set of standards for what should be considered as sustainable – though efforts areunderway at European level to do this for raw materials used for non-food purposes such as biofuels92.
Given the importance of this challenge, there is scope therefore to agree some basic principles to minimise
the amount of effort that individual businesses – particularly SMEs – need to invest in selecting the rightsystems and processes to use to ensure that raw materials are sustainably sourced, particularly in the eventof increased availability of novel raw materials.

Recommendation 9: Expand Government’s evidence base further to include other sectorsof the food and drink industry which are known to be innovative
The present study focused on seven sectors of the food and drink industry which were selected on the basisof making a substantive contribution to the UK economy and showing a relatively high level of technologicalinnovation. However, there are other sectors which are also highly innovative and could make a material
impact on producing more environmentally sustainable, healthy food. These include, in particular, thesnacks, confectionary and cereals sectors.

90

Notably WRAP, the FDF’s Sustainability Steering Group, the Chilled Foods Association, the Food Manufacturing Engineering Group and otherrepresentatives from the ready meals sectors
91

For example, Fair Trade products, and the Royal Society for the Prevention of Cruelty to Animals’ Freedom Foods scheme

92

For example, the Global-Bio-Pact Global Assessment of Biomass and Bioproduct Impacts on Socio-economics and Sustainability(http://www.globalbiopact.eu/, accessed May 2013)
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