New Product Development

Situation

A small food company used a flavor house to assist them in developing a new functional beverage. No development cost was incurred as a number of flavor houses and ingredient suppliers provide this service so that their ingredients will be used in the new product.

Problem

The development of the product took a long time. The prototype produced was unstable. Furthermore, incompatible and expensive ingredients were used. Also, the food company is contractually obligated to buy the flavors that are used in the formula at a premium price.

Solution

Information on the desired attributes of the new product was requested. This included cost parameters, shelf-life requirement, flavors desired and information about other physical and chemical characteristics of the product. Next, various ingredients along with prices and specifications were obtained from a number of reputable suppliers. Formulation and prototypes development followed. After a couple of formula adjustments, the client accepted the product. The production formula, process, nutrition facts and ingredient statements were finally provided to the client. The whole process took about eight weeks.

Benefits

A marketable formula was produced in half the time than was originally spent on the project. The ingredient cost was 40 percent lower than the formula from the flavor house. Base on the sales projection that was provided, the product development cost was only a tiny fraction of the annualized savings in ingredient cost. Furthermore, the client owns the formula and is free to purchase the ingredients from any supplier.

For additional information, contact Swee Seet (626) 689-9523 seet@sbcglobal.net