Food Industry Overview Cal State Northridge

1. Food Industry OverviewCal State Northridge Rhondi Shigemura Sr. Director of Product Development Senomyx, Inc. San Diego, CA

2. Agenda Food Industry Background Developing Foods to meet Consumer Demands Product Development Product Life Cycles Product Development Process Preparation for careers Careers in the Food Industry Careers in Nutrition Notes:Notes:

3. SENOMYX, San Diego CA Senomyx is the leading biotechnology company that uses proprietary human taste receptors to discover and develop taste enhancers, taste modulators for the food and beverage industry Programs include: Salt Enhancers Sweet Enhancers Natural High Potency Sweeteners Umami/Savory Enhancers Bitter Blockers Natural Mint Flavors I work in the product development area at Senomyx My background has been more than 15 years in the R&D/Product development areas of the food industries Worked for Hunt Wesson/Con Agra, Case Swayne/Unilever, Jamba Juice and now at Senomyx for the past 3 � years I work in the product development area at Senomyx My background has been more than 15 years in the R&D/Product development areas of the food industries Worked for Hunt Wesson/Con Agra, Case Swayne/Unilever, Jamba Juice and now at Senomyx for the past 3 � years

4. FOOD INDUSTRY FACTS $1,023b in annual sales Approximately 51.5% Retail, 48.5% Away From Home Highly Labor Intensive Highly Diversified Major Economic Multipliers Stable Demand As you can see, the food industry is HUGE. Over one trillion dollars in sales. The significant change is occurring in the split between foods prepared and eaten at home vs. away (almost 50:50). The away sector includes foods that are prepared away from home then taken home as well as sales made through restaurants. This sector continues to grow due to many social factors such as two income families and improved quality. Stable demand � people have to eat, food and beverage stocks are stable or up even during recession � people have to eat and have libations.As you can see, the food industry is HUGE. Over one trillion dollars in sales. The significant change is occurring in the split between foods prepared and eaten at home vs. away (almost 50:50). The away sector includes foods that are prepared away from home then taken home as well as sales made through restaurants. This sector continues to grow due to many social factors such as two income families and improved quality. Stable demand � people have to eat, food and beverage stocks are stable or up even during recession � people have to eat and have libations.

5. WHY STUDY CONSUMER TRENDS? We need to understand the four major factors that leads to the understanding of consumer behavior and successful new products. This is what is important to Product Developers We as food scientists that are creating or developing these new products have to understand what drives consumer purchasing behavior � why buy your product??? We need to know their likes, dislikes, demographics, that drives their purchase intent and this will lead to successful products. To product developers: launching a a product � how is it used, prepared, likes, dislikes, flavors, etc. is important in building a product We need to understand the four major factors that leads to the understanding of consumer behavior and successful new products. This is what is important to Product Developers We as food scientists that are creating or developing these new products have to understand what drives consumer purchasing behavior � why buy your product??? We need to know their likes, dislikes, demographics, that drives their purchase intent and this will lead to successful products. To product developers: launching a a product � how is it used, prepared, likes, dislikes, flavors, etc. is important in building a product

6. EXAMPLES OF THE FOUR AREAS Many new products will combine more than one of the four primary factors that drive consumer acceptance. These are examples showing where some are combined and some are driven by single factors. And for the pringles fat free chips made with olestra, they�ve found a third benefit � constipation relief.Many new products will combine more than one of the four primary factors that drive consumer acceptance. These are examples showing where some are combined and some are driven by single factors. And for the pringles fat free chips made with olestra, they�ve found a third benefit � constipation relief.

7. PRODUCT LIFE CYCLES Foods are similar to other goods in that they are influenced by trends, they have fads, and they have goods that can be classified as commodities. A fad is something that begins, shows fast growth but then drops nearly as fast as it grew. Wine coolers and low-carb are two examples. A trend is a change that involves a significant change in consumer behavior. The growth of health and wellness is probably the best example in today�s market. Trends run for longer periods than fads and they may become mainstream or slowly decline in value to the consumer. Commodities are items that are produced by many companies and have few points of difference. Commodities are characterized by large volumes and low margins. The challenge with commodities is for companies to find ways to differentiate themselves from the competition.Foods are similar to other goods in that they are influenced by trends, they have fads, and they have goods that can be classified as commodities. A fad is something that begins, shows fast growth but then drops nearly as fast as it grew. Wine coolers and low-carb are two examples. A trend is a change that involves a significant change in consumer behavior. The growth of health and wellness is probably the best example in today�s market. Trends run for longer periods than fads and they may become mainstream or slowly decline in value to the consumer. Commodities are items that are produced by many companies and have few points of difference. Commodities are characterized by large volumes and low margins. The challenge with commodities is for companies to find ways to differentiate themselves from the competition.

8. NEW PRODUCTS More than 20,500 new SKU�s for food and beverage products were introduced in 2005.Those products would fill one-third or more of a typical grocery store! What do you think the success rate is for new products? What do you think the success rate is for new products?

9. SOME WIN, BUT MANY LOSE�Lite,� �Low fat� Era Some products that appear to address market needs actually do not. Olestra-fried chips addressed the nutritional side of the need but with side effects that consumers weren�t willing to accept they and they did not meet consumer sensory expectations. Some products that appear to address market needs actually do not. Olestra-fried chips addressed the nutritional side of the need but with side effects that consumers weren�t willing to accept they and they did not meet consumer sensory expectations.

10. WHY DO NEW PRODUCTS FAIL? Failed consumer expectations Promotional failure Positioning failure Timing Failure Cultural Failure (Internal / External) Technical Failure Financial Failure There are many things that can cause products to fail but these are the primary causes. The new product development processes used today do not allow time for fixes so new products must be winners from the start. This is especially true for the larger consumer goods companies. Again, the need to be one or two in a category or to introduce a new category. The latter is expensive and many shy away from if because they are risk adverse.There are many things that can cause products to fail but these are the primary causes. The new product development processes used today do not allow time for fixes so new products must be winners from the start. This is especially true for the larger consumer goods companies. Again, the need to be one or two in a category or to introduce a new category. The latter is expensive and many shy away from if because they are risk adverse.

11. SOURCES OF GROWTH There tends to be a natural growth for most products. Many times this natural growth is tied to growth in population so it tends to be steady but not dynamic. Business� demands more so they fund new product development, acquisitions, line extensions, costs for entering new markets, and the exploration of possible new uses for existing products to expand the business. All of these are expensive efforts but they are essential for long term success of the business. Product development people should keep these in mind as they work and as they interact with various parts of a business.There tends to be a natural growth for most products. Many times this natural growth is tied to growth in population so it tends to be steady but not dynamic. Business� demands more so they fund new product development, acquisitions, line extensions, costs for entering new markets, and the exploration of possible new uses for existing products to expand the business. All of these are expensive efforts but they are essential for long term success of the business. Product development people should keep these in mind as they work and as they interact with various parts of a business.

12. STAGES OF PRODUCT DEVELOPMENT Idea Generation Prototype Creation Market Testing and Strategy Validation Further Product Development Consumer Validation Production Scale up Market Introduction There is a logical approach to product development. These are the primary steps and the order they normally occur. Each builds on the previous stages. They all must be done well for success. There is a logical approach to product development. These are the primary steps and the order they normally occur. Each builds on the previous stages. They all must be done well for success.

13. Idea Generation ?????? It all starts with an idea A GOOD IDEA

14. Prototype Development Some Physical Product Example of Your Idea Recipe Some �tweaked� product with the built in desired attributes

15. Market Testing and Strategy Validation Put your prototype in front of your target consumer See how they react Do they like the flavor, benefits, texture, color, aroma? What are they willing to pay for something like this? Gather valuable feedback and �����. Back to the lab

16. Further Product Development Reformulate your product Fix the attributes that the consumers didn�t like Improve the attributes that they did like Validate processing, equipment, product stability

17. Consumer Validation Go back to the consumer with this new and improved product Gain acceptance Do they like this new product? How much are they willing to pay for it? How many times a year will they buy it? Will it replace something that they already purchase?

18. Production Scale Up Ensure the product is scale able at a large production level Runs on current equipment Process engineering It is safe Meets processing requirements Meets Regulatory guidelines Develop the pretty package Does it meet costs? Shelf life testing Processing requirements � pH, Aw, solids level Regulatory - does the product have a std. of identity it needs to meet or what marketing claims are you making about your product � are you just selling in the US or global � if global you have to meet the regulatory guidelines for each country Packaging � not just pretty to meet the consumers eyes � it has to be functional too � keeps out O2 or if it is produce, that that oxygen CO2 barrier, your product has to maintain its quality and shelf life and the packaging protects it � keeps it from spoiling.Processing requirements � pH, Aw, solids level Regulatory - does the product have a std. of identity it needs to meet or what marketing claims are you making about your product � are you just selling in the US or global � if global you have to meet the regulatory guidelines for each country Packaging � not just pretty to meet the consumers eyes � it has to be functional too � keeps out O2 or if it is produce, that that oxygen CO2 barrier, your product has to maintain its quality and shelf life and the packaging protects it � keeps it from spoiling.

19. Market Introduction Launch the Product Buy all the raw materials Manufacture the product Ship/distribute the product Get it into the consumer hands Marketing campaigns Coupons Sampling

20. A COMPLEX PROCESS This is not an eye test but it certainly does give a detailed view of the many parts of product development. As you can see, it starts with a concept and ends with the market introduction of a new product. Between these two there are many business functions that that must be a part of the process and all are important. It is a costly process; from development to commercialization, it can cost anywhere from 0.5 � 10,000 dollars for development of a product (one product to multiple products or flavors in a product categoryThis is not an eye test but it certainly does give a detailed view of the many parts of product development. As you can see, it starts with a concept and ends with the market introduction of a new product. Between these two there are many business functions that that must be a part of the process and all are important. It is a costly process; from development to commercialization, it can cost anywhere from 0.5 � 10,000 dollars for development of a product (one product to multiple products or flavors in a product category

21. Career Options within the Food Industry R&D: Product Development Research Packaging Process Engineering Menu Development Commercialization Regulatory Analytical Chemistry Quality Assurance/Manufacturing QA manufacturing Food Safety Microbiology Vendor Management Sanitation Supply Chain, Purchasing Manufacturing, management Academia Teach Research Consult Your education in foods, science and especially nutrition gives you an opportunity to develop interests and career paths in various career options R&D � for a food manufacturer or packaged consumer goods company � Involves development, food research, regulatory � food law, how you label, how products are regulated in various countries. QA � insures the quality, consistency and safety of manufactured foods Your education in foods, science and especially nutrition gives you an opportunity to develop interests and career paths in various career options R&D � for a food manufacturer or packaged consumer goods company � Involves development, food research, regulatory � food law, how you label, how products are regulated in various countries. QA � insures the quality, consistency and safety of manufactured foods

22. Career Options within the Food Service Industry Restaurants, Chains Menu Development Product Development Nutritionist or Dietician Public Health Marketing/Sales Quality Assurance, Food Safety Restaurant Manager Food Distribution Purchasing Other Information Specialist Writer Nutrition or Foods Writer Weight loss counselor With a background in foods and nutrition and some physical science courses, There a other career paths within the food service industry � and these are restaurant chains (sit down or quick service) that have multiple, sometimes thousands of restaurants. There are opportunities within this area of the FS industry.. There are �other career paths� that foods and nutrition majors and graduates can also get into: IT, writer (food magazines � Gourmet, Food and Wine, trade magazines (Food Technology, Food Processing) � good to have a science and nutrition background)With a background in foods and nutrition and some physical science courses, There a other career paths within the food service industry � and these are restaurant chains (sit down or quick service) that have multiple, sometimes thousands of restaurants. There are opportunities within this area of the FS industry.. There are �other career paths� that foods and nutrition majors and graduates can also get into: IT, writer (food magazines � Gourmet, Food and Wine, trade magazines (Food Technology, Food Processing) � good to have a science and nutrition background)

23. Careers within the Nutrition Nutrition Registered Dietician, Health Maintenance Organizations Menu Development: hospitals/health centers/schools/care centers/social meal programs Education, Academics Life Coach Nutrition � Packaged Foods Corporation, Chain Restaurants/QSR, Restaurants Health, Nutrition, Foods Focused Companies: Jenny Craig, Weight Watchers, E Diets, Curves, 24 Hr Fitness, Other fitness clubs and programs Technical Writers Research, Clinical Trials Pharma Sales Holistic health care/nutritional therapy

24. How Can You Prepare? Use internships with business to expose to non-technical disciplines Read�.outside technical resources (list available) Expose oneself to multi-discipline activities Take business related coursework Sharpen Skills and Abilities Communication (written, verbal, presentation) Ability to organize and analyze information Computer skills (Word, Excel, PowerPoint, MS Project) Problem solving, interpersonal skills Internships are important. Companies like to see these when they consider candidates coming to them directly from college. Work hard at these since the company where you are interviewing may contact the company where you interned to ask about your work habits and other factors. If you can intern with the same company more than once it sends a message that you did well enough that they brought you back. What a great way to learn and you can experience the industry life while still in school. Use this experience to help you better utilize the knowledge that is being taught in the classroom. Things are changing faster than at anytime in history so you can never stop learning. It is important to stay current and one of the best ways to do this is to read trade journals, attend seminars, and if possible, continue your education at a University. Once you graduate, get involved with organizations that can help you advance your career. Organizations like IFT. As you can see from this presentation, there are many disciplines involved in product development and to have impact you should have an understanding about how they interact. We have touched on many of these today but there is a lot to be learned from on the job training (OJT). Take time to talk with people in the other disciplines to find out what they do and gain an understanding about how their work impacts yours and vise versa. For success in food, or for that matter any discipline, you need to have a passion. Become a �foodie�; meaning that you are truly interested in all aspects of food. One of the best �foodies� today is Alton Brown whose show �Good Eats� airs on the Food Network. Alton has found a way to deliver a message about the technical aspects of food in a way that non technical people understand and enjoy. He has a passion for what he does and he is always working to learn new things about foods. He was the keynote speaker at the IFT Annual Meeting in 2006 after which he signed copies of his book. He was there for four hours signing books and this was to a community of scientific people. It demonstrates the success that comes from being passionate about what you do. Last but certainly not least, always think like a consumer (after all you are one) and keep your eyes and ears open to see changes that are occurring in the marketplace. It is amazing what you can find by taking a slow walk through the supermarket. Look at the layout of the store to see where the emphasis is being placed to satisfy consumer needs. Look at the new products that being introduced and the changes to old products. When you go out to restaurants look at the menus to see what changes you find in the types and flavors of foods being offered. When you secure an industry position you need to stay abreast of what is happening within your company but also what the competition is doing in terms of new products and line extensions. This can stimulate ideas and you might be the one to come up with the concept for the next big success. Love what you do, work hard, be smart and be a team player.Internships are important. Companies like to see these when they consider candidates coming to them directly from college. Work hard at these since the company where you are interviewing may contact the company where you interned to ask about your work habits and other factors. If you can intern with the same company more than once it sends a message that you did well enough that they brought you back. What a great way to learn and you can experience the industry life while still in school. Use this experience to help you better utilize the knowledge that is being taught in the classroom. Things are changing faster than at anytime in history so you can never stop learning. It is important to stay current and one of the best ways to do this is to read trade journals, attend seminars, and if possible, continue your education at a University. Once you graduate, get involved with organizations that can help you advance your career. Organizations like IFT. As you can see from this presentation, there are many disciplines involved in product development and to have impact you should have an understanding about how they interact. We have touched on many of these today but there is a lot to be learned from on the job training (OJT). Take time to talk with people in the other disciplines to find out what they do and gain an understanding about how their work impacts yours and vise versa. For success in food, or for that matter any discipline, you need to have a passion. Become a �foodie�; meaning that you are truly interested in all aspects of food. One of the best �foodies� today is Alton Brown whose show �Good Eats� airs on the Food Network. Alton has found a way to deliver a message about the technical aspects of food in a way that non technical people understand and enjoy. He has a passion for what he does and he is always working to learn new things about foods. He was the keynote speaker at the IFT Annual Meeting in 2006 after which he signed copies of his book. He was there for four hours signing books and this was to a community of scientific people. It demonstrates the success that comes from being passionate about what you do. Last but certainly not least, always think like a consumer (after all you are one) and keep your eyes and ears open to see changes that are occurring in the marketplace. It is amazing what you can find by taking a slow walk through the supermarket. Look at the layout of the store to see where the emphasis is being placed to satisfy consumer needs. Look at the new products that being introduced and the changes to old products. When you go out to restaurants look at the menus to see what changes you find in the types and flavors of foods being offered. When you secure an industry position you need to stay abreast of what is happening within your company but also what the competition is doing in terms of new products and line extensions. This can stimulate ideas and you might be the one to come up with the concept for the next big success. Love what you do, work hard, be smart and be a team player.

25. How Can You Prepare Interact and network within various professional organizations IFT, Southern California Institute of Food Technologists ADA, American Dietetics Association Women�s Food Service Roundtable RCA, Research Chefs Association NRA, National Restaurant Association Attend local meetings Talk to association members, find out what they like/dislike about Attend local meetings Talk to association members, find out what they like/dislike about