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F&B Brands Double Down on New Product Innovation, but Many Lack Digital Infrastructure

August 6, 2025
in Food
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F&B Brands Double Down on New Product Innovation, but Many Lack Digital Infrastructure

Key takeaways:

  • TraceGains’ 2025 NPD Report reveals that 83% of companies are increasing innovation spend, yet only 2% have fully digitized product development processes.
  • Manual workflows remain a major bottleneck, with 82% still relying on spreadsheets, emails, or paper, leading to costly compliance risks, slower time-to-market, and limited cross-functional collaboration.
  • AI adoption is growing, especially among mid-sized companies, but without foundational digital infrastructure, most businesses risk falling short of their innovation ambitions, despite increasing budgets and mounting economic and regulatory pressures.


Food companies may be pouring more money into innovation than ever before, but most are still developing next-generation products using last-generation tools. According to
TraceGains’ newly released 2025 NPD Report, 83% of food and beverage brands plan to increase their new product development (NPD) budgets this year — up from 76% in 2024 and 64% in 2023. Yet only 2% report having fully digitized and automated NPD workflows.

The report is based on a survey of 190 food and beverage professionals, providing insights from quality, R&D, and regulatory leaders across companies ranging from startups to major multinational corporations.

Innovation investment meets infrastructure reality

With the majority of companies planning innovation investments in NPD, but just 2% completely digitizing their processes, where is all that innovation money actually going?

Innovation expenses encompass everything from specialized development time and new ingredient sourcing to lab testing and production scaling costs. “Technology can drive efficiencies in all those areas,” says Paul Bradley, Senior Director of Product Marketing at TraceGains, “but many organizations are caught up in a perpetual cycle of needing to upgrade and sustain legacy PLM platforms and other enterprise systems, which can get in the way of exploring more innovative ways to leverage tech.”

Indeed, the data reveals a troubling dependency on outdated workflows. A staggering 82% of respondents said they still rely on manual methods like spreadsheets, email, and paper-based systems to manage NPD, with 26% describing their team as “very reliant” on these outdated tools. More than half (53%) don’t use a Product Lifecycle Management (PLM) system at all.

Manual processes lead to costly compliance mistakes 

The stakes of maintaining manual processes extend far beyond operational inefficiencies. 

Gary Iles, SVP Marketing & Business Development at TraceGains, points to last year’s study, which reported that recalls had increased by 20%. “Without digital audit trails or real‑time data synchronization,” Iles says, “manufacturers are exposed to allergen or nutrient mis-statements, label inaccuracies, and an inability to respond to new legislations like FSMA 204 traceability. All of these can lead to severe financial penalties, product recalls, and legal liabilities, not to mention brand reputation.”

“NPD is a team sport,” Bradley adds, “and nearly all innovation initiatives are cross-functional in nature. When workflows are manual, and critical information is in spreadsheets without strong version control, it’s easy for things to slip through the cracks.” 

Bradley notes that managing restricted substances, in particular, is a growing challenge, as regulatory requirements for additives and packaging materials differ widely between markets and even within U.S. jurisdictions. “Without strong approval workflows and global regulatory intelligence, a product with the wrong ingredient can end up on its way to a market where it can’t legally be sold, creating a host of issues and generating big costs.”

Economic pressures reshape innovation priorities

The latest NPD report also identifies a clear shift in innovation drivers for 2025. Reducing ingredient and manufacturing costs (cited by 45% of respondents) ties with meeting consumer health demands as the top driver of innovation. This economic pressure is intensified by expected raw material price increases of 7.3% this year.

Health-forward products continue dominating innovation opportunities, with 67% of brands focusing on “better-for-you” formulations — up from 60% in 2024. Meanwhile, enthusiasm for plant-based products continues declining, with only 19% identifying it as a priority, down from 33% in 2024.

Tech investment remains reactive

The survey reveals that 40% of respondents are more likely to invest in technology due to global trade volatility, while 22% plan investments in formulation tools and 13% in compliance technology. This reactive approach to tech investment reflects an industry still responding to external pressures rather than proactively building digital foundations.

And despite 47% of companies using PLM systems, only 37% report being completely satisfied with their implementation, and 63% indicate their current PLM requires workarounds or additional effort to meet business objectives.

Mid-sized companies lead AI adoption

While infrastructure challenges remain, AI adoption is gaining momentum. Seventeen percent of brands are now “all in” on using AI for product innovation, up from 10% in 2024, while skepticism dropped from 44% to 32%. Notably, mid-sized companies (1,000 to 5,000 employees) are leading adoption.

“Industry commentary suggests that mid-sized brands, which aren’t reliant on as many legacy systems, are more agile in automating AI tasks than larger competitors with slower, siloed workflows, creating speed to market advantages,” notes Iles.

Bradley adds, “There appears to be something of a ‘sweet spot’ for organizations that have the scale and resources to take a forward-thinking approach to technology, but at the same time aren’t overburdened by large-scale legacy systems and processes that don’t lend themselves to rapid change. AI technology is moving at an incredible rate of speed, which can be hard for very large organizations to adapt to.”

However, while more companies embrace AI, many are lacking the digital foundation necessary to effectively leverage AI. More than half (56%) of teams are still somewhat reliant on manual tools, and only 16% have largely transitioned to digitized systems.


While businesses demonstrate unprecedented commitment to innovation investment, the persistent reliance on manual processes threatens to undermine these efforts. Success will require more than increased budgets — it demands fundamental modernization of product development infrastructure to support the industry’s ambitious innovation goals while managing increasing compliance complexity and economic uncertainty.

Download TraceGains’ full report for more insights on new product innovation in the food industry. 

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