(Technology!Platform 4:!Emerging!Technologies!for Product ... · VG08087 ! Emerging!Technologies:!ValueAddition !!!!! Opportunities!and!challenges!faced!withemerging! technologies!intheAustralianvegetable!industry.!

HAL Project Title:

Opportunities and challenges faced with emerging technologies in the Australian vegetable industry.

(Technology Platform 4: Emerging Technologies for Product Value Addition)

Project VG08087

Project completion date: 02/06/2010

Author: Dr Silvia Estrada-Flores

VG08087 Emerging Technologies: Value Addit ion

Opportunities and challenges faced with emerging technologies in the Australian vegetable industry.

(Technology Platform 4: Emerging Technologies for Product Value Addition)

Horticulture Australia Project Number: VG08087 Project Leader: Dr Silvia Estrada-Flores.

Principal Consultant, Food Chain Intelligence.

Contact details: PO Box 1789. North Sydney 2059, NSW.

Ph 0404 353 571;; e-mail: silvia@food-chain.com.au

ebsite: www.food-chain.com.au

Delivered on: April 2010.

Purpose of Project:

This report was prepared as an outcome of Milestone 105 challeaims to provide a broad review of technologies that are influencing the competitiveness of the industry. This is the fourth of five reports to be developed during 2009-2010 and reviews novel products and processing technologies for value addit ion.

Funding acknowledgements:

Food Chain Intelligence acknowledges the financial support for this project from Horticulture Australia Limited (HAL) and AUSVEG.

Disclaimers:

Any recommendations contained in this publicat ion do not necessarily represent current HAL policy. No person should act on the basis of the contents of this publication, whether as to matters of fact or opinion or other content, without first obtaining spec ific, independent professional advice in respect of the matters set out in this publication.

The report has been prepared by Food Chain Intelligence through the use of primary and secondary data sources and interviews. While every effort has been made to ensure the accuracy of the analyses, the uncertain nature of some data is such that Food Chain Intelligence (FCI) is unable to make any warranties in relation to the information contained herein. The FCI disc laims liability for any loss or damage that may arise as a consequence of any person relying on the information contained in this document.

mailto:[email protected]

http://www.food-chain.com.au/


Food Chain Intelligence Page | 1

Table of Contents

Media summary .................................................................................................................. 3

Technical summary ............................................................................................................. 4

Project Background............................................................................................................. 6

Introduction........................................................................................................................ 7

Overview of the processed fruit and vegetable sector in Australia .................................... 7

Focus of this report ....................................................................................................... 14

New Product Development ................................................................................................ 16

NPD concepts in the Ready-to-Eat category ................................................................... 19

NPD concepts in the bioactives category ........................................................................ 23

NPD concepts in the vegetable juice category ................................................................ 26

NPD concepts in the dried snack category ..................................................................... 27

Other applications ......................................................................................................... 28

Costs/benefits of NPD: health claims ............................................................................. 28

New Processing Concepts ................................................................................................. 32

Novel non-thermal processes......................................................................................... 33

High Pressure Processing (HPP) ................................................................................. 34

Economics and energy efficiency............................................................................. 35

Commercial application ........................................................................................... 35

Pulsed electric field (PEF) processing.......................................................................... 37



Novel thermal processes................................................................................................ 40

Ohmic processing ...................................................................................................... 40



Microwave and radio frequency processing................................................................. 43

Postharvest treatments........................................................................................... 45



HAL-Funded Projects in Technologies for Value Addit ion.................................................... 51

Implicat ions and Recommendations .................................................................................. 52

Recommendations for future R&D funding ..................................................................... 53



The challenges .......................................................................................................... 53

The drivers ................................................................................................................ 54

The areas for R&D ..................................................................................................... 54

Potential mechanisms for R&D funding....................................................................... 55

Acknowledgements ........................................................................................................... 57

References ....................................................................................................................... 58



Media summary

In 2009, the Australian fruit and vegetable processing sector contributed with an estimated 7% of value addition in the Australian Food and Beverage sector, behind the much larger segments of beverage manufacturing, and meat and dairy processing.

improvement of crop productivity, given that an increase in farm products output (either due to a good season or due to technical improvements in productivity) depresses both farm prices and the total income of farmers.

It is expected that population growth and consumer awareness in a healthy diet will increase

population increase by 2020, represents $0.9 billion. In contrast, the cumulative payoff expected from three proposed HAL subprograms related to innovation in quality and new product/processes represents $1.48 billion.

Novel vegetable-based products recently launched worldwide include: ready-to-eat vegetable snacks distributed through vending machines in sGo cups with vegetable salads, soups and stews;; new colourful varieties of carrots, broccoli and sweet corn;; and juices an dietary supplements enhanced with vegetable-extracted bioactives, among others.

Vegetable products should be processed through technologies that maintain their nutritional value and functionality as much as possible. Novel thermal and non-thermal technologies for

l heat treatments during blanching, drying, pasteurisation, sterilisation and other processes. It is important to understand consumer attitudes towards different new food processing technologies. For example, while consumers may have a strong dislike towards genetic engineering and irradiation, they have fewer concerns about technologies such as ohmic heating, radio frequency and high pressure processes.

The development of novel vegetable products and processes has an extraordinary window of opportunity with the planned changes in nutrition, health and related claims by Food Standards Australia New Zealand (FSANZ). The changes will effectively tighten the criteria a product needs to satisfy before a nutrition or a function claim are made.The fruit and vegetables fresh and processed sectors stand to benefit the most from the proposed FSANZ changes, based on the strong link between their consumption and health benefits.

However, innovation is a high risk activity: each year, Australasian supermarkets are offered between 5,000 and 10,000 new products, but only around 10% are accepted to be displayed on shelves. Further, less than 1% of those products are still on the shelves after 5 years of their introduction.

Factors that decrease the level of risk in new product development and innovation include the size and type of organisation and the existence of collaborative networks. In particular, vertically integrated firms that establish contractual arrangements for innovation significantly enhance their chances of success. Further, mid-size and large companies have more financial and human resources to withstand the risks associated to innovation than small firms.



Technical summary

ologies in

influencing the competitiveness of the Australian vegetable industry.

This report is the fourth of five analyses to be developed in 2009-2010 and reviews emerging technologies for novel products and processing technologies.

Some key findings of this analysis were:

In 2009, the Australian fruit and vegetable processing sector contributed with an estimated 7% of value addition in the Australian Food and Beverage sector, behind the much larger segments of beverage manufacturing, and meat and dairy processing.

productivity, given that an increase in farm products output (either due to a good season or due to technical improvements in productivity) depresses both farm prices and the total income of farmers.

It is expected that population growth and consumer awareness in a healthy diet will increase demand for vegetables. population increase by 2020, represents $0.9 billion. In contrast, the cumulative payoff expected from three proposed HAL subprograms related to innovation in quality and new product/processes (as presented in the Australian Horticultural Plan Future Focus) represents $1.48 billion.

Novel vegetable-based products recently launched worldwide include: ready-to-eat vegetable snacks distributed through vending machines in schools, health cGo cups with vegetable salads, soups and stews;; new colourful varieties of carrots, broccoli and sweet corn;; and juices an dietary supplements enhanced with vegetable-extracted bioactives, among others.

Vegetable products should be processed through technologies that maintain their nutritional value and functionality as much as possible. Novel thermal and non-thermal technologies for

s during blanching, drying, pasteurisation, sterilisation and other processes. It is important to understand consumer attitudes towards different new food processing technologies. For example, while consumers may have a strong dislike towards genetic engineering and irradiation, they have fewer concerns about technologies such as ohmic heating, radio frequency and high pressure processes.

The development of novel vegetable products and processes has an extraordinary window of opportunity with the planned changes in nutrition, health and related claims by Food Standards Australia New Zealand (FSANZ). The changes will effectively tighten the criteria a product needs to satisfy before a nutrition or a function claim are made.The fruit and vegetables fresh and processed sectors stand to benefit the most from the proposed FSANZ changes, based on the strong link between their consumption and health benefits.



The Centre for International Economics has calculated the benefit/cost of different strategies to address

and erosion of competitors market, a new marketing strategy is likely to bring much more modest benefits (in the order of 2 3% of those potentially achievable through new product development).

However, innovation is a high risk activity: each year, Australasian supermarkets are offered between 5,000 and 10,000 new products, but only around 10% are accepted to be displayed on shelves. Further, less than 1% of those products are still on the shelves after 5 years of their introduction.

Factors that decrease the level of risk in new product development and innovation include the size and type of organisation and the existence of collaborative networks. In particular, vertically integrated firms that establish contractual arrangements for innovation significantly enhance their chances of success. Further, mid-size and large companies have more financial and human resources to withstand the risks associated to innovation than small firms.

To decrease the financial burden of innovation in the novel products/process platform, it is recommended that HAL considers the establishment of consortia, which is a central concept to both European and American approaches in this area. In the Australian context, organisations with a demonstrated interest in emerging processing technologies include:

RDCs such as MLA and HAL;;

CRCs including Australian Seafood, Innovative Grain Food Products, Innovative Dairy Products, National Plant Biosecurity, Australian Poultry Industry and Internationally Competitive Pork Industry;;

CSIRO Food & Nutritional Sciences;;

Universities: Curtin University of Technology, RMIT, UNSW, Monash University.

HAL has a key role on: searching for synergies in the development of novel processing technologies with the organisations above;; b) pairing up these organisations with processing companies interested in pursuing the growing opportunities in the nutritional/functional area;; and c) communicating the potential advantages in using fruits and vegetables as supplies for this market.



Project Background

The vegetable industry is a truly multi-disciplinary business, particularly in the context of modern global supply chains. The industry draws knowledge from a variety of fields such as plant breeding and production, greenhouse technologies, irrigation, climate control, information technologies, product processing, packaging, logist ics and consumer science, among others. Therefore, the growth of the vegetable sector is intertwined with the development and application of innovative solutions. The use of molecular biology to produce new enhanced (but still non-genetically modified organisms) cultivars, the introduction of pre-packed fresh vegetables and the development of track-and-trace systems that can improve transparency in food supply chains are examples of how emerging technologies can influence the Australian vegetable industry.

The projes a broad review of current and emerging technologies

that are influencing the competitiveness of the Australian vegetable industry. This review, carried out through the use of competitive intelligence (CI) analyses, provides a technology roadmap that shows: (a) where the Australian vegetable industry lies in the use of technology that benefits the competitiveness of the sector;; and (b) what specif ic

The application of CI techniques in this report was based on a two-staged approach:

I) An analysis of the technological state-of-the-art in the Australian vegetable sector, i.e. what technologies are been applied commercially (as dist inct from pilot trials) during the production, harvesting, processing and distribution of vegetables. This analysis inc ludes -implementation of new technologies and the benefits reaped from the uptake of new technologies.

II) An analysis of emerging and potentially disruptive technologies with potential impact on the vegetables industry. The analysis inc luded potential impediments for commercial implementation in Australia and potential benefits arising from the uptake of such technologies.

This project delivers competitive intelligence analyses in five key technological platforms relevant to horticultural industries:

(1) Supply chain and logist ics systems. (2) Technology for mitigation and adaption to environmental changes. (3) Technology for food safety and quality assurance. (4) Value addit ion processes (e.g. novel products and processes). (5) Technology for production and harvesting.

The present report specifically delivers to the fourth technical platform: technologies for novel vegetable products and processing.



Introduction

Overview of the processed fruit and vegetable sector in Australia

Australian fruit and vegetable processing encompassed 511 enterprises that cumulatively reported a revenue of $4.1 billion and a profit of $218.6 million in 2009 (Riddell, 2009a). The sector contributed with an est imated 7% of value addit ion in the Australian Food and Beverage sector, behind the much larger segments of beverage manufacturing, meat and dairy processing.

The market of prepared fruit and vegetables in Australia is segmented in seven product types, as illustrated in Figure 1.

Figure 1. Product and services segmentation of the processed fruit and vegetables market, valued at $4.1 billion in 2009 (Riddell, 2009a).

Focusing on vegetables, the most significant processing segments are (McKinna et al.,2007):

1) Fresh-cuts vegetables. The value of fresh-cut vegetable and salad segment was estimated in $160 million in 2007. Fresh-cuts account for 5% of the fresh category;; however, in the United States and United Kingdom, fresh-cuts account for 11% and 17% of the market, respectively. This indicates that the Australian market is yet to reach maturity.

2) Frozen vegetables. The Australian frozen vegetable market had a retail value of $460 million (including potatoes) in 2007. While the category has experienced value growth, this does not come from increased volume sales. Instead, growth is being driven by the impact of the drought and also by higher prices.



Table 1 and Figure 2 show the most important frozen vegetable products by value and by volume. Table 1. Value and volume of the most important frozen products sold in supermarkets in Australia during 2007 (McKinna et al. 2007)

Product Value (AUD) Volume (tonnes)

Total Beans (frozen) 30,697,000 9,317 Total Broad Beans (frozen) 3,303,000 686 Total Broccoli (frozen) 6,428,000 1,172 Total Brussels Sprouts (frozen) 2,817,000 578 Total Carrots (frozen) 4,461,000 1,186 Total Cauliflower (frozen) 3,552,000 765 Total Corn Cob (frozen) 17,960,000 5,381 Total Corn Kernels (frozen) 16,740,000 4,845 Total Miscellaneous (frozen) 1,456,000 156 Total Mixed Veg (frozen) 158,025,000 35,899 Total Onions (frozen) 3,754,000 814 Total Oven Roast (frozen) 5,928,000 870 Total Peas (frozen) 72,153,000 24,785 Total Potato (frozen) 160,972,000 51,295 Total Spinach (frozen) 9,698,000 1,709 Grand Total $ 497,944,000. 139,458

Figure 2. The six most important frozen products by volume and value: 1) potato products;; 2) mixed vegetables;; 3) peas;; 4) snap beans;; 5) corn cobs;; and 6) corn kernels.

Total Potato (frozen)

Total Mixed Veg (frozen)

Total Peas (frozen)

Total Beans (frozen)

Total Corn Cob (frozen)

Total Corn Kernels (frozen)

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3) Canned vegetables. In 2007, the Australian canned vegetable market had a retail value of $290 million. Similar to the frozen vegetable market, the canned vegetable market is relatively stagnant, with modest (but steady) growth in value and volume at 4.6% in 2007. Table 2 and Figure 3 show the most important canned vegetable products by value and by volume. Table 2. Value and volume of the most important canned products sold in supermarkets in Australia during 2007 (McKinna et al. 2007)

Product Value (000s) Volume (tonnes)

Total Artichokes (canned) 1,514,000 192 Total Asian Veg (canned) 634,000 149 Total Asparagus (canned) 21,405,000 2979 Total Beetroot (canned) 42,254,000 17855 Total Cabbage (canned) 1,232,000 223 Total Capsicums (canned) 906,000 107 Total Carrots (canned) 2,203,000 705 Total Corn (canned) 45,960,000 14002 Total Dry Seed Beans (canned) 4,664,000 1421 Total Mixed Veg (canned) 8,657,000 2219 Total Mush/Champ (canned) 14,586,000 3867 Total Other Segment (canned) 932,000 177 Total Peas (canned) 14,916,000 3969 Total Potato (canned) 12,024,000 2317 Total Salad Veg (canned) 2,077,000 629 Total Stir Fry (canned) 805,000 136 Total String Beans (canned) 3,756,000 1081 Total Tomatoes (canned) 77,658,000 34487 Total Wet Seed Beans (canned) 33,538,000 10717 Grand Total $ 289,721,000 97,232



Figure 3. The seven most important canned products sold in retail by volume and value: 1) tomatoes;; 2) beetroot;; 3) corn;; 4) beans;; 5) asparagus;; 6) peas;; and 7) mushrooms.

Comparisons between Figures 2 and 3 indicate that frozen vegetable products are the most significant vegetable processing category in value and volume. Within this group, frozen potato products and mixed frozen vegetables present the highest processing values and volumes. There is a large gap in both value and volume between these two products and their closest competitor (frozen peas).

In the canned category, canned tomato leads the category and its closest competitors (i.e. corn and beetroot) lag significantly behind.

revenue and value addit ion1 have fallen in recent years (Figure 4). The main contributing factors for this decrease are raising costs of raw materials (i.e. fresh vegetables), competition from imported products, rising energy costs and ineffic iencies in production. Packaging costs of plastic containers have declined marginally over the current period. However, metal can prices have risen at an est imated annual rate of 7.3%. Further, the effect of private label products, which provide vigorous competition for branded lines, also plays a role in the loss of revenue for the vegetable processed sector.

1 Value addition is calculated as the subtraction of the costs of production (i.e. the cost of materials, fuel, electricity, contract work .

Total Tomatoes (canned)

Total Corn (canned)

Total Beetroot (canned)

Total Wet Seed Beans (canned)

Total Asparagus (canned)

Total Peas (canned)

Total Mush/Champ (canned)

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Figure 4. Revenue, value addit ion, imports, exports and demand for the processed fruit and vegetable sector.

International trade of processed vegetables is of particular concern to some local manufacturers. Since 2002-03, Australia has been a net importer of processed fruits and vegetables. There are over 100 types of processed vegetable products imported to Australia, of which eight stand out in terms of value during 2007-08 (Figure 5). The latter figure also indicates that in five of those product types (i.e. processed tomatoes, frozen potatoes, shelled beans, frozen mixtures of vegetables and other frozen vegetables), imports have steadily increased since 2004.

Australia exports over ninety types of processed vegetable products. Figure 6 shows the ten most significant vegetable export products in terms of value in 2007-08. None of the products in Figure 6 have shown a steady increase between 2004 and 2009, although the overall trend of exports for fresh chilled carrots, turnips, onions and frozen potatoes is positive in the period analysed.

Despite these challenges, the processing vegetable industry is to benefit in the next years from an increased consumption of fruit and vegetable products, fuelled by nutritional concerns from consumers and population increases. Expansion in domestic demand will be limited, however,

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Figure 5. Imports of fresh and processed vegetables by value, 2004-2009. Source: DPI 2009.

Preserved Tomatoes, Whole

Or In Pieces Potatoes Frozen

Shelled Beans, Prepared Or Preserved (not

frozen)

Frozen Mixtures Of Vegetables

Frozen Sweet Corn

Frozen Shelled Peas

Mixtures Of Fruit And Vegetable Juices (Excl.

Citrus)

Frozen Vegetables (Excl. Potatoes, Leguminous Vegetables,

Spinach, Sweet Corn)

2004-‐05 50,284,389 20,854,249 34,968,550 19,905,099 13,673,046 17,540,181 11,961,501 11,613,992

2005-‐06 51,415,440 18,916,329 35,316,837 26,315,590 13,874,873 16,551,000 16,169,912 11,323,802

2006-‐07 61,297,477 38,197,048 34,655,061 27,916,994 13,196,806 18,688,373 22,770,837 17,166,727

2007-‐08 89,263,395 65,117,741 37,752,984 33,612,796 26,946,775 26,121,929 24,932,399 20,572,310

2008-‐09 124,616,619 109,298,003 40,690,545 35,877,971 18,966,748 20,194,869 24,943,379 21,991,766

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Figure 6. Exports of fresh and processed vegetables by value, 2004-2009. Source: DPI 2009.

Carrots And Turnips, Fresh And Chilled

Brown Onions, Fresh Or Chilled

Potatoes, frozen

Asparagus, Fresh Or Chilled

Tomatoes, Fresh Or Chilled

Other vegetable

products (excl. locust beans, seaweed, kernels and sugar beet)

Tomatoes, processed

Ginger Preserved By

Sugar

Potatoes, Fresh Or Chilled

Vegetables, Fresh Or Chilled

2004-‐05 36,885,348 17,037,076 12,973,175 26,872,117 6,467,573 10,742,478 7,719,731 6,888,894 16,165,975 3,175,525

2005-‐06 40,825,544 19,283,891 12,152,605 22,093,817 8,088,398 16,374,283 7,186,910 7,019,089 14,586,214 4,848,866

2006-‐07 41,422,353 22,962,719 15,434,812 18,026,296 9,032,821 16,577,090 8,781,581 7,511,390 10,803,082 8,775,290

2007-‐08 38,266,052 22,195,167 21,603,076 16,687,226 11,795,993 9,075,325 7,183,747 7,005,304 6,907,996 6,807,320

2008-‐09 46,133,875 23,074,944 18,865,731 24,254,144 6,050,240 12,754,763 6,420,190 5,633,012 9,507,165 2,296,125

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Focus of this report

investment in R&D is normally directed to improvement of crop productivity, given that vegetables have a low price elasticity and increased production leads to decreased gross margins.

The fact that an increase in farm products output (either due to a good season or due to technical improvements in productivity) depresses both farm prices and the total income of farmers is well known (Jackson et al., 2007). For example, the impact of increasing the production of capsicums in Carnarvon, WA (which supplies 70% of the domestic market during July-December) was investigated by Hickey et al (2006). The authors used price elasticity as an indicative of prices and gross margins perceived by vegetable growers, as illustrated in Figure 7.

Figure 7. Impact of increased production and sales on domestic market on gross margin for capsicum grown in Carnavon, WA (Source: Hickey et al., 2006. Maximising returns from water in the Australian vegetable industry: national report. HAL).

Price falls as more produce is sold and Figure 7 shows that it only takes a 5 10 % increase in production at Carnarvon to reduce prices to the extent of reducing gross margins to zero. The domestic market for fresh produce cannot support significant increases in production, unless demand grows accordingly (Hickey et al., 2006) .

As discussed previously, it is expected that population growth and consumer awareness in a healthy diet will increase demand for vegetables. However, the size of the Australian market will still limit the potential growth of the vegetables industry: in the Australian Horticulture

(Horticulture Australia Limited, 2008) it is estimated that the horticultural (using only population growth as a factor of change) represents

another $0.9 billion by 2020 in real terms, whole-of-industry profits. However, this future market will also be shared by imported products and substitutes.



R&D investment directed to open new markets based on exports and processed products may provide better returns to the industry than focusing solely on field productivity. The Future Focus authors stated that the potential for growth under a scenario that captures

.

Rather than competing solely on cost (and be unsuccessful), growers, manufacturers and marketers working in Australian vegetable chains should consider their involvement in producing novel, dist inctive and premium products. Future Focus estimates that the

unded with $20-$30 million per year, would be of over $550 million by 2020. In particular, the value adding/processing

To achieve these goals, a crucial change in the mindset of primary producers is necessary. Many horticultural enterprises currently focus on the production of vegetables for the fresh domestic market, which traditionally provides better returns than product sent to processing. However, if the industry is to benefit from export markets, value-adding processes will need to be established and processing will become a substantial component of horticultural chains.

Estrada-Flores (2010) dealt with several new technologies for minimally processed product, as related to quality and safety assurance (e.g. MAP, irradiat ion, hurdle technologies). Further, Estrada-Flores (2009b) dealt with the use of vegetable waste for biofuel production. Readers are referred to these previous reports for details in these technologies.

Only products and technologies not tackled in the previous three reports will be addressed in the present report. The technologies of interest are presented in Figure 8.

Figure 8. Processing technologies investigated in this project.

This report highlights the opportunities that new product development and new processing technologies offer to increase the market share and the resilience of the vegetable industry. The analysis of patent trends, included in the previous reports, has not been included here. The reason for this was the fact that many of the emerging technologies investigated continue in developmental stages. Also, most of the technologies illustrated in Figure 8 are used to process a wide range of products and are not specifically designed for vegetable-



based products. Therefore, the patent analysis does not deliver meaningful outcomes that aid dec isions of R&D investment.

New Product Development New product development (NPD) is the most important investment area for building competitive advantage, according to a global panel of food and drink executives surveyed by Business Insights in December 2006 (Meziane, 2007).

NPD projects initiated by food manufacturers rarely involve food retailers and there is even less involvement of suppliers. As a consequence, NPD projects have an extensive consumer research phase but often fail in engaging suppliers. This engagement is important to ensure that the raw materials have the required quality and grading expectations for the new product.

An ad-hoc approach to NPD may also lead to confusion on critical supply chain conditions (e.g. time and temperature) to be maintained throughout the distribution of the new product. Failure on maintaining these conditions may lead to quality losses or can even trigger serious food safety issues. The lack of a coordinated innovation framework among supply chain partners partly explains why NPD remains a high risk activity in the food sector, where over 90% of NPD ventures fail, even before the financial crisis 2.

Table 3 presents some typical manufacturing-led innovation init iat ives.

Table 3. Manufacturer-led innovations.

Innovation Outcome targeted New product development (NPD)

- : a product that replicates characterist ics of existing successful products in the market, thus avoiding some NPD risks. The objective is to erode the market of a competitor Line extensions: variat ions of a well-known product (e.g. favours, colours, etc). The aim is to increase market share and improve product positioning with relat ively litt le effort and development time, plus small changes in manufacturing processes, marketing strategy and storage and/or handling operations. Repositioning of products: changing the promotion strategy of current products in the market, to reposition these as products

functional products. The aim is to capitalize in niche markets. New form/formulations for existing products: these encompass products that have altered to another form (e.g. solved, dried, granulated, concentrated, spreadable, dried or frozen) or products that have been reformulated. For the former category, extensive R&D and development time may be required, plus changes in the supply chain operations. Formulation changes can have various

2 http://www.worldfoodscience.org/cms/?pid=1004890



impacts on the supply chain, according to the degree of variation in the product. The outcomes sought refer to: convenience, value addition, cost reduction, unreliable supply of some raw materials, or the availability of better/less costly ingredients. Evolutionary innovative products: substantial changes in an existing product, otherwise than described above. The changes must add value/functionality in a significant manner to the original version. R&D times, costs and risks are generally larger than for other modificat ions. Marketing can also be costly. Radically innovative products: require extensive product development, have high R&D, marketing and capital (new equipment) costs and have the highest failure chance of all categories. Having said that, these products potentially offer greater rewards than others. The products can be potentially disruptive, but not all are.

New packaging development

Added functionality, better preservation of foods, variety in volumes/portions, more attractive designs for targeted consumer segments, labelling, convenience, retail-ready.

New processes Cost reduction (e.g. less labour, energy efficient), OH&S compliance, reduction of environmental impact, requirement for manufacturing new product

New supply chains business formats, supply chain init iat ives, traceability (e.g. RFID).

As mentioned before, in this report we are particularly interested in NPD and new process development. New packaging development and new supply chain technologies have been discussed in previous reports (Estrada-Flores, 2009a, Estrada-Flores, 2010). Therefore, these will only be discussed in the context of NPD.

The NPD process is illustrated in Figure 9.

Figure 9. New product development process. go decision making points.

OPPORTUNITY IDENTIFICATION

IDEA GENERATION

CONCEPT DEVELOPMENT

CONCEPT TESTING

PRODUCT DEVELOPMENT

POSITIONING DEVELOPMENT

CONFIRMATION-ADVERTISING

TESTING

TEST MARKETING COMMERCIALISATION



Ideally, the execution of NPD is carried out by a collaborative, cross functional brand management group focused on the specific opportunity area, reporting to senior management. The team encompasses staff from R&D, Marketing (including advertising and market research), Finance, Sales and Promotions.

Recent European studies (Alfaro et al., 2008, Karantininis et al., 2010) have analysed the factors determining successful innovation in processed food sectors, including vegetables. In general, three categories of factors are of utmost importance:

a) Firm factors: the type of organisation matters in terms of innovative efforts. In particular, vertical integration (particularly downstream the chain) and the existence of collaborative networks established through contractual arrangements significantly enhance the development of innovations. In terms of size, mid-size and large companies have more financ ial and human resources to withstand the risks associated to innovation than small firms. For example, in the US 90% of the R&D is conducted by the 400 largest corporations. Larger organisations can also support pre and post-market activities required for successful product launches. Human capabilities and organisation are also important, because innovation init iat ives have to be encouraged and supported from executive levels to operative staff. Further, a diversification

n NPD, whereby products are launched to develop a portfolio or a theme of products. An orientation towards exports is also associated to successful innovation. Firms with export orientation tend to innovate more, as the variable percentage sales from exports are significant and positive.

b) Supply chain factors (see also firm factors): if suppliers are well integrated into the or raw

materials (a crucial factor of success) are easier to implement and business processes are already established. Further, the participation of research centres as providers of R&D is also an important factor, when firms do not have the size and resources necessary to carry out the development. Collaborative funding from these centres is also important. At the end of the chain, knowledge of consumer trends is a significant factors of success and consumer-driven innovation is a powerful tool to achieve a successful NDP launch.

c) Environmental factors: when an industry has high levels of concentration, the development of novel products can be a key competitive advantage. The Australian processed fruit and vegetable sector is considered to be moderately concentrated, with a mix of small, medium and large companies. However, four firms (Heinz

-Cola Amatil, and McCain Foods) account for over 60% of total turnover. It is likely that innovation efforts will be concentrated on these firms. Market power has been highlighted as a potential factor for stifling innovation in various forums. However, a recent study developed in Denmark suggests the contrary: companies that deal with several suppliers/buyers tend to introduce more innovations per year. Firms who sell to a large number of customers may have to differentiate their product in order to cater for each

s of firms downstream may increase the



demand for a large number of products. Further, if a firm tends to introduce a large number (and variety) of new products, it may also need a large variety of inputs. Hence their need to procure from a large number of input suppliers (large number of firms upstream).

NPD concepts in the Ready-to-Eat category

Vending machines

In September 2009, Del Monte introduced refrigerated vending machines, which offer fresh-cuts packaged in plast ic clamshells (non-MAP) in schools, health clubs, parks, and office buildings. The product line includes pineapple chunks, grapes, apple slices, baby carrots, celery and tomatoes. Some of the products also have a dip included, such as caramel for sliced apples, ranch dressing for baby carrots, celery and vegetable mix and yogurt dip for pineapple chunks and pineapple and grape mix. The fresh-cut products range in size, with portions between 4 ounces and 6 ounces. Prices range from US$1 to US$2.25 per item, which is competitive with other non-healthy snack items. Individually wrapped bananas in a new proprietary packaging called CRT are also offered. The film slows down ripening, extends the yellow coloring of the bananas and improves the texture and sweetness of the product. The CRT package extends the shelf life of the bananas 2-3 days beyond the normal shelf life, for a total of about five

days 3.

The Del Monte machine has two temperature zones: the upper section holds the bananas at temperatures of 14 oC to 16 oC, and the lower two-thirds of the machine holds rows of fresh-cut items at a temperature of 3 oC to 4 oC to

visible divider between the two sections the temperature zoning is achieved by air flow

management.

The machine also maintains quality by handling the produce gently. A standard vending machine drops the snack item to the bottom, but the Del Monte machine catches the produce item and transports it to the bottom where the consumer can reach in and get it.

Replenishment of the fresh-processing fac ilit ies and re-packaging distributors throughout the United States. The

3 http://www.freshcut.com/pages/arts.php?ns=1586



machines should be restocked at least once a week, so a convenient distribution system is necessary to maintain quality.

Apio Inc is an American fresh-cut manufacturer that introduced the Eat Smart branded vegetables in 1995. In 2009 Apio introduced a new line called Grab and Go Cups, with 12 products in four categories Simple Soups, Simple Salads, Simple Melts and Simple Noodles. The packaging is designed to be a quick meal on-the-go, and comes with a collapsible fork or spoon, depending on the product 4.

The Simple Soups are a 2.79-ounce microwaveable cup with the seasonings packed separately in the lid. The consumer adds water and microwaves for 4 minutes, then adds the seasoning and stirs. The soups come in three flavors Miso Veggie, Veggie with Chicken flavor and Veggie Noodle. Each variety has broccoli, snow peas, carrots and

noodles. The Eat Smart Simple Salads are 4.25-ounce cups of Asian Sesame, California Style or Savory Southwest variety. The main fresh-cut part of the salad is in the cup portion of the package, and the dressing and any other garnishes are in separate packages in the lid. The salads require no preparation beyond opening the packaging and mixing the

dressing, produce and other ingredients together. The Asian Sesame salad is made with green cabbage, broccoli, carrots and red cabbage, with Asian dressing, chow mein noodles and almonds packaged separately. The California Style salad has broccoli, carrots and red cabbage, plus roasted soy nuts, sunflower kernels and dried cranberries and dressing. The Savory Southwest salad has broccoli, carrots, red cabbage and grape tomatoes, and a Southwest dressing and tortilla strips separate. The Apio Simple Melts are fresh-cut produce packed in a microwaveable cup with a cheese sauce packed in the lid. The customer prepares the products by simply pouring the cheese sauce over the produce and microwaving the container. The Broccoli Cheddar Simple Melt is 5.5 ounces of broccoli florets with cheddar cheese sauce, the Cauli Cheddar Simple Melt is 5.75 ounces of cauliflower florets with cheddar cheese sauce and the Garlic Herb Simple Melt is 5.75 ounces of broccoli florets, carrots and cauliflower florets with garlic herb cheese sauce. The fourth catego -ounce cups in Teriyaki, Kung Pao and Spicy Orange flavors all have broccoli, snow peas and carrots with noodles. Preparation steps consist on adding water, microwave heating, draining and mixing the ingredients. The cup has a built-in drain spout to drain excess water. The price point is about US$2.49, according to Apio Inc.

4 http://www.freshcut.com/pages/arts.php?ns=1528



product development and advertising. companshare and turns over in excess of £100 million every year. The company has offices in London, Paris, Dublin, Amsterdam,Copenhagen, Stockholm, Hamburg and Salzburg.

The veg pots contain a variety of vegetables that provide between 2 and 3 servings of vegetables per day. Eight recipes (inc luding stews, moussaka, miso soup and others)

were developed.

David Taylor, a marketing consultant and manager of brandgym (a network of brand growth coaches), discussed several difficult ies for the development of products such as the innocent veg pots 5:

1. popular in home cooking, this is essentially a new type of product in the consumer market. The concept is therefore difficult to communicate (e.g. "they are like a soup,

Also, convincing the consumer

difficult mission.

2. Price-point: the pots cost about £3.50 (about AUD$7), which is an expensive at-home lunch option when considering that it is competing with chilled soup, which is about half the price. lovely litt le meals is the price. £3.49 is an awful lot for some veggies, rice and beans.

6. Piric ing strategy is important.

3. Selling the idea to retailers: there is a fierce competition between private labels and regional, national or international brands for shelf space in the chilled product category. For example, in the UK retail brands have over 90% of this growing market. Opening a space for a new product manufactured label can be extremely difficult. Therefore, these products need to succeed in the marketplace through other channels (e.g. foodservice) before being taken by supermarket chains.

Steam-in-the-bag

Companies such as Wada Farms and Green Giant Fresh have developed vegetable products that can be cooked in the bag and therefore do not require washing, mixing or puncturing 7. The only thing that consumers need to do is placing the bags in the microwave. Cooking

5 http://wheresthesausage.typepad.com/my_weblog/2008/09/innocents-veg-pots-pots-of-money-or-not.html 6 http://www.ciao.co.uk/Innocent_Veg_Pot_Mexican_Sweet_Potato_Chili__Review_5865074 7 http://www.greengiantfresh.com/media_newproducts.asp



time varies from 3 to 8 minutes, depending on the product. In some cases, products can be accompanied by a sauce (e.g. garlic and butter, bacon, chilli or cheese). In this case, packaging is the main innovation component: the bags need to be hermetically sealed, with steam vents or micro-perforations designed to precisely cook each type of food. The nature of the packaging film is

particularly important in chilled products because the film needs to vent steam when microwaved, while attaining optimal gas and vapour transmission for a given product during distribution. With high-respiration products like broccoli, microperforations carry the potential for keeping more oxygen in the package 8.

Easy-open functionality is also a must, allowing consumers to effortlessly tear open the package. Other desirable features inc lude the application of flexographic printing on the surface of the package and a rugged structure that enables the package to withstand food distribution environments. This is of particular importance in the frozen foods category, where distribution conditions can be rougher than for chilled products.

Frozen RTE food

Through its Birds Eye brand, Simplot Australia commercialises frozen vegetable-based foods such as vegetable fingers (with carrot, peas and sweetcorn) and corn fritters. Simplot can

develop joint ventures for these products (finger foods) and other related categories (e.g. sea food, main meals, dessert, potato, meals and sauces, and frozen vegetables). Simplot also has marketing arrangements to perform concept and product development, sales, marketing and advertisement.

Other innovation strategies in the frozen vegetable category involve new brands with new products and packaging. For example, Birds Eye launched in 2009 its Field Fresh sub-brand for its UK vegetables

portfolio. Four new products under this brand were developed: Supersweet Sweetcorn, Very Fine Green Beans, Country Mix and Select Mixed Vegetables. Consumer research showed positive results for the new packaging, with its premium and contemporary feel rat ing highly amongst targeted shoppers.

New varieties

Sunset Produce is a US-based company specialised in the development of greenhouse vegetables for gourmet uses. Over the past few years, Sunset Produce

oes,

8 http://www.foodandbeveragepackaging.com/Articles/Packaging_Leaders/BNP_GUID_9-5-2006_A_10000000000000426167



Peppers, and organic tomatoes, peppers, and cucumbers.

won recognition from specialised food industry magazines and it is a finalist in the 2010 United Fresh awards, to be unveiled in late April 2010. The sugar content of Candy tomatoes (5 grams/100 g product) is nearly twice the contents found in normal US-grown tomatoes (red, ripe, raw, year round average).

Coloful Harvest is also a US-based company specialised in the development of new varieties, such as the rainbow carrots, the purple broccoli and the red sweet corn pictured below. There variet ies are rich in phytonutrients and get their colour from antioxidants (anthocyanins).

The development of new varieties through traditional breeding techniques (such as the examples above) has to go through a long process before the product reaches consumers. Some varieties may take as long as eight years to be developed.

Colorful appeal of the product in foodservice, the company is looking at extending their share in the latter sector. To do so, marketing plans include working with well know chefs, who can use colorful vegetables to create eye-catching menus and plate presentations.

NPD concepts in the bioactives category

The global demand for nutraceutical ingredients will grow 5.8 % annually to reach US$15.5 billion in 2010 9, serving a projected market for nutritional preparations and natural medicines of US$197 billion. This market includes fortified foods and beverages, infant and pediatric nutrit ionals, dietary supplements, adult nutritionals and nutrient-based therapies such as parenteral and enteral nutrit ional solut ions. The most traded category is the fortified foods and beverages sector.

In the Asia-Pacific market, the demand for nutraceutical ingredients in 2015 is expected to reach US$8,300 million (Figure 10) and is growing at a faster (7.4% and 5.8%, respectively). The categories of nutrients and minerals and vitamins are the most demanded.

9 http://www.functionalingredientsmag.com/article/Business-Strategies/-em-functional-ingredients-em-market-overview.aspx



Figure 10. Nutraceutical demand by product group (US$millions). Source: Freedonia Group, 2006. World Nutraceuticals industry forecasts to 2010 & 2015.

The best worldwide growth opportunities for functional foods and beverage additives are: lutein, lycopene, omega-3 fatty acids, probiotics and sterol esters10.

Lycopene is an antioxidant carotenoid that has been researched for its role in cancer risk reduction (particularly prostate and digestive tract cancers), heart health, and skin protection. It is used as a healthy ingredient in foods and supplements, as well as a natural red food colouring.

An immediate source of lycopene is the waste generated by the tomato processing industry. The tomato processing industry produces large amounts of solid waste. About 10 40% of the total tomato processed in the facility are as skins and seeds. Skins are particularly rich in lycopene.

Globally, lycopene sales were predicted to surpass $26 million by 2009 11. High quality lycopene prices vary, depending on customer, quantity ordered and packaging. However, sources cite an on-the-spot figure of over US$6,000 per kg in 200712. While cheaper lycopene is available from Chinese suppliers, the quality and the possibility of using genetically modified tomatoes to source the lycopen does not entice European and American consumers.

10 Freedonia, 2006. 11 http://www.functionalingredientsmag.com/article/Science-Now/the-power-of-lycopene.aspx 12 http://www.nutraingredients.com/Industry/New-player-to-tap-tomato-waste-for-cheaper-lycopene

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1990 1995 2000 2005 2010 2015 2020

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Nutraceutical Demand

Nutrients & Minerals

Vitamins

Herbal & Non-‐Herbal Extracts



There are other components of interest in the nutraceutical industry, such as antioxidants. While fruit waste and by-products generally show a higher antioxidant activity than vegetable waste and by-products, some vegetable by-products (e.g. broccoli stems) have shown potential as antioxidant sources (Wijngaard et al., 2009).

Phenolic-enriched extracts from blanched artichoke, artichoke blanching waters, cauliflower, carrot, celery and onion byproducts have also been shown to impart added functionality to tomato juice. A 250 ml serving of functional tomato juice containing vegetable extracts (within consumers' acceptance limits) provides an additional intake of phenolic compounds which can range from 22 mg (when functionalised with cauliflower extract) to 300 mg (with blanched artichoke extract) (Larrosa et al., 2002).

The most likely buyer of vegetable-derived extracts with antioxidant properties is the dietary supplements industry. The total dietary supplements market value for Australia and New Zealand is AUS$2.9 billion, broken down as functional foods ($1 billion), organic ($0.8 billion), supplements ($0.9 billion), and natural personal care ($0.2 billion)13. Compared to other developed world markets, New Zealand and Australia have an excellent potential for growth. There are over 20 manufacturers of dietary supplements and over 2,100 retail health stores throughout Australia. Some of the major chains include Health Life, Go Vita, GNC-LiveWell and Good Life. There are approximately 450 health retailers in New Zealand with Health

14. There are challenges to the establishment of vegetables as sources of bioactive ingredients. While the concept of superfruits (e.g acai, pomegranate) is well established, there is scarce information about the number and types of bioactive ingredients present in vegetables. Therefore, consumers may not be aware of the health benefits brought by vegetable consumption. Further, confusion about the role of fruit and vegetable consumption has been generated by recent research indicating that only when it comes to preventing the disease in heavy drinkers. In healthy individuals, there is only a weak protective effect (Boffetta et al., 2010). Therefore, more efforts in c learly communicating proven health benefits of vegetable-derived bioactives is required.

13 Health Strategy Consulting, 2003. Australian and New Zealand complementary medicine market. 14 http://www.nutraceuticalsworld.com/articles/2006/07/australia-new-zealand-the-lands-of-opportunity



NPD concepts in the vegetable juice category

The predicted overall growth rate of the vegetable juice market between 2007 and 2011 is 10.6% in Europe and 4.7% in USA 15. The market in Australia is not known, as data for fruit and vegetable juice is typically pooled in market research studies. However, the overall juice drink industry

is growing at a 5% rate per annum and represents a market of $1.6 billion (Riddell, 2009b). While the vegetable juice sector is expected to contribute in a relat ively minor proportion to the overall growth of the juice category, there is significant potential for the former segment. Market growth in juice products is strongly linked to innovation and NPD.

The line between functional foods and everyday foods is becoming blurred. For instance, consumers are starting to see vegetable juices as a way to increase their daily

vegetable servings (and fiber intake). Recent studies suggest that low-sodium vegetable juices can aid weight loss in overweight individuals with metabolic syndrome (Shenoy et al., 2010).

Proven therapeutic uses can create opportunities in the marketing and advertising campaigns of traditional juice products. However, these claims need to be scientifically substantiated and advertisement needs to comply with FSANZ and ACCC guidelines for functional products. This point is further discussed later on this report.

Examples of juice products directly marketed as a replacement of fresh vegetable servings include the V8 Fusion juice (from Campbell ), touted to provide a full serving of vegetables

-. V8 juices are manufactured with tomatoes, carrots, celery, beets, parsley,

lettuce, watercress and spinach as raw materials. They are also enriched with lycopene and a 250 ml size drink is said to to provide four times the amounts found in a medium sized tomato.

Another variation is the mixed fruit and vegetable juice category. Organic vegetable juices manufactured by the Singaporean company Wild Bunch & Co are another example of innovative product marketing. The juices offered include ingredients such as beetroot, celery, ginger, parsley, carrot, spinach and wheatgrass.

In Australia, Berri Ltd manufactures only tomato juice, while Woolworths offers vegetable juice under their Select label. Nudie Juice currently offers only one product with vegetable juice (orange, carrot & ginger). Recently, the Sunraysia Natural

15 http://www.globalbusinessinsights.com/content/rbcg0197m.pdf



Beverage Company developed a beetroot and apple juice promoting heart health 16. However, there are signs of increased activity in this category through the juice retail bars sector (e.g. Boost Juice). It is worth noticing that Boost Juice may become a player in the packaged juice sector: in 2007 the company launched new 1 litre and 350 ml bottled products that are being sold in Woolworths, Safeway, Coles and other independent retailers17. There are few innovative vegetable juice products in the market and therefore this author believes that there is room for growth in this category.

NPD concepts in the dried snack category The annual snack food market in Australia is worth $2.5 billion and it is growing at a rate of 2.3% (Sivasailam, 2010). Similarly to the juice category, growth in the snacks market is high ly correlated to innovative packaging and product development. Potato crisps comprise nearly 50% of the snack food market. Even though obesity is one of Australimost pressing health issues and it has been associated to the consumption of traditional snacks such as potato chips, an increase in the consumption of snack foods has been reported in previous years. However, consumershealthy and natural snack foods such as cereal and snack bars, fruit and nut based snack foods and similar foods. Nutritious snacks represent the most significant opportunity area within the snack food industry, with an est imated growth of 22% over 2009 and totalling 10.8% of the market in 2009-10. This market shift can open opportunities for vegetable-based snacks, which can ease consumers concerns about snacking and shed its associat ion with a bad or unhealthy lifestyle.

Large snack manufacturers have seized this opportunity: Frito-Lay (manufacturer of Red Rock Deli products in Australia), launched in 2007 its Flat Earth vegetable and fruit crisps. These are baked chips which contain vegetable blends and provide a half-serving of fruits and vegetables in each serving of 14 chips. Part of the innovative angle of these products is the selection of flavours, such as Apple Cinnamon Grove, Peach Mango Paradise, Tangy Tomato Ranch, and Wild Berry Patch.

16 http://www.freshplaza.com/news_detail.asp?id=61136 17 IBISworld. 2007. Fruit juice drink manufacturing in Australia, C2187.



Other applications

A literature survey covering more than 160 articles outlined three prospects for future economic treatment of vegetable byproducts: 1) Reuse of vegetable residues for the production of multifunctional food ingredients for fruit juice and bakery processes;; 2) Bioconversion of vegetable waste via solid-state fermentation as an exclusive substrate for the generation of fruity food flavours;; 3) Conversion of vegetable residues into bioadsorbents for waste water treatment (Laufenberg et al., 2003).

A variety of uses for vegetables that have not been fully explored include:

The direct addit ion of dry tomato peel to meat products (e.g. hamburgers, sausages) to obtain a meat-based products enriched in lycopene (Garcia et al., 2009).

The extraction of quercentin form onion skins to develop natural anti-histamine and anti-inflammatory medicaments, shown to help hay fever sufferers18.

The fermentation of sugar beet to produce organic inhibitor compounds that prevent corrosion in metal reinforcing bars (Chandler et al., 2002).

Refrigerated soups provide an innovation platform for large manufacturers to partner with local manufacturers and experiment with new seasonal vegetable-based products, such as chilled cucumber soup, gazpacho and other chilled soups for the summer, which is tradit ionally a downtime for soup sales. For winter, a variety of

-seasonal products could appeal to the locally-aware consumer.

Costs/benefits of NPD: health claims A study recently evaluated the costs of NPD in the context of the proposed changes outlined by Food Standards Australia New Zealand (FSANZ) to regulate on nutrit ion, health and related claims (Centre for International Economics, 2008). In essence, the changes proposed will t ighten the criteria a product needs to satisfy before a nutrit ion content claim or a function claim is able to be made 19.

Among the categories investigated by CIES, the following are of interest from the point of view of NPD:

1. new products developed on the basis -formulations/ evolutionary products/ radically innovative products);;

2. existing products re-marketed to make use of health claims (product repositioning);; and

3. changes to the formulation of exist ing products to meet new qualifying criteria (line extension)

18 http://www.freshplaza.com/news_detail.asp?id=43877 19 Specific details of the proposed changes are set out in the Proposal P293 Preliminary Final Assessment Report (April 2007) (FSANZ 2007a) and Draft Assessment Report (December 2005) (FSANZ 2005). http://www.foodstandards.gov.au/consumerinformation/labellingoffood/nutritionhealthandrelatedclaims/



According to CIES, a manufacturer that develops a new product or significantly modifies an existing product to take advantage of the proposed FSANZ regulatory changes will face a large number of upfront costs. These costs are described below:

Init ial product concept and development costs, including:

o market research;;

o product testing;; and

o product refining in response to market research and product testing;;

developing a relevant marketing strategy;;

implementing the marketing strategy in media (where relevant) and designing and printing product labels and packaging;;

ensuring that the product:

o meets the requirements of a nutrit ion content claim, general level health claim or approved high level health claim;; or

o undergoes scientific testing and subsequent pre-approval by FSANZ to allow a high level health c laim;;

undertaking ongoing compliance checking of the product to ensure that it meets the relevant criteria and conditions for the relevant high level or general level health claim.

New marketing strategies are expected to be developed for any of the three product development categories mentioned before.

Specifically, firms that choose to undertake a new marketing strategy would need to:

develop a relevant marketing strategy;;

implement the marketing strategy in media (where relevant) and design and print product labels and packaging;;

ensure that the product:

o meets the requirements of a nutrit ion content claim, general level health claim or approved high level health claim;; or

o undergoes scientific testing and subsequent pre-market approval by FSANZ to allow a high level health c laim;;

undertake ongoing compliance checking of the product to ensure that it meets the relevant criteria of the relevant high level or general level health claim.

CIES calculated the development costs as a proportion of product sales in three brackets of product investment (Figure 11). For example, a product with a $5 million retail value has init ial product development costs of about 5.4 % of annual sales.

For a product value of $50 million, init ial development costs decrease to approximately 3.1% of annual sales. This finding is congruent with the observations about the impact of



company size, mentioned previously: large companies can accommodate large innovation efforts because the impact of development costs as a function of sales decreases, in comparison to smaller innovation projects.

Figure 11. Product development costs as a proportion of sales (Centre for International Economics, 2008).

Based on consultations with food industry representatives, CIES determined that the largest benefits of the proposed FSANZ changes were expected for the fruit and vegetables sector. This is not surprising, given the strong link of these products with claimed health benefits.

Under the proposed changes, fruit and vegetable suppliers will now be able to further emphasise and market produce using general level and high level claims. Given that a large proportion of food expenditure per household is dedicated to fruit and vegetables, these are good news for producers.



However, caution is required when dealing with health claims. Figure 12 shows the benefit/cost calculat ion of CIES in seven platforms of change due to the proposed FSANZ regulat ion. Of particular interest are the

categories, which represent the voluntary side of the proposed FSANZ changes. The other four categories represent the downside of the changes, which are companies changing their label, advertisement, product formula or retiring the product altogether from the market to comply with the stricter FSANZ health claims regulat ions.

The clear winner in all cases evaluated (i.e. product value of $5 million, $10 million and $50 million) is new product category. A new marketing init iat ive has a small effect on benefits. As this is a voluntary action by manufacturers, on average firms will expect to earn the typical profit rate on all expenses. The addit ional costs associated with developing a new marketing strategy for a product with a $5 million retail value are approximately $101,000. In order to justify the expense, firms would expect sales of $109,000 per year, implying additional profits of $8,000.

These results indicate that new marketing strategies and product presentation can be -

increase their purchases or to pay a premium for the product. Further, it is unlikely that a marketing strategy alone will be able to produce the same benefits expected from a successful novel product.

Figure 12. Benefit/cost for different NPD areas for a product with a value of $5 million in the context of health and nutrit ional c laims (Centre for International Economics, 2008).



New Processing Concepts Undoubtedly, the development of a new product must encompass the entire life cycle of the product, including its processing. For instance, if the marketing angle of different types of vegetable-based products is based on its nutrit ional and functional contents, then it is crit ical to maintain the functionality by ensuring that the processing stage is such that no damage to critical components (e.g. lycopene, vitamins, anthocyanins) occurs. Failure in doing so does not only endangers the new product: if a nutrit ional claim is found to be false,

the entire brand.

Therefore, one question that a NPD team needs to raise is whether there are processes that cvegetable products normally offer.

This is where novel technologies have a relevant role to play . While a lack of investment in innovation has seen the food industry become one of the least profitable industry sectors, recent advances in novel preservation technologies offer exciting new possibilit ies to meet important consumer drivers such as health, convenience, pleasure and low environmental impacts in one single product (Quested et al., 2010).

Consumers may be sceptic about (and sometimes downright against the idea of) new food processing technologies. However, this attitude is not equally felt about all technologies. For example, Cardello (2003) investigated concern levels for 20 traditional and novel food technologies in U.S. consumers. The study found that the food technologies/treatments that evoked the greatest concern were genetic engineering (rank = 1), the addit ion of bacteriocins (2), irradiat ion (3) and pulsed X-rays (4). Of somewhat lesser concern were such technologies/treatments as UV-light (6), pulsed electric fields (8), and oscillating magnetic fields (11). Other innovative and emerging technologies that evoked still lower concern included hydrostatic pressure (14), radio-frequency heating (15) and electrical resistance heating (17), while those evoking the least concern were the traditional processes

(Cardello, 2003).

Another study found similar negative results for irradiat ion and genetic modification, while high pressure processing produced the most positive utility values of all the emerging technologies investigated (Cardello et al., 2007). The latter finding suggests that high pressure processing may find more rapid acceptance among consumers than other technologies. Industry marketers of innovative and emerging food technologies also need to explore further the understanding of consumers of phrases such

to optimize the marketing strategy and marketplace potential for these foods.

It is important to highlight the factors that shape public views about novel processing technologies for food products (Lyndhurst, 2009):



Perceived risks and benefits: Risk perceptions influence public attitudes in this ore the consumer comes

into contact with the foods. Any risks associated with them are likely to be unobservable and so the consumer is unable to weigh up risks and benefits. This

(Cardello, 2003). Naturalness: contrast to the suspicious attitudes they often adopt towards foods processed using novel technologies. This att itude was investigated in Australian consumers of prawns: in a survey, researchers found that consumers perceived triploidy20 in prawns more positively than prawns treated with electron beams or irradiat ion, because triploidy was considered more 'natural' than the two treatment technologies (Cox et al., 2007).

Trust: Trust in the food industry, regulatory bodies and the information they transmit plays an important role in influencing public attitudes towards novel food processes (Siegrist et al., 2008).

Experience and information: If consumers are able to taste the novel product and are provided with information in a friendly format, their concerns about the production process decreases (Cardello et al., 2007). The Cardello (2003) experiment demonstrated this observation: respondents that were asked to rate their concern for 20 novel food processing technologies were given food samples to taste afterwards. These samples had been processed using some of the novel technologies investigated. An explanation of the processes accompanied the tasting. When they rated their concern for the 20 technologies for the second time, the concern ratings decreased for 15 of the technologies investigated.

It is important to keep these factors in mind when developing a new product/new process strategy for the vegetables industry.

There are two main groups of novel processing technologies for food: non-thermal and thermal technologies. In novel thermal processes, the change in temperature is the main mechanism for product transformation (e.g. elimination of microorganisms, blanching). In non-thermal treatments a change in temperature may arise, but it is not the main processing mechanism. These groups are further discussed next.

Novel non-thermal processes Non- processes mainly focused to decrease microbial loads and are effective at ambient or sub-lethal temperatures. High hydrostatic pressure, pulsed electric fields, high-intensity ultrasound, ultraviolet light, pulsed light, ionizing radiat ion and oscillating magnetic fields are amongst these technologies.

Estrada-Flores (2010) dealt with most of these technologies from the point of view of quality and safety improvement, high pressure processing and pulsed electric fields excepted. Both

20 Triploid prawns have three sets of chromosomes, rather than the usual two. Triploidy occurs sporadically in nature, and in some aquaculture species has commercial benefits such as faster growth.



of these technologies involve heat due to the generation of internal energy (e.g. adiabatic heating and resist ive heating during HHP and PEF, respectively). However, these are classified as non-thermal because they still eliminate the need of high temperatures to kill undesirable microorganisms, avoiding their deleterious effects of heat on safety, flavour, colour and nutritive value of foods (Pereira and Vicente, 2010).

High Pressure Processing (HPP) The application of HHP on foodstuffs is the subject of major interest for both food preservation and preparation because the process can pasteurise fluid food materials by using pressure rather than heat (Pereira and Vicente, 2010). In this process, food materials (with or without packaging) are placed in a chamber that is filled with water to exert pressures that can vary from 100 to 1,000 MPa. Under this pressure, biomolecules obey the Le Chatelier Braun principle and reactions that result in reduced volume are promoted. One of such reactions is a partial unfolding of large proteins, thus triggering their denaturation. This results in the inactivation of microorganisms and enzymes and can also promote changes in the rheological properties of the products (Hendrickx et al., 1998, Ahmed et al., 2003). However, small molecules such as amino acids, vitamins and flavour and aroma components contributing to the sensory and nutritional quality of food, remain unaffected (Balci and Wilbey, 1999). A variat ion of HPP is to combine compression heating with conventional heating for food sterilization (Koutchma et al., 2005). Instantaneous adiabatic compression during pressurizat ion leads to a quick increase in the temperature of the food products, which is reversed when the pressure is released, providing rapid heating and cooling conditions and hence short processing times (Shao et al., 2008). This results in a new approach to food sterilization with a significant improvement in food quality. A further variation is the use of HPP for shift ing the freezing point of foods. In this process, foods are frozen under high pressure. The resulting ice crystals are of smaller volume than in a typical freezing process and as a result, damage to cells is greatly diminished. This process is particularly advantageous to vegetables, which have a tendency to lose texture when frozen (Li and Sun, 2002). An example is the use of HPP for a mixture of apple and broccoli juice to ensure the preservation of sulforaphane, a bio-active substance found in broccoli. Frozen and HPP treated juice exhibited highest concentration of sulforaphane, whereas heat pasteurised juice showed slightly lower sulforaphane content. The sensory quality of the HPP treated apple broccoli juice was comparable with frozen juice for up to 70 days of storage (Houska et al., 2006). HPP has also been investigated as a potential competing technology to canning and blanching of vegetables. HPP affects enzymes that have structural functions, such as pectinases. As a result of HPP, the action of some pectinases is accelerated and products such as carrots experience a slight increase in firmness, even without the use of calcium dips (De Roeck et al., 2010). However, other products (e.g. tomatoes, pears) suffer a loss of firmness.



Similarly divergent effects of HPP in plant materials have been observed in terms of colour and flavour, with some HPP products scoring better in these attributes and others performing poorly with respect to conventional heating treatments. Elucidation of the effects of high pressure on sensory properties of fruit and vegetables such as colour, flavour and texture is not straightforward, due to the presence of various enzymatic and chemical reactions during processing and storage. The effect of HPP on sensory properties cannot be generalized since (i) basic research in this subject is st ill lacking and (ii) sensory properties are product dependent (Houska et al., 2006).

Economics and energy efficiency The combined application of high pressure and heat achieves an inactivation of spores of Clostridium spp similar to that of conventional sterilizat ion. However, the energy input required for sterilizat ion of cans can be reduced from 300 to 270 kJ/kg when applying the HHP treatment. Energy recovery can lead to further decreases of 20% in the total energy requirements (Toepfl et al., 2006). Pressure-assisted sterilization is considered to be a waste-free process. In fact, the pre-sterilizat ion of packaging by hydrogen peroxide or other chemical agents is not required and therefore contributes to a reduction of the amount of chemicals in the liquid effluents. As an example of production capacity, an Avure Technologies21 HPP system of about 215 L capacity for batch processing can deliver about 4,500 tonnes of product per year. The costs of a commercial scale, HPP unit are between $500,000 and $2.5 million USD. It is est imated that HPP can cost between ¢3 to ¢10 USD per pound of product (Moraru, 2008).

Commercial application HPP is now in the stage of commercialisation: in 2006 the estimated number of HPP installat ions was 91, distributed in 55 companies processing over 150 products. The total production of HPP products in 2005 was between 100,000 120,000 tonnes (Moraru, 2008). The application of HPP in an industrial scale requires an effect ive R&D program that tests several product concepts and processing combinations until the optimum parameters are found and the product formulation is tested in consumer panels. Therefore, each product has a unique cost/benefit threshold. Figure 13 illustrates the thresholds for different products, as assessed by Avure Technologies.

21 Avure Technologies is an American company considered to be the most important manufacturer of HPP systems. They have an installed base of over 1,200 units and 98% of their presses sold since the 1960s are still in operation.



Figure 13. Classification of value creation as a function of food safety profile for HPP. Note the low value creation for whole vegetables vs the high value creation for fresh cuts and salads (not leafy greens). A study conducted in 2006 (Attwood, 2006) defined a number of Australian commodities and products of interest for HPP (Table 4). These products were selected by commercial organisations as ones for which market demand and market growth is expected in the future, plus potential to command a premium price. These profits would achieve suffic ient returns to cover processing cost and increase returns to investors. The observations in Table 4 were confirmed by commissioned market research in most cases. The premium price relates to the convenience and quality of the product, and benefits derived from extended shelf life. The benefits to the processor/distributor include reduced sea freight cost compared with airfreight cost and the ability to withstand quarantine periods in specific export markets. Often (but not always), the commodities used for HPP processing (e.g for fruit salad), may be those downgraded due to size or skin blemish, and would otherwise be of low value to the fresh market. Table 4. Australian Commodities and HPP Products of Commercial Interest Commodity Products Avocado Fresh, cut, guacamole, puree Mango Fresh, cut Apple, pear, stone fruit Fruit salad combinations Grapes Fresh Citrus Fresh, cut Orange and other fruit Fruit juice Apples Sliced Vegetables (carrot, cabbage, onion) Prepared salads e.g. coleslaw



There are currently two companies spec ialised in HPP of fruits and vegetables: Pressure Fresh Australia Pty Ltd, established in 2006 in Queensland and Donny Boy Fresh Food Company (now Preshafood Ltd), also established in 2006 in Victoria. HPP vegetable products currently commercialised by Pressure Fresh include purees (e.g. chilli, herbs, egg plant,garlic). The company advertises that the products can be stored a minimum of 12 months at ambient temperature and longer if stored in refrigeration.

Packaging sizes vary from 22kg, up to 1,000kg . HPP vegetable products are characterised by extremely low microbiological count (SPC < 100) and aflatoxin levels (UG/KG < 1 or PPB < 10). Preshafood Ltd commercialises the Preshafruit juice concepts . The latter over in the DrinkTec 2009 Beverage Innovation Awards in Munich. Preshafruit also won the 2009 Packaging Council of Australia Innovation award. While pasteurised juices such as Nudie, Golden Circ le Black Label and Boost Juice may last 20 to 25 days on shelves after reaching supermarkets, HPP juices can last up to 165 days (Cooper, 2009).

techniques were originally developed by Food Science Australia, a joint init iat ive of the CSIRO and the Victorian government that rebranded as CSIRO Food and Nutritional Sciences in 2009.

Pulsed electric field (PEF) processing The major applicat ion of PEF is as a technology that can inactivate microorganisms through the application of high voltage pulses (typically 20 80 kV/cm), with minimal effects on the nutritional, flavour and functional characterist ics of foods due to the absence of heat (Pereira and Vicente, 2010). PEF pasteurizat ion kills microorganisms and inactivates some enzymes and, unless the product is ac idic, it requires refrigerated storage. For heat-sensitive liquid foods where thermal pasteurizat ion is not an option (due to flavor, texture, or color changes), PEF treatment would be advantageous. The shelf-life of PEF-treated and thermally pasteurized foods is comparable. Application of PEF has been successfully demonstrated for the pasteurizat ion of foods such as juices, milk, yogurt, soups, and liquid eggs. Its use is restricted to food products



with no air bubbles and with low electrical conductivity. The maximum particle size in the liquid must be smaller than the gap of the treatment region in the chamber in order to ensure proper treatment. PEF is a continuous processing method, which is not suitable for solid food products that are not pumpable. PEF is particularly attractive for the processing of fruit and vegetables purees and juices. Compared to pasteurization, PEF causes less changes in the colour of orange juice after treatment and during an init ial storage period at 4oC. In long storage periods exceeding 112 days, the colour changes in PEF-treated products are the same as for products treated with normal pasteurizat ion (Lelieveld, 2005). PEF-treated orange juice and gazpacho have shown to better retain vitamin C than thermally-treated products. Vitamin C retention depends on the type of food and process parameters such as electric field strength, treatment time, pulse frequency, width and polarity. In general, lower levels of the latter parameters result in higher vitamin C retention (Elez-Martínez and Martín-Belloso, 2007). Although pasteurization has been the main focus of PEF processing, PEF can also be used as an aid to extract or disintegrate biological material. Examples include juice extraction and puree manufacturing. In the former, extraction rates in carrot juice have been shown to increase in 6 7% in comparison to traditional extraction processes. In experiments conducted with Granny Smith, Braeburn, Royal Gala and Red Boskoop apple variet ies, the extraction of juice increased between 2 and 7% (Toepfl, 2006). PEF has also been used to extract pigments from beetroots, with recovery rates of up to 90% of total red colouring and ionic content (Fincan et al., 2004). PEF has also found application in reducing the solid volume (sludge) of wastewater 22.

Economics and energy efficiency Figure 14 illustrates the est imated costs of investment for PEF applications as an aid for extraction and disintegration of cells and as a preservation technology for fruit juices. Cost estimations are based on laboratory scale up and quotations of different pulsed power systems and component suppliers in 2006, based on energy requirements of 1 to 3 kW/t for cell disintegration and 30 to 50 kW/t for preservation. There is contradictory information about the cost efficiency of PEF . One source indicates that PEF is an energy efficient process, adding only $0.03 to $0.07/L to final food costs in commercial-scale PEF systems between 1,000 and 5,000 L/hr of liquid foods22. Generation of high voltage pulses having suffic ient peak power (typically megawatts) is the limitat ion in processing large quantit ies of fluid economically. The emergence of solid-state pulsed power systems, which can be arbitrarily sized by combining switch modules in series and parallel, removes this limitation.

22 http://www.oardc.ohio-state.edu/sastry/USDA_project.htm



Figure 14. Estimated costs of investment for PEF applicat ion as cell disintegration and preservation technique in fruit juice production dependent on production capacity (Toepfl, 2006). Another study (Lung et al., 2006) provided estimates on the potential energy savings of PEF compared to existing pasteurisat ion technologies for orange juice. The natural gas savings were est imated at 100%, since thermal processing is eliminated. The electricity savings of PEF can be up to 18%, based on the assumed electric ity consumption range of the base technology. However, Toepfl (2006) found that the preservation of liquid media by PEF caused operation costs in the range of 1 -cents per litre, about 10-fold higher than those needed for conventional thermal processing. The combination of pulse energy dissipation and the simultaneous resistive heating of the suspending medium has also been investigated. For example, a two-step pasteurization process where PEF is combined with a heat treatment can lower treatment temperatures and shorter residence times, in comparison to conventional pasteurizat ion. The required electric energy consumption to obtain a 6 log-cycle inactivation of E. coli can be lowered from 100 to less than 40 kJ kg 1, when raising the treatment temperature from 20 30 °C up to 55 65 °C (Heinz et al., 2003). Some studies indicate that PEF pasteurization is less energy-intensive than traditional pasteurizat ion methods, with annual savings of 791.2 to 1,055 TJ per year of fossil fuel-equivalents, while also contributing to the reduction of CO2 emissions (Lelieveld, 2005). However, the application of PEF needs to be carefully evaluated in each type of product and its economic feasibility calculated through pilot plant studies.

Commercial application There is sufficient sc ientific evidence to convince fruit and vegetable processors on the quality and safety advantages of PEF over thermal pasteurizat ion. However, a lack of product-specific information and a wide range of operational conditions applied in published



literature are often cited as the major constrains on the application of PEF in an industrial scale (Lelieveld, 2005, Pereira and Vicente, 2010). The best way to integrate PEF technologies in an existing processing plant is by working in collaboration with research organisations that have equipment and know-how available.

-mover in the uptake of PEF and the first company to be approved by FDA to process fruit juices using PEF in the US. The processor wanted to preserve its organic commitment to customers and decided not to use thermal pasteurization, which would destroy most of the vitamin content and enzymes in raw juice. FDA offic ials put Genesis in contact with Ohio State University, which was developing PEF technology and licensed it to Diversified Technologies Inc. (Bedford, MA). Diversified Technologies builds commercial PEF systems of processing volumes ranging from 500 to 2,000 liters per hour 23. When , that PEF could not handle foaming beverages in a predictable way. Therefore, it has dec ided to process Genesis beverages using high-pressure processing instead. kept the organic angle of the products and expanded the variety of beverages to carrot juice, smoothies and other similar drinks 24. In Australia, CSIRO Food and Nutritional Sciences has a PEF facility capable of processing 300 1,000 L/h. CSIRO also has a group of scientist working on this and other emerging technologies mentioned in this report.

Novel thermal processes Tradit ional thermal processes deliver heat to products by heating an external media (e.g. air, water, metal), and putting in direct or indirect contact the product with the hot conductive media.

physical and chemical characterist ics as conduits for heat transfer. Processes that act on this principle include ohmic heating, dielectric heating (including microwave and radio frequency heating) and inductive heating (Vicente and Castro, 2007).

Ohmic processing was

successfully applied in milk pasteurisat ion in 1935 and by 1938 there were fifty plants already using the process. However, issues such as high processing costs and the insuffic ient availability of inert materials used in the electrodes of the equipment rendered this technology non-viable.

23 http://www.divtecs.com/ 24 http://www.foodengineeringmag.com/Articles/Feature_Article/BNP_GUID_9-5-2006_A_10000000000000163616



However, research on ohmic heating continued. There is now a renewed interest in ohmic heating because processed products are of a superior quality to those processed with conventional pasteurisation processes (Vicente and Castro, 2007). Ohmic heating can be used for heating liquid foods containing large particulates, such as soups, stews, and fruit slices in syrups and sauces, and heat sensit ive liquids. The technology is also useful for the treatment of protein-rich foods, which tend to denature and coagulate when thermally processed. For example, liquid egg can be ohmically heated in a fraction of a second without coagulating it. Juices can be treated to inactivate enzymes without affecting the flavor. Other potential applications of ohmic heating include blanching, thawing, on-line detection of starch gelatinizat ion, fermentation, peeling, dehydration, and extraction 25. Ohmic heating consists on the direct passage of electric current through the product, which generates heat as a result of electrical resistance. Its advantages are: 1) rapid and uniform heating;; 2) less thermal damage to products;; 3) decreased operational costs and 4) absence of hot surfaces and therefore reduced fouling as contrary to UHT processing. In vegetable processing, ohmic heating can be used to blanch products, especially of whole large vegetables where the process may be accomplished in a relat ively short time, regardless of the shape and size of the product. Such a process eliminates the need for dicing, as is typical of water blanching treatments (Mizrahi, 1996). It is also helpful in the processing of britt le products such as cauliflower florets, where ohmic heating is thought to provide a more gentle treatment than water blanching (Eliot-Godéreaux et al., 2001). The use of ohmic heating has also been shown to retard Maillard reactions in products prone to change colour due to these mechanisms. For example, colour changes as a result of non-enzymatic browning during hot water sterilizat ion and ohmic heating of vegetable puree have been compared (Icier et al., 2006). Enzyme inactivation was found to occur at lower processing times than conventional hot water sterilizat ion. Further, colour changes as a result of non-enzymatic browning were less pronounced in the samples treated by ohmic heating. Other processes where ohmic heating can be used are evaporation, dehydration, fermentation, extraction of soluble and fruit peeling. The latter applicat ion could greatly reduce the use of lye commonly used in such operations, resulting in environmental benefits.

Economics and energy efficiency A dated economic analysis conducted at the University of Minnesota (Allen et al., 1996) indicated that ohmic heating would be economically viable for premium quality foods. The components included in the cost analyses were labour, energy, packaging, equipment maintenance and repairs, plant supplies, and interest and depreciation on the processing and filling equipment. Ohmic operational costs were found to be comparable to those for freezing and retort processing of low-ac id food products. Though ohmic heating was found

25 http://ohioline.osu.edu/fse-fact/0004.html



to be more costly than conventional methods for processing high-acid foods, the authors believed that ohmic heating was still viable for premium products. However, costs of ohmic systems have decreased greatly since that time, and the range of products for which ohmic heating is economical has expanded considerably (Bengston et al., 2006) . The energy effic iency of ohmic processes is highly influenced by the energy uptake of the ohmic cell, which is constant and independent of the fluid level or flow rate (Ghnimi et al., 2007). The global energy effic iency of the system power supply and the ohmic heater is 85%. This highly efficient process can lead to energy savings, compared to traditional processes. Ohmic heating uses ordinary electric ity and no emissions are produced at the point of use.

Commercial application APV (a company acquired by SPX Corporation in 2008) commercialises ohmic heating systems for high concentrations of large delicate partic les. Their offices in Australia are in the Monash Science Technology Park (738 Blackburn Road, Clayton North, Victoria). Emmepiemme SRL in Piacenza (Italy) also designs ohmic processing plants. Their relevant installat ions are summarised in Table 5. The most representative example of the commercial use of ohmic heating is the processing of low ac id meats and vegetables in bags by HJ Heinz (UK). Wildfruit Products, a division of Nissei Co. Ltd. of Japan 26, also uses a system to process whole fruits. Table 5. Industrial ohmic heating plants installed by Emmepiemme SRL for thermal processing of foods (Pereira and Vicente, 2010). Country Year

(installation) Product Heat power

(kW) Italy 1994

Tomato sauces and pastes 50

Greece 1998 Peach and apricot slice and dice

150

Italy 2000 Diced pears and apples

150

Italy 2001 Low-acid vegetables purées

100

Mexico 2002 Strawberries 250 France 2002 Fruit preparation 100 France 2003 Processing line for meat rec ipes 50 Italy 2004

Plum peeled tomato and tomato dices 480

Italy 2005 Vegetables sauces 60

26 http://www.nissei-com.co.jp/



Microwave and radio frequency processing Microwave processing in industrial processes acts under the same principles used by microwave ovens at home. Microwaves are waves of electrical and magnetic energy moving together through space. Microwaves fall into the radio frequency band of electromagnetic radiat ion and are much less powerful than other electromagnetic radiation, such as x-rays. Microwaves have three characteristics that allow them to be used in cooking: 1) they are reflected by metal;;2) they pass through glass, paper, plast ic, and similar materials;; and 3) they are absorbed by foods. Microwaves are produced inside the oven by an electron tube called a magnetron. The microwaves bounce back and forth within the metal interior until they touch the food, causing the water molecules in food to vibrate, producing heat that cooks the food. Therefore, high water content products such as fresh vegetables can be cooked more quickly than other foods. However, other factors such as shape, volume and surface area are also important for microwave heating. In terms of processing, the advantages of microwave processing include: a) a significant reduction in the thermal processing time;; 2) reduction of nutrient losses due to high temperature treatments;; 3) more precise control and energy use;; 4) in-package processing is possible;; 5) innovative new products that would not be possible with conventional pasteurisat ion/sterilisation processes are achievable through the use of microwave processing. Continuous flow microwave heating has advantages over conventional heating process for viscous and pumpable food products because microwaves allow for volumetric heating of the entire flow (Coronel et al., 2008). Continuous flow microwave heating is also associated with improved colour, flavour, texture, and nutrient retention. Another form of application of microwaves for pasteurising ready-to-eat products has been patented by MicVac27, a Swedish company based in Mölndal. In the MicVac process illustrated in Figure 15, the ingredients or the mixed foods are filled into a package, which is then sealed with a plast ic film. The packaged food is then cooked and pasteurized. During the heating process, a specially designed valve on the package opens and releases steam and oxygen. When the microwave heating process stops, the valve closes. The steam created during the cooking process inside the package condenses and causes a vacuum in the package. The final result is a cooked, pasteurized and vacuum-packed product. The short cooking times in combination with the absence of oxygen in the package are unique to this process. The method has been used in the food industry since 2005.

27 http://www.micvac.com/



Figure 15. Ready-to-eat product processed using the MicVac technology, where microwaves are used for cooking and pasteurisation. Among the MicVac clients, CêlaVíta (a Dutch company) uses the MicVac process to produce vacuum-packaged potato puree and La Cuisine Culinaire (another Dutch company) uses the process for a range of pasta and ready-to-eat products containing vegetables. Microwave processing has also been used to assist drying of fruit and vegetables. Examples include: the combination of microwave and vacuum freeze drying for instant vegetable soups;; microwave assisted convective drying for potato, carrot, olives, mushrooms and grapes;; and microwave assisted vacuum drying for carrot, banana, grapes, tomato and garlic (Zhang et al., 2006b). Microwave-assisted drying can significantly shorten the processing times, while allowing a relat ively minor migration of water-soluble constituents and lowering product temperatures in combination with vacuum. This is particularly advantageous for dried vegetables with high heat-sensit ive compositions, and fruits with high sugar contents. In most cases the quality of the microwave-dried food products is improved or equivalent to conventionally dried products, but with significant productivity gains. A sister technology of microwave is radio frequency (RF) heating. RF and microwave systems operate with the same princ iple, forcing polar molecules, such as water, and ionic species to constantly realign themselves by reversing an electric field around the food product. The molecular friction produced by dipole rotation and by the migration of ionic species under the influence of the oscillating electromagnetic field, generates heat inside the food by energy dissipation. RF drying of foods ingredients (e.g. herbs, spices, vegetables), snack foods, potato products and pasta products are well established applications. However, RF systems for food pasteurizat ion or sterilizat ion are now being investigated due to the capability for rapid and



uniform heating. Before full commercial implementation of RF pasteurizat ion/ sterilizat ion of packaged foods, potential problems such as dielectric arcing28 and thermal runaway heating need to be addressed (Pereira and Vicente, 2010).

Postharvest treatments Microwaves and RFs are not only useful for drying: in the 1990s, food scientists began exploring alternatives to chemical treatment of post-harvest nuts and fruit. Cherries bound from the Pacific Northwest to Japan were being treated with methyl bromide, and the Japanese and European markets were demanding alternatives to chemical fumigants. Microwave treatment was one of the alternatives first considered. Experiments with microwave radiation at both 2450 mega hertz (MHz) and 950 MHz frequencies were conducted, but microwave proved too damaging to the quality of the fruit, and it did not penetrate deep enough to get rid of the pests. Since then, a range of microwave and RF treatments have been proposed. For example, a commercial test with walnuts at D (Stockton, CA) in 2005 confirmed that deeper wave penetration at the shorter frequency resulted in 100% kill of the most heat-

ur or other quality parameters 29. Other published results that have shown promise for the use of microwaves and RF as disinfestat ions treatments for fruit and vegetables include:

Control of Botrytis cinerea and Penicillium expansum in peaches (Karabulut and Baykal, 2002)

Control of blue mold rot in pears (Zhang et al., 2006a) Control of codling moth in cherries (Ikediala et al., 2002) and fresh apples (Wang et al., 2006)

Control of Indianmeal moth, red flour beetle larvae and cowpea weevil in chickpea, green pea, and lentil (Wang et al., 2010)

Navel orangeworm within in-shell walnuts (Wang et al., 2007) Mediterranean fruit fly in Navel and Valencia oranges (Birla et al., 2005)

Future technologies will use millimeter-wave radiat ion, which is more associated with full-

Raytheon Company30 has developed a pasteurizat ion technology that delivers concentrated energy to the surface of the food, reducing the amount of wasted energy that exists in current pasteurization methods. Ninety five percent of the energy produced is directed to the food surface 31. This is particularly useful for ground meats and citrus, which commonly have significant risks of surface bacterial contamination.

28 The unintended formation of an electric arc. 29 http://www.foodengineeringmag.com/Articles/Cover_Story/BNP_GUID_9-5-2006_A_10000000000000060174 30 www.raytheon.com 31 http://homelandsecuritynewswire.com/raytheon-uses-millimeter-wave-radiation-keep-food-safe



Interest ingly, Raytheon also patented the first microwave oven 66 years ago.

Economics and energy efficiency In 2001, an industrial microwave system had a cost of $4,000 $7,000/kW, which includes the generator, applicator, conveyor and control system (Datta and Anantheswaran, 2001). Given this rule of thumb, microwave pasteurisation is an off-limits technology for low value products. This is why ready-to-eat meals are best placed to benefit from microwave processing.

Commercial application Commercial equipment for microwave sterilizat ion is currently available in Europe (Belgium, Holland, and Italy). Microwave processing for fresh filled pasta became common in Italy in the 1990s, and the technology has been applied to ready -to-eat meals, pasta-based products and a variety of other foods throughout Europe, Japan and parts of South America. Some of the biggest processors in the world have (or are) applying the technology, including

Unilever and Barilla SpA in Italy and Morinaga in Japan 32. The leading supplier of those systems was Officine Meccaniche Attrezzature per Ceramiche (OMAC), established by engineer Giuseppe Ruozi to fabricate a multistage system he devised. Ruozi held four patents for the process, which uses rapid heating by low power magnetrons for controlled cooking. Systems capable of

processing up to 2,000 kg/hr were fabricated, but OMAC closed in 1995. The technology was acquired by Classica Microwave Technologies Inc. in 2000. By 2007, Industrial Microwave Systems (IMS) acquired the assets of the now-defunct Classica and continues the commercialisat ion efforts of the technology. This episode shows how difficult is for a company to establish itself in the area of manufacturer of novel processing technologies. US manufacturers have several types of microwave heating systems for food tempering, de-freezing and baking, as well as pasteurizat ion and drying of semi-liquid products. None of this equipment is designed for high temperature microwave sterilizat ion 33. One major drawback in the commercialisat ion of microwave technology for pasteurisat ion and sterilisat ion in the US is that very few novel technologies have been accepted by the U.S. Food and Drug Administrat ion (FDA) in recent history. In October 2009, the FDA approved the use of microwave energy for producing pre-packaged, low-acid foods as performed by Washington State University (WSU), which may help to clear the way for its commercializat ion. Specifically, FDA acceptance was granted for a sweet potato puree product sterilized using continuous flow microwave processing and aseptic packaging. The technology has been implemented in Yamco L.L.C., a North Carolina food manufacturer 34.

32 http://www.foodengineeringmag.com/Archives/8bced4f4472f8010VgnVCM100000f932a8c0____ 33 http://www.microwaveheating.wsu.edu/ 34 http://www.microwaveheating.wsu.edu/factsheet/index.html



which allows a single-mode cavity for in-container sterilizat ion that could replace commercial retorts for many products 35. A consortia of companies (named DUST) get priority in single-

. The consortia, which includes large manufacturers such as Kraft, Hormel, Masterfoods USA and Ocean Beauty Seafoods, are investing in the R&D phase about US$1 million per year.

Opportunities and Barriers

Table 6 summarises the social, technological, economic, ecological and political/legal factors affecting the development and uptake of emerging novel products/ processes. This table was compiled from views expressed in a variety of industry reports and forums, which are included in the References section.

35 http://www.foodengineeringmag.com/Articles/Cover_Story/BNP_GUID_9-5-2006_A_10000000000000060174



Table 6. Environmental (STEEP) analysis showing the opportunities, challenges and threats affecting the diffusion of novel products and treatments in the

Australian vegetable processing sector.

VARIABLE TREND OPPORTUNITY CHALLENGE Social Consumers are sceptic about (and

sometimes downright against the idea of) new food processing technologies, fearing health consequences.

Not all novel processing technologies are

enhance the naturalness of the product are perceived as safer than those where the resulting product does not look and

Processing technologies, by definition, change the

a product is for consumers may depend on factors not related to the processing itself (e.g. packaging, fear to radiation-related processes, additives, added colourings). AWARENESS BARRIER

Emergence of environmental concerns

footprints.

Development of low-carbon products and processes.

Knowledge on some of these technologies is still evolving KNOWLEDGE BARRIER.

In recent years, domestic demand for fruits and vegetables has been stimulated by rising public concern about nutrition.

Positioning the horticultural industry as a main supplier of healthy and innovative processed and fresh products. Minimally processed products such as fresh cut vegetables, frozen vegetables and packaged salads are expected to benefit from increased health awareness.

Limited domestic market size. An improvement in nutritional contents of fresh vegetables will have to be achieved against a backdrop of increased climate challenges and decreased land availability. ECONOMIC AND ENVIRONMENTAL BARRIERS

Technological New products have a high failure rate in the market.

Opportunity to involve supermarkets in the development of new products and conduct consumer-driven innovation.

Management of risk is different for the domestic market (i.e. what supermarkets require), and for the export market. The current environment is not conducive to collaborative innovation between suppliers and retailers. This structure can only work if there is trust and transparency among the co-innovators. COMPETITIVE POSITIONING BARRIER.

Many of the novel technologies in this report have been developed and are being sold overseas. R&D and maintenance costs can increase for this equipment.

Develop R&D projects with universities and public research organisations, which have extended international networks and pilot plant equipment.

There is a scarcity of public funding to support innovation projects between industry and universities. This trend is continuing as more agricultural research laboratories are closed. POLICY BARRIER



Multinational companies develop most of their R&D projects on novel processing technologies in Europe or USA.

Australia is positioned to become an R&D hub for novel processing technologies for the Asian market.

An increase in publicly funded R&D infrastructure is necessary to achieve this vision. Capability building in novel processing technologies also needs to be ramped up (see above). POLICY BARRIER

Economic Reduction in number of retailer buyers and the growth of large supermarket chains.

Large companies that deal with multiple buyers also have a wide range of innovation needs.

Use of category management practices is weakening the negotiating strength of vegetable processors in supply contracts. Large retailers prefer to purchase from companies that can meet their nationwide needs rather than just regionally. Therefore, small processors offering innovative processed products have lower opportunities to break into the market. Greater buying power and negotiating strength by

increasing complex demands that can add to production and packaging costs. POWER IMBALANCE BARRIER

Increased energy / fuel costs.

Opportunity to introduce energy-efficient processes and novel packaging solutions that decrease costs and environmental impacts.

Temptation to cut energy costs by sacrificing product quality, thus potentially leading to consumer rejection and brand damage. AWARENESS AND COST BARRIERS.

Increased competition from imported processed products (mainly from Southeast Asia and New Zealand).

Barriers to entry are considered to be low with respect to other industries. For example, the technology required and specialised human resources are available (although sourcing specialised employees for the food industry is becoming an issue of late).

Establishment costs in Australia (including construction, land, plant and equipments) are particularly high in some processing industries such as canning. For companies betting on branded products, new companies need to spend considerable resources in marketing to create a brand image. For companies betting on private label, significant costs to achieve the scale of production needed to satisfy demand by retailers is necessary. COST BARRIERS.

Strong consumer focus on price as a result of the financial crisis, yet quality remains important due to a shift towards home cooking and a decrease

Positioning high quality horticultural

Expecting a premium for products processed with novel technologies (as opposed to conventional freezing and canning) may not be realistic. COST BARRIER.



in restaurant meals.

Ecological Increased regulatory and consumer pressure to decrease environmental impacts.

Opportunity for the uptake of low impact processing technologies that decrease carbon emissions and water consumption.

Consumer beliefs in novel products and processes and environmental aspects needs to be investigated. A high degree of processing will be associated with a high environmental impact, even though this is not necessarily so. AWARENESS BARRIER

Political/ regulatory

Regulatory hurdles to approve novel processing technologies and novel products are likely to be met by innovators.

FSANZ changes have been shown to favour the fruit and vegetables sector.

There are many angles that need to be addressed, including fragmentation of food labelling laws, health claims and others. REGULATORY BARRIER

The National Partnership Agreement on Preventive Health will put boundaries on formulations to reduce salt and other potentially harmful ingredients.

Potential to develop the minimally processed vegetable sector as a response to regulatory hurdles.

See above.



HAL-Funded Projects in Technologies for Value Addition

To detect the major focus of investment in HAL projects, a list of the tit les of all vegetable funded projects36 in novel processing technologies was analysed. Tit les of projects and start dates were extracted from the HAL database by performing a keyword search that reflected quality evaluation and extension technologies, i.e. project titles with concepts such as:

-processing OR processed - -juice -canning OR canned -frozen -chilled -dried -fresh-cut

This search led to a sub-sample of 125 projects funded between 2000 and 2009. The analysis considered both fruit and vegetable types of projects, as it is believed that diffusion of technological developments is common between these areas, particularly in the context of

Figure 16 shows the growth curve of HAL projects developed in the period mentioned above in the area of novel processing technologies. The technology curve reached maturity in 2004 and the peak number of HAL projects on these areas is expected to have occurred in 2009, if no factors have influenced investment policies and strategies in this platform.

This analysis is based on the number of projects, as dist inct to the financial investment made on the area. HAL has an average spend per project of around $72,000 per year (Horticulture Australia Limited, 2008), which is relat ively small. If future HAL strategies switch to fund fewer (but larger) projects in this and other areas, future analyses should be performed in terms of investment.

36 This list was provided by Keryn Hill, HAL, on March 2010.



Figure 16. Historical cumulative number of projects developed with HAL funding in emerging technologies for value addit ion of fruit and vegetables.

Implications and Recommendations

The trends of HAL-funded projects in emerging value adding technologies suggest that the peak investment in this area occurred in 2009. An exploration of the project list t itles indicates that most projects have focused on the improvement of quality attributes and productivity in the field. Fewer projects seem to have been developed to cover the downstream stages of the processed vegetables chain, for example, manufacture and packaging technologies, and consumer research for processed vegetable products.

Figure 17 shows that the number of HAL projects related to value addit ion is lower than any of the three previous platforms investigated (i.e. quality and safety technologies, environmental technologies and supply chain & logist ics technologies) (Estrada-Flores, 2009a, Estrada-Flores, 2009b, Estrada-Flores, 2010).



Figure 17. Comparison of projects developed in the five emerging technology areas investigated in project VG08087. Codes: SCL= supply chain & logist ics;; ET= environmental technologies;; FSQ= food quality & safety;; VA= value addit ion;; PHAR= production and harvesting.

It has been mentioned before that the potential cumulative payoff from three subprograms related to quality and new product/processes (commercial/marketing, novel products and eating quality platforms) represents $1.48 billion (Horticulture Australia Limited, 2008). This goal is unlikely to be achieved if the number of HAL projects peaks on this R&D portfolio occurs in 2010 and then declines. Therefore, there is a need to review current HAL policies

Recommendations for future R&D funding

The challenges CIES cites a FAO report (Winger and Wall, 2006), which points out the following:

Supermarkets in Australia and New Zealand have up to 25,000 food and beverage stock keeping units (SKUs) on their shelves.

Each year, Australasian supermarkets are offered between 5,000 and 10,000 new products, but only around 10% are accepted to be displayed on shelves.

o o 75 % are considered failures. o Only 1-2 % of new food products are radically different from products that

Around 75 % differ lit -products, line extensions, repositioned products, new forms of existing products, reformulated products or involve new packaging.

Introduction of a new product invariably leads to discontinuation of another. Consumers already have a vast array of products available (>25,000 SKU), yet most households get 80-85 % of their needs from 150 items.

Most consumers have relat ively stable purchasing patterns.



Only 26 % of consumers buy a wide variety of foods or brands. The time-to-market can be considerable for some countries where exports may be considered: in Europe, the average time for novel food/ingredients to complete the process of authorization is 35 months. In the US it is 3 months.

The drivers In view of the challenges, many horticultural enterprises may ask: Why bother with innovation? Especially in the case of small firms that will have more hurdles than larger firms, as discussed in this report.

This author believes that the vegetable processing sector has several reasons to innovate, namely:

The opportunities: as mentioned before, the Asia-Pacific market for healthy ingredients and foods has a substantial potential.

Globally, the most innovative new products can average increased sales between 10% and 15%, and much larger increases are not uncommon 37.

The development of new products will open new avenues for growth in the domestic .

The Australian market is limited and therefore growth most also focus to exports, where innovative products are a key point of differentiat ion.

The Australian fruit and vegetable processing sector is in decline, where revenue is growing slower than the economy, small companies are being absorbed by larger ones and new technology is not being utilised.

If grower-funded projects focused to increase productivity are successful, there is a

phenomena. Such a mechanism can be the expansion of the vegetable processing industry as a buyer of fresh vegetables. Rather than channelling product not fit for the fresh market or dumping to maintain favourable market conditions, vegetable processing for novel products such as bioactive extraction or minimally processed salads would be a better option.

Another situation where processing can be an option is when the crop conditions are not likely to meet retail or wholesale quality expectations. For example, surface head rot (pointer) or yellowing in broccoli or chilling injury in eggplant.

However, these drivers should not encourage firms to uptake technologies that have significant hurdles to face before being successfully used in the marketplace.

The areas for R&D The areas of opportunity for further R&D that this author has detected for the Australian processing vegetable industry are:

1. Microwave and radio frequency (RF) technologies for postharvest disinfestations.

37 http://www.ausfoodnews.com.au/2010/04/14/product-of-the-year-open-for-entries.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+AustralianFoodNews+(Australian+Food+News)



a. Approval from AQIS will require validation and monitoring systems, additionally to the development of the technologies.

2. Microwave and RF for drying of vegetables, either alone or in conjunction with air drying systems.

3. High pressure processing for pasteurisat ion and sterilisat ion of vegetable-based juices, purees, soups and similar semi-fluid products.

a. In this area, coupling of new packaging and formulations that are compatible with the treatment are also needed.

b. Also, approval from FSANZ as a regulatory body (and other countries if the product is for export) must be sought. Therefore, development of monitoring and validation technologies and methods is required.

4. Pulsed electric fields for disintegration and extraction of bioactives from vegetables.

5. Development of novel product concepts based on the bioactive activity of vegetable products.

From these areas, (1) and (2) would be likely to benefit from the current HAL funding approach: small, mult iple projects that target specific commodities at a t ime. For areas (3) to (5), this product-specific approach (i.e. vegetables, c itrus, pome fruit) lacks the critical mass to result in satisfactory return on investment for the industry. This was demonstrated in a previous HAL project on the area of bioactive ingredients (Estrada-Flores S, 2009).

The horticultural industry would benefit from a R&D platform that manages levies from a range of growers and a range of commodities to provide the critical mass required to negotiate R&D contracts and potential premiums for some commodities (as discussed in Estrada-Flores, 2009). This fund would require a careful examination of the crops most likely to benefit as suppliers of raw materials for the novel processing sector.

CSIRO Food & Nutritional Sciences has the installations necessary to test HPP, cold plasma and PEF, for example. Further, this organisation has R&D staff in other disc iplines (e.g packaging development, sensory science) that has developed experience in developing novel concepts in these areas.

However, R&D for novel processing technologies is an area that requires a relat ively high level of investment, even in cases where installat ions to test product concepts and methods are readily available. A question arises as to how growers could leverage in other food business networks to achieve a greater impact than the potential outcomes achievable through HAL alone.

Potential mechanisms for R&D funding Costs of R&D can be further reduced by adopting the concept of a consortium of companies funding the required R&D work in each area of interest. This has been successful in at least three cases in the US, illustrated in Figure 18. It is worth noticing that the US Army has a strong interest in all of these consortia and has contributed funding and expertise to these.



Figure 18. The US consortia behind three novel processing concepts: 1) high pressure processing;; 2) Pulsed electric fields;; c) Microwave sterilisat ion (Dunn, 2008).

NovelQ is a five-year, 11.3 million project funded by the European Commission tackling the development of a range of innovative processing technologies for foods (De Vries et al., 2007). The project started in 2006 and has now 32 partners, including universities, research organisations manufacturers of equipment for the food industry, and food manufacturers. The project emphasizes the use of HPP, PEF, cold plasma (reviewed in the past report), microwave, RF, ohmic heating and novel packaging materials. The management of the project includes an industry advisory platform, established to ensure an effective delivery of R&D outcomes through training and technology transfer. Further, the project takes a

-of-the-chcommunication between these two parties. The industry also contributes funding to this project.

The expected outcomes of this project by 2011 include:

The publicat ion of over 50 scientific art icles in the range of technologies investigated.

New software tools for monitoring, analysis, understanding and prediction of product and process parameters.

At least three validated processing methods and equipment prototypes.

The idea of government-academy-industry consortia is central to both European and American approaches. In the Australian context, developing consortia of organisations with demonstrated interest in emerging processing technologies could work to consolidate research on the area and pool human and financial resources.

As a manner of example, some organisations with similar interest in novel processing technologies are:

RDCs such as MLA and HAL;;



CRCs including Australian Seafood, Innovative Grain Food Products, Innovative Dairy Products, National Plant Biosecurity, Australian Poultry Industry and Internationally Competitive Pork Industry;;

CSIRO Food & Nutritional Sciences;;

Universit ies: Curtin University of Technology, RMIT, UNSW, Monash University.

HAL has a key role on: searching for synergies in the development of novel processing technologies with the organisations above;; b) pairing up these organisations with processing companies interested in pursuing the growing opportunities in the nutritional/functional area;; and c) communicating the potential advantages in using fruits and vegetables as supplies for this market.

Finally, an interest ing proposition for the horticultural sector would be the development of a novel products industry that is completely vertically integrated. To illustrate this concept, a vertically integrated bioactives industry could include selective breeding programs to obtain horticultural products with high bioactives contents, the processing of such products and the development of functional processed products that contain the bioactives produced. Signs of this integration can already be observed in other parts of the world, as illustrated by the Coressence-Danisco partnership: Coressence developed specially-bred, red-flesh apples which contain more flavanols than green tea and cocoa (the company claims that one Coressence apple contains the flavonoids of 370 normally bred apples 38). Coressence has a long-term agreement to supply Danisco with a range of polyphenol- rich apple ingredients to the European and US markets.

Acknowledgements The author wishes to thank Ms Keryn Hill for her help in collecting relevant HAL reports and information for this report. The author also wishes to acknowledge the direction of Dr Helen Sargent (former Postharvest & Emerging Technologies Manager, HAL) for her help in developing the conceptual framework of this project.

38 http://www.nutraingredients.com/Industry/Apple-gaining-functional-ingredient-makeover



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Documents

(Technology!Platform 4:!Emerging!Technologies!for Product ... · VG08087 ! Emerging!Technologies:!ValueAddition !!!!! Opportunities!and!challenges!faced!withemerging! technologies!intheAustralianvegetable!industry.!