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The role of manufacturers in food Food innovations in Sweden innovations in Sweden

rit Beckeman Ma
Department of Design Sciences, Division of Packaging Logistics, Lund University, Lund, Sweden

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Michael Bourlakis
Kent Business School, University of Kent, Canterbury, UK, and

Annika Olsson
Department of Design Sciences, Division of Packaging Logistics, Lund University, Lund, Sweden
Abstract
Purpose The purpose of this paper is to investigate how food manufacturers in Sweden dene and view innovations, how they view their role and those of other actors and the interaction/collaboration regarding innovations in the food supply/value chain. Design/methodology/approach After an exploratory pre-study with 12 participants, a full study of Swedish manufacturers comprised of representatives from 12 food companies was initiated. In total, 21 interviews were carried out. The majority of the respondents had food industry experience. They initially answered structured questions and thereafter open-ended ones. Findings Few, if any, innovations in the Swedish food sector are considered radical. Many are invisible to meet demands for lower cost, shorter orders and sustainability. The food manufacturers seem to develop products in house for consumers and not by working with them or others inside or outside the supply chain; they do not adopt an open innovation mindset. There is lack of trust in the chain and limited exchange of information. Some manufacturers pursue horizontal collaboration with other manufacturers abroad. Research limitations/implications Innovations and strategies are a competitive edge for a company, so the respondents may not have been completely open. Practical implications Manufacturers and the whole supply chain would benet from an open innovation mindset to organise and work differently and build trust. Originality/value There is no other published study on innovations and food manufacturers in Sweden. The food sector should embark on collaboration and coopetion and initiate discussions on what can be done to become more innovative. Keywords Food industry, Innovation, Sweden, Food manufacturers, Retailers, Packaging suppliers, Open innovation, Coopetition Paper type Research paper

1. Introduction Food manufacturers and their role have changed. Retailers today in most European markets control the product supply from producers to consumers (Fernie and Sparks, 2009). This is a change from the time when manufacturers had the power. They
The Product Innovation Engineering program (www.piep.se), a Swedish research and development program for increased innovation capability in organizations, has contributed to this work; as have all the respondents in this study, who willingly accepted to be interviewed.
British Food Journal Vol. 115 No. 7, 2013 pp. 953-974 q Emerald Group Publishing Limited 0007-070X DOI 10.1108/BFJ-09-2010-0164

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focused on efciency by running full shifts that allowed the stocking of products for fast delivery and lower production costs (Van Donk, 2001). Van Donk (2001) lists three main reasons for the change of power in the supply chain: consumers wish for differentiation; the restructuring of the supply chain by retailers to reduce cost and time and to push manufacturers for faster deliveries; mergers and acquisitions in the retail chain triggered by low retail margins. The change requires manufacturers to be more consumer driven, have more exible production and deliver on demand (Van Donk, 2001; Van Donk et al., 2008), preferably with lower cost and improved quality. Thus, today the perspectives of the whole supply chain and value chain are of importance for food innovations; efcient logistics have become a necessity to co-ordinate the differentiated demands from various food products (Fisher, 1997; Gustafsson et al., 2006). Retailers launch products under their own brands, increasingly competing with global, national or local manufacturers brands. In the UK, major retailers have launched their own branded products on three levels of sophistication and the retailer names have become brands of their own (Burt and Sparks, 2002; Howe, 1998). To support this, retailers have established food technology departments (Omar, 1995). Similar developments can be seen in other markets in The Netherlands (Luijten and Reijnders, 2009) and in Sweden, where the biggest retailer, ICA, differentiates its own brand range and employs professionals with expertise in food science, much in the same way as in the UK. The retail concentration in Sweden is the highest in Europe (Defra, 2006), with ICA alone having almost 50 percent market share, and all major retailers have their own brands. The level of retail brands ranges from 28 to 45 percent in Switzerland, Germany and the UK, to around 15-20 percent in Sweden, many other European countries and the USA (Anselmsson and Johansson, 2007). Another effect on food innovations and food supply chains is that consumers are becoming more individualistic, having the opportunity to be more informed and demanding (Kandampully, 2002; Grunert, 2005). Innovations must therefore be consumer/market driven, even market driving for more radical innovations (Kumar et al., 2000) and add value in different societies and cultures (Grunert, 2005). Fornari et al. (2009) found in Italy that only 20 percent of recently launched products (food and personal care) could be considered genuinely new and only 1.8 percent as successful, whereas an additional 5.3 percent were worth keeping under observation. Such low rates may indicate shortcomings in the methodology for food development (Stewart-Knox and Mitchell, 2003). Earlier studies of the situation in Europe indicate that little really new or radical innovation is taking place in the food industry (Christensen et al., 1996; Lagnevik et al., 2003). However, research on the Swedish food sector when it started to expand directly after World War II indicates that innovations were achieved in networks and cluster structures that included not only manufacturers and their suppliers but also the trade, branch media and others from the outside; manufacturers, though, were the main drivers (Beckeman, 2006). Limited information is available about the situation in Sweden today and little academic research on manufacturers of food and innovation has been published. It is therefore the purpose of this paper to ll this gap by investigating the following research questions: RQ1. How do food manufacturers in Sweden dene and view innovations?

RQ2.

How do food manufacturers view their role, the roles of other actors and the interaction/collaboration regarding innovations in the food supply/value chain?

Food innovations in Sweden

This is the second in a series of three studies of the Swedish food sector and innovations. The rst investigated food retailers in relation to food innovations. This one is about food manufacturers and will be followed by a third on food packaging suppliers and innovations. The paper is organised as follows: after dening innovations, supply chain management and collaboration in general, the focus is on food innovations and different aspects in the literature. The study methodology is then explained followed by results, discussion and conclusions. 2. Innovations 2.1 Denitions An innovation can be a product, a service or a new way of doing things and refers to any goods, service, or idea that is perceived by someone as new (Kotler referred in Grunert et al., 1997, p. 4). They can range from radical ones that cause marketing and technological discontinuities on both a macro and microlevel to incremental ones that occur only at a microlevel and cause either a marketing or technological discontinuity but not both (Garcia and Calantone, 2002, p. 120). The more radical the innovation, the higher the uncertainty and risk. Innovations can be generated bottom-up the main driver being the entrepreneurial culture of the organisation or top-down the main driver being the organised, established process for innovations. Innovations should also permeate the entire organisation and not only be left to R&D experts (Deschamps, 2008). Deschamps (2008) describes four different innovation groups requiring different processes, structures, cultures and people: (1) new/improved products, processes or service offerings; (2) totally new product categories or service offerings; (3) totally new business systems or models; and (4) new/improved customer solutions. The trend in recent years in innovation research has been to emphasise not only goods but services because a service-centred view is inherently customer oriented and relational (Vargo and Lusch, 2008, p. 7). Relationships, networks and interactions are then required and trust between partners becomes essential as it encourages co-operation, long-term benets and prevents opportunism (Lindgreen, 2003). 2.2 Supply chain management and collaboration Co-operation along the entire supply chain exists in many industries and is the starting point for supply chain management (Spekman et al., 1998). Mentzer et al. (2001, p. 4) dene a supply chain as: a set of more companies directly linked by one or more of the upstream and downstream ows of products, services, nances, and information from a source to a customer. Cruz and Boehe (2008, p. 1189) describe a global value chain as comprising all activities that bring a product from conception to market and add the concept of sustainable development as: the development that meets the needs of the

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present without compromising the ability of future generations to meet their own needs, citing the Brundtland Report (1987). Spekman et al. (1998, p. 57) describe going from co-operation via co-ordination to collaboration in the supply chain and mention that: collaboration requires high levels of trust, commitment and information sharing among supply chain partners. In addition, partners should share a common vision of the future. Measurements for success involve cost, speed, innovation and customer satisfaction. Spekman et al. (1998) state that collaboration is not for every buyer-seller relationship and that partners and strategies must be selected with care, but that sharing information is essential for developing a more integrated supply chain. Vereecke and Muylle (2006) found, when investigating performance improvement in the supply chain, that collaboration is no guarantee for success. But a clear strategy, including both information exchange and structural collaboration with suppliers and customers, characterises companies that are reaching major performance improvements (Vereecke and Muylle, 2006). Lambert and Cooper (2000) note that competition is no longer between organisations in a supply chain but between supply chains and the success of a single actor/business will depend on his/its ability to integrate into a chain. Sometimes actors may compete and collaborate simultaneously. For example, if both the elements of cooperation and competition are visible, the relationship between the competitors is named coopetition (Bengtsson and Kock, 2000, p. 415). An example might be private labels, developed and produced for a retailer by a manufacturer, who at the same time provides own branded products based on the same knowledge base. Bengtsson and Kock (2000) claim the following benets with coopetition: reduced development costs, shorter lead time and that each company contributes with its core competence. By recognising this concept, and cooperate and compete when each organization has complementary but distinctly different sets of resources and when the eld of competition is distinctly separate from the eld of cooperation (Peng and Bourne, 2009, p. 377), opportunities exist to use more common resources of R&D and yet separately develop the nal offerings and compete. According to Osarenkhoe (2010, p. 356) there are two critical points in coopetition strategy, namely knowledge sharing and pooling competencies, which can help to strengthen competitive advantage. When integrating suppliers into new product development, Petersen et al. (2003) propose to select suppliers that are trusted and experienced. Von Hippel suggests involving users as innovators, giving them toolkits to do their own development (Von Hippel, 2001), and to involve lead users (Von Hippel, 2005). Chesbrough (2003) invites anyone who is able to contribute to his Era of open innovation, based on a landscape of abundant knowledge (Chesbrough, 2003, p. 37) to be found all around the world as opposed to the closed in-house innovation model. 2.3 Food innovations The European food industry (including beverages) invests much less in R&D than industries in other sectors and radically new products are rare according to Costa and Jongen (2006). They make up only 2.2 percent of the total launches and the risk of failure is high. Fornani et al. (2009) found that only 1.8 percent could be considered successful. With such risks of failure, one might ask why so many actors in the chain are interested in new products and according to Fuller (2005, p. 19), the need for new food products is driven by ve dominant forces:

(1) (2) (3) (4)

all products have a life cycle; they die and must be replaced; new products promote growth; new markets may be created; organic, functional food, e-commerce, etc.; new knowledge and technologies may offer new opportunities such as sous vide, nanotechnology, microwave, the internet, etc.; and (5) changes in legislation, health regulations, agricultural policies, etc. A number of aspects and references that could be applied to innovations in the food supply chain are described in the literature. However, the following three aspects particularly set the scene for this paper: (1) Open innovation mindset (Chesbrough, 2003, p. 37) as opposed to the closed innovation model (in-house). General Mills in 2005 identied open innovation as a key strategic priority (Erickson, 2008) to foster innovation in product and process development. As an example, the rm allows consumers to develop their own cereal mix, have it packed and delivered. Recently a Swedish cereal Kvarn, followed suit (Packmonitor, 2009). Proctor & Gamble producer, Salta created their model for innovation by involving external organisations and individuals around the world (Huston and Sakkab, 2006), which has proven very successful. Proctor & Gamble claim that their innovation success rate has more than doubled while the cost of innovation has fallen. Still Fortuin and Omta (2009) found that open innovation is not widely used in the food industry in The Netherlands, although it could have potential. In the UK, retailers are said to exploit open innovation and their degree of innovation increased from 40 percent in a 2002/2004 survey to over 50 percent in 2004/2006, relying on sources such as customers and suppliers (Reynolds and Hristov, 2009). (2) User-oriented innovation in the food industry. Grunert et al. (2008, p. 591) provide an overview of user-oriented innovation, dening it as:
[. . .] a process towards the development of a new product or service in which an integrated analysis and understanding of the users wants, needs and preference formation play a key role.

Food innovations in Sweden

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As users can be both direct customers and end-users, this concept is broader than consumer-oriented innovations and affects multiple actors of a value chain. Grunert et al. (2008) describe three types of user-oriented innovations in the food sector: Type I, the classical new product development carried out in-house by the producer; Type II, the retailer takes the initiative to obtain products for his own brand and interacts with the producer; Type III, the whole value chain is involved and the initiative can come from many actors in the chain. There is a trend towards more Type III innovations, driven by demands by end-users for differentiation. Where many actors are involved, interaction and collaboration become necessary in order to create trust (Grunert et al., 2008). (3) Value creation. Mascarenhas et al. (2004) conclude that the product itself is no longer the basis of value creation, but the experience by the consumer. Customer satisfaction can be inuenced not only by past experience but by expected future experiences related to consumer delight. This is why food products have to be co-created with customers/consumers.

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In addition, there are other aspects in connection with food innovation which are of relevance to this study and they are summarised in Table I. 3. Methodology This study of food manufacturers in Sweden started in 2007/2008 by employing exploratory open-ended interviews (Yin, 2003) with 12 expert participants, who had long experience in the food sector. The interviewees were a mixture of professors from academia and institutes and of people actively involved in various organisations and who had past experience in R&D or marketing. The purpose was for them to identify issues and important aspects in the Swedish food sector concerning innovations, such as attitudes among different actors, ways of working, collaboration, etc. and to elicit suggestions of suitable companies and interviewees that could contribute to the study. The criteria for selecting food manufacturers (not necessarily Swedish owned) were that they were innovative and successful in the Swedish market and had a major impact. Participants conrmed an interest in the topic, contributed with aspects and suggested the food companies and names of appropriate people to approach. They also tested some of the questions to be included in the interview guide to the manufacturers (see Appendix). The actual study of how food manufacturers in Sweden view innovations and their role in relation to others in the chain took place in 2009. The selection was based on input from the exploratory study and the authors experiences and knowledge of the food industry, as both had been working in food manufacturing and food packaging industries. The selection resulted in twelve companies and interviews with 21 respondents in total. The methodology was qualitative in order to achieve a deeper understanding of the manufacturers views. The data collection consisted of some initial and specic questions about the interviewees company, position, previous experience and educational background and was followed by open-ended questions (Yin, 2003, see Appendix). Web sites of the selected companies were also studied before the interviews. The interviews were recorded and transcribed. They were analysed and subsequently themes were identied and grouped according to the purpose and the research questions (Miles and Huberman, 1994). The 21 participants, their positions and some information about the 12 companies are presented in Table II. Five respondents from the exploratory group are included since they had backgrounds in food development/processing/academia. They are marked with an asterisk at the end of the table as they only answered some of the questions. Table II shows that the majority of respondents are, or have been, active in the food industry, including management or R&D. Their educational backgrounds are split between engineering (ten persons), business and economics (eight persons), and two are active in academia. The reason for asking about education was to nd out if there were any possible differences in the answers provided for this element; however, no major differences were found. The size of the 12 companies varies from SME (less than 250 employees) to multinationals and not all of these are Swedish owned. Together, the companies represent food products in practically every packaged product category in the Swedish consumer market. In the interviews, the respondents answered open-ended questions (see Appendix) in order to dene innovation, to give examples for the market (not limited to their

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Aspect Drivers to get products matching demands

Reference(s) Fortuin and Omta (2009)

Summary

Food innovations in Sweden

Barriers for integration in the supply chain

Structured development process, key performance indicators, cross-functional teams, customer centricity, ability to select the right ideas and freedom to innovate, etc.; communication marketing and R&D; high retail pressure and unequal power distribution Van Donk et al. (2008) Shared resources between many products and serving many customers; variety of packaging and customers; uncertainties in demand and manufacturing; limited shelf life of many products Found that safety is highest on the list and this will involve the whole chain Has to be done before involving prospective partners in collaboration Different strategies for a product of stable supply and demand than for one of unpredictable demand and source; the latter often relates to an innovative product In order to capture both short and long-term benets (experience accumulated between the two partners), permanent access to suppliers new technologies and transfer of knowledge is granted, supported by giving access to individual supplier resources and capabilities Non-competitive horizontal product development alliances to develop more complex products and meet foreign competitors offering lower prices Consumer driven collaborative pull innovation needs active value-oriented networks, contrary to more transaction oriented passive supply chains. The food industry appears to respond and to collaborate in vertical, horizontal, and spatial dimensions of the system (p. 399) Can be more or less organised in clusters and networks, internal and/or external or in other forms of inter-organisational relationships Network is one form of clustering mainly based on trust and relations When frozen food was introduced in Sweden (1940-1950s), a spontaneous bottom-up cluster and a top-down network contributed to success (continued )

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Collaboration In the whole chain Develop ones own ability Strategies for managing the chain

Grievink et al. (2002) Dunne (2008) Lee (2002)

Select suppliers and decide on Van Echtelt et al. their involvement (2008)

Alliances between food manufacturers Networks and clusters

Ronnow Olsen et al. (2008)

Weaver (2008)

Pull innovation networks

Barringer and Harrison (2000) Gordon and McCann (2000) Beckeman and ldebrand (2007) Skjo

Involve stakeholders Promote food innovations

Table I. Summary of additional aspects of innovation from the literature

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Aspect

Reference(s)

Summary Stronger than market or consumer driven and aims to change the rules; often a new entrant Create higher value by not focusing on functionality An innovation network for chilled ready meals in the UK was accompanied by an information network of the supply chain from the retailer For example, with outside competence in product development; even outsourcing R&D (especially interesting for companies with no/limited R&D of their own) and/or other non-core activities Limits to being open if going too far in outsourcing and losing competence in innovation and manufacturability

Improve innovative capabilities Market driving Kumar et al. (2000)

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Integrate product and packaging Innovation and information network Partnership

Olsson and Larsson (2009) Cox et al. (2003)

Feicht (2007)

Outsourcing Table I.

Dankbaar (2007)

own), to tell whether more innovations were needed and how they might be achieved and to report on trends, their own special assets and workings in the chain, including collaboration, and relations with retailers and other actors. Table III links the relevant literature to the undertaken empirical work and notes the level of the level of information we aimed to obtain. 4. Results The results address the two research questions: RQ1. RQ2. How do food manufacturers in Sweden dene and view innovations? How do food manufacturers view their role, the roles of other actors and the interaction/collaboration regarding innovations in the food supply/value chain?

4.1 Denitions of innovations by food manufacturers in Sweden The majority dened innovations as more than an incremental development and of different levels and that more sales and increased prots should be involved. They noted that innovations include: . creating a new category/segment and/or a way of consumption or working or selling/communicating; . thinking of concepts outside the box and breaking traditional patterns; thinking new but capitalising on own resources; and . the continuous development of unique products/concepts of market and/or technological impact. In order to illustrate the denitions of innovations mentioned by the interviewees, the manufacturers were asked for examples of innovations in the Swedish sector in general

Size (employees) and type of Company company Main products respondent A B C R&D director R&D in refrigerated food sector R&D director

Present or previous position Respondents other relevant experience

4 E F G H I J K CEO R&D director R&D director CEO and owner Past CEO and owner CEO and owner Past CEO in company 4

CEO

Worked in company 7 and other companies Worked in several multinational companies

(4)

. 7,000, national and export Fresh, frozen, dry, canned; raw material, semi-fabricates and ready meals . 3,000, partly multinational Aseptic and refrigerated; ingredients and ready products; mainly dairy . 1,000, national and export Fresh, dry, canned, paste; ingredients, mixes, other semi-fabricates; spice oriented . 1,000 in Sweden, partly Dry, concentrated, chilled, multinational canned, frozen; ready meals, drinks, etc. See company 4 See company 4

. 1,000, mainly national

(8) 9

Fresh bread products; direct distribution to stores . 500, national Refrigerated ingredients and products; mainly dairy based . 1,000 in Sweden; part of Frozen, canned, dry food multinational company products . 400, national Frozen bread; direct distribution See company 8 See company 8 . 300, national mainly; part Frozen ice cream and similar of a family group frozen products

In other family enterprises (continued )

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Table II. Interviewees and companies

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Size (employees) and type of Company company Main products respondent CEO CEO

Table II. Present or previous position Respondents other relevant experience In multi-national and national companies Consultant Several food companies Past marketing director Past head of manufacturing in 12 Several positions in company 7 and 12 R&D in company 7 See company 7 See company 4 R* S* Food industry consultant R&D in company 7 Food industry consultant Marketing in company 7 Past R&D director In mother company of 4, and R&D in another company Professor Food and packaging research R&D director T* Food technology U*

Aseptic or refrigerated liquids L and ice cream, co-produced by company 9; cereal based 11 . 100, national Dry ingredients and mixtures M of cereals, etc. and bread, pasta, juices; in all 150 products Branch organisation for food N Marketing manufacturers director O Multinational; company 7 All kinds of food and local beverages: dry, canned, frozen, chilled, etc. (12 and 7) P (12 and 7) Multinational; company 7 All kinds of food and local beverages: dry, canned, frozen, chilled, etc. (7) See company 7 See company 7 Q*

10

. 100, national and export

(7)

See company 7

(4)

See company 4

Institute

University

Main questions from Appendix (abbreviated)

Question no. Main references Kotler in Grunert et al. (1997), Garcia and Calantone (2002), Deschamps (2008), Vargo and Lusch (2008) service

Information sought

Food innovations in Sweden

What is innovation? And give 2 examples

Collaboration in and/or outside 2, 3, 5 the chain

Denitions, radical versus incremental; how updated they are about the value chain and what others are doing; types of innovations, i.e. packaging, service, etc. alongside products Spekman et al. (1998), Lambert Roles in innovations, theirs and others; informed about others and Cooper (2000), Vereecke innovations inside or outside of and Muylle (2006), Grievink et al. (2002), Chesbrough (2003) Sweden; any network for new ideas and products and open innovation and internal/external collaboration collaboration in general (institutions, abroad, etc.)

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Who should innovate? Where do you nd new ideas? Who should take part in NPD? Do you collaborate with users/ 3, 5 consumers? Or suppliers? Trends and future of innovations and of private labels Do you collaborate with retailers?

4, 5

Von Hippel (2001), Grunert et al. (2008), Mascarenhas et al. (2004); Petersen et al. (2003) Reynolds and Hristov (2009)

How do they develop the NPD process and who is involved; if yes, how?

Relate the trends to examples of innovations and discussion about the future Grunert et al. (2008), Reynolds Pin point collaboration with and Hristov (2009) retailers and if manufacturers are aware that the main retailers employ food people and that they might go for open innovation as in the UK

Produce private labels? Develop with one retailer?

Anselmsson and Johansson (2007) collaboration in the chain

Squeezed by retailers? Category management Co-branding What are retailers missing in relation to you? Food manufacturers specically

Grievink et al. (2002)

Christensen et al. (1996), Lagnevik et al. (2003)

Find out if there is any interest to collaborate and share knowledge Find out if food manufacturers are aiming for more unique products based on new technologies and how they see export in relation to trends

Work with new technologies? Export? Logistics? Needs? Do you trust each other in the chain? Do you want to grow? How?

3, 6 3 7 8 9

Lindgreen (2003) Empirically based question

Without trust, there is no collaboration Find differences between smaller and bigger companies

Table III. Linking the literature to the empirical work

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and not limited to their own companies activities. A selection of what they dene as innovations in the food sector on the Swedish market is presented in Table IV. 4.2 Roles of food manufacturers and other actors and their collaboration regarding innovations All manufacturers conrmed a need for more innovations but many of the actual innovations are technical, invisible to the customers/consumers. The focus amongst most manufacturers is to remove all non-value creating activities in the supply chain where logistics plays a major role (i.e. removing the intermediate storage by keeping goods on the move and evaluating all steps to shorten the process from the grower/farmer to the consumer). One respondent (from multinational company 12) emphasised that one of the more important activities in innovation is to secure industrialisation by allocating sufcient resources once the development is done. The manufacturers differ in size and offerings and hence they have different special assets resulting from having a broad range of attractive products that the retailers cannot do without, to being specialised in a niche and with a story to tell. In general, manufacturers do not believe that retailers can or want to take over the present role of manufacturers in innovations but they feel squeezed on cost/price while maintaining the quality and innovating. But if the manufacturer is not the leader, or number two, in a selected category (ies) then it runs the risk of becoming a producer of (only) retailer brands; an opinion shared by small and larger companies. Table V illustrates the key results regarding collaboration as well as other issues. 5. Discussion 5.1 Denitions of food innovations by food manufacturers in Sweden Manufacturers dene innovations in concordance with other researchers (Kotler in Grunert et al., 1997; Deschamps, 2008; Garcia and Calantone, 2002). Looking at the given examples, it is clear that very few innovations on the Swedish market are radical, similar to what Costa and Jongen (2006) found in the European food industry, or market driving (Kumar et al., 2000). One exception is the Nespresso system by Nestle that is neither produced nor invented in Sweden and which has created a new way of preparing/consuming coffee, a new machine for doing so, and continuous purchasing of capsules by consumers via e-mail. Therefore, a new way of doing business is created that drives the coffee consumption market (Deschamps, 2008). nnens Gooh! in combination with the MicVac process and packaging Lantma system is considered really new but it is hard to evaluate it at this early stage. Products in combination with services (Vargo and Lusch, 2008) are not specically mentioned but the service aspects are often inherent in the offerings and trends in order to solve a problem for the consumer: functionality, simplication, cooking aids, convenience of having semi-fabricate and ready meals. The respondents emphasised the importance of invisible innovations that are not obvious to customers/consumers, but they may be a lifeline to keep down costs. To mange invisible innovations and cope with the environmental aspects (energy, waste, new materials, etc.), considerable rethinking and reworking is require. At the same time, it is a strong driver for change aiming to gain sustainability in the chain (Cruz and Boehe, 2008). One respondent (P) strongly emphasised the need to secure successful industrialisation by allocating sufcient resources once the innovation is

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Innovation

Type of innovation

Description

Brand owner

Description/comments Recipes developed by renown restaurants; high quality single portions sold in shop-in-shops; now going national

Gooh!

nnen Product/package/process/way of Refrigerated high quality meals; Lantma selling; new category MicVac packaging and process Unique and patented; for refrigerated food Special development of packaging material by Tetra Pak to t existing canning processes nemejerier Ska

MicVac

Packaging and process; patented

GoGreen in Tetra recart

Process in packaging with special vault and using microwaves MicVac A new vegetable range; rst in Product not new but package Sweden in a new carton instead could replace most tin cans; new nnen; Tetra Pak image Lantma of a can

Proviva

Producer and brand owner is a farmer-owned dairy; Proviva contains no dairy components

Oatly

Functional fruit drinks with L. plantarum 299v and oats; new category Patented based product and process; new category

Valio lactose free

A new company was created; intend not to license but for own production or outsourcing the packaging and supply base Valio (Finnish dairy) First big launch of new category; now many Swedish followers (Swiss) Nestle A radical innovation also becoming popular on the Swedish market; market driving

Nespresso

Patented and clinically tested, refrigerated and licensed to other markets A range of oat based products; alternative to dairy products and for health conscious consumers Oatly First range of lactose free dairy Process to take away lactose and offer a range products on the market; new category Special coffee machines, Concept/product/package/ system/equipment/new way of capsules for a variety of high quality coffees sold via eselling commerce

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Table IV. Selected innovations in the Swedish food sector

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Issues concerning

Themes

Results from interviews (letter refers to a respondent in Table II) Only if win-win (S) Respondent P mentioned that the company is using the mindset of open innovation and is working with universities or small start up companies, for example, as most ideas come from outside M involves users to create their own cereal; H uses external (e.g. advertising agents, for idea generation). Many want to work more with packaging suppliers as packaging is often the best way to drive growth (D); F, K and P work with machinery suppliers and B with consultants to set up lines G needs a partner for co-distribution; B, C, D, H, K and P have or want to collaborate with other food producers/ partners or from other branches (C, D and P); co-branding retailer-producer not realistic but between producers The bigger companies claim to have organised systems for innovation, with stage gate decision points, marketing involved and support from top management whereas the smaller ones decide and work internally Buying data; get some data (mainly locally) from retailers, from companies in different markets, trade journals, exhibitions, suppliers, market visits Sustainable, local and ecological, sometimes contradictory (B); ecological where there is a chance for farmers to get a better price (G); ecological is not always sustainable (A); adapting to weekday versus weekend shopping, becoming Situids (I); simplifying for families to cope and shop; environmental issues; simple, pure, authentic without additives promoting component products instead of meals (H); industry food should taste like a good restaurant food, even like the traditional Swedish food (D) Not transparent data about sales from retailers; industry not proud enough of achievements and lacks vision (B); no trust in the chain; a proper cold chain needed to prolong shelf life (G) Most companies do it in limited scale (D); H, I and K not at all, and P from a principal standpoint not at all Market leaders do not lose to RBs but smaller ones do (B); wonders if retailers take enough responsibility (A); no new products go into RBs rst (C); not direct copies (F); RBs can be natural and can provide bigger volumes and are faster out in the market (G); same products but different concepts (L); not less prot from running RBs (L); if not better margins or turnover are achieved then RBs will take over (L) and inferior products will be produced by the manufacturers (C); if product easy to copy, then not the right product (P)

Collaboration Generic ones in the supply Open innovation chain

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User involvement in development

Suppliers in innovations Partners

Innovation processes

System for innovation-

Finding new ideas Driving innovations Trendsa

Barriers to innovation

Barriers in the chain

Retail brands Produce retail brands (RBs) Arguments for and against producing for retsailers

Table V. Key results based on the issues from the thematic analysis

Notes: aAccording to the respondents, obvious trends such as convenience, health, cost/price, safe food, functional food and globalisation are relevant but do not drive innovations on their own

developed, particularly for more radical innovations. Here, the big manufacturers have an advantage whilst for smaller companies it might be worthwhile to outsource part of the development work (Feicht, 2007). 5.2 Roles of food manufacturers and other actors and collaboration regarding innovations Reecting on the innovation literature and the results from the interviews, there are similarities and discrepancies. Structured development processes seem to be in place among the biggest manufacturers, but often top-down (Deschamps, 2008), whereas the smaller ones go for the managers gut feeling or that of the owner or CEO. The food manufacturers generally in Sweden appear to be developing products in-house mainly for consumers but not by working with them as suggested by Von Hippel (2001, 2005). This is despite the trend of having Type III innovations involving the whole chain according to Grunert at al. (2008). Only one manufacturer (worldwide multinational company 12, respondent P) stands out and mentioned that they are taking a wider approach involving external competences as suggested in open innovation models (Chesbrough, 2003). Hence the situation in Sweden is similar to the situation in The Netherlands where open innovation is not widely used in the food industry (Fortuin and Omta, 2009). If Swedish retailers are going for open innovation models as in the UK (Reynolds and Hristov, 2009), they might leave the Swedish producers behind. According to Lambert and Cooper (2000), competition today is between supply chains and a single actor needs to integrate its activities within a chain. But the barriers for integrating into a chain mentioned by Van Donk (2008) exist in Sweden as manufacturers need to be listed by all major retailers to get enough volume; this prevents them from running special innovation projects with only one retailer. Other barriers were also identied including lack of transparency in the chain and lack of pride and visions among manufacturers. The examples of innovations (Table IV) relate to products which create new categories in terms of packaging or are a consequence of collaboration with suppliers. The Deschamps (2008) four innovation groups are too narrow for some of the examples and this is probably because food is more complex. The increasing number of small deliveries of a wider variety of products with different shelf lives (Van Donk et al., 2008) and demands (Fisher, 1997; Gustafsson et al., 2006) are part of the complexity. This complexity is one aspect where manufacturers lack an understanding of retailers and consumers. It is unclear though, if manufacturers see it as their own problem only, although they complain about retailers ignorance. As retailers build up their food competence, a dialogue could be possible even if the power between manufacturers and retailers in Sweden is very unequal. According to Fortuin and Omta (2009) unequal power can be one of the strongest drivers for innovation and some interviewees talk about the necessity to make more unique products that are not easy to copy. The complexity and the fact that retailers are not sharing information about sales and performance with the producers lead to a lack of trust which makes it difcult to collaborate in the chain (Spekman et al., 1998; Stewart-Knox and Mitchell, 2003; Lindgreen, 2003; Van Donk et al., 2008; Grunert et al., 2008). There also appears to be a limited interest from manufacturers to collaborate with retailers and not everyone

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is keen to produce retailer brands, although most companies do. For food manufacturers, developing and producing private label products in parallel with their own branded products, this practise could be seen as a way to both compete and collaborate, i.e. coopetition (Bengtsson and Kock, 2000). Some manufacturers do it in separate organisations but based on the same basic knowledge and resources (Bengtsson and Kock, 2000; Peng and Bourne, 2009). Here trust is achieved and better use of resources can be seen as well as getting new products faster to the market. One manufacturer (company 6) explicitly mentioned that they willingly produce private labels, even starting with a new product, as this brings it faster to the market; one of the key benets of coopetition (Bengtsson and Kock, 2000). Retailers source products all over the world to differentiate within their own brands. They want to include successful new products from manufacturers by copying or getting similar products from the original manufacturer or other retail brand producers. There is a lingering feeling of acceptance among most manufacturers about the way the Swedish food sector is operating today and a need to focus on own products and activities. The bigger companies feel safe in having a broad range of products that they claim retailers cannot do without. Some producers want to extend their range without investing in equipment and technology by collaborating in alliances and networks (Weaver, 2008) with other producers (Ronnow Olsen et al., 2008) not competing in the Swedish market. This is similar to what retailers are doing, sourcing all over the world. The smaller companies are present in niches and feel they need to have special assets that attract retailers and consumers and from which they can innovate and be category leaders. Hence they emphasise patented products and processes, continuous development and having a story to tell. Consumers want to be satised or even delighted (Mascarenhas et al., 2004) when shopping for food, and a risk may be that offerings and stores will become too uniform. Together with trends towards locally produced products/raw materials and ecological ones in some cases, consumers strive for pure and natural products even bought from farmers markets, although families with limited time available can only marginally shop at these markets. It will be interesting to follow those manufacturers who aim to participate in a wider horizontal collaboration with manufacturers in other countries to extend the product and packaging ranges offered under manufacturers brands. The study indicates that it is a waste of knowledge and competence in Sweden to not be more open in innovations and to collaborate with actors within and outside of the value chain, but there is a lack of trust. If trust cannot be established between groups of actors in the chain, the concept of coopetition offers opportunities to establish trust between individuals and start within agreed projects or areas and nd ways to better use resources at the R&D level and ercely compete with the nal products. 6. Conclusions 6.1 Denitions of innovations by food manufacturers in Sweden Manufacturers want more innovations, dene them as more than incremental development and note that they should create more sales and increased prots. Few, if any, innovations mentioned are radical but many are invisible to lower cost despite of shorter orders and trends towards more sustainability. Manufacturers realise the importance of more unique and differentiated products but they are also very aware that anything can be copied; however, it takes longer with unique products.

6.2 Roles of food manufacturers and other actors and collaboration regarding innovations Food manufacturers in Sweden seem to develop products in house for the consumers and not by working with them, which might be a limitation if striving for more unique offerings. Manufacturers have an increased interest in collaborating with some suppliers, notably packaging suppliers, which is obvious from the list of innovation examples. Retailers in Sweden are following the development of the UK market with differentiated products, increased food competence and products globally sourced. This makes retailers even stronger competitors but also more competent partners if ways are found to collaborate and use experiences from both retailers and manufacturers. Lack of trust is a major problem, which is partly due to the unequal power in the supply chain and lack of integration, of which one example is not having a transparent information ow in the chain. Another problem is that information about the complexity and choices facing the food production and supply is not shared or discussed to any great extent in the chain. Retailer and producer managers meet to discuss new products and then to make the best deal, but they do not seem to be aiming to increase the understanding of managers or their knowledge of innovations. Manufacturers are still the most competent in development, processing and industrialisation and might become even more so when nding good partners among other manufacturers outside Sweden. Manufacturers have a strong role to play in launching offerings that are unique and difcult to copy by using the knowledge of suppliers of packaging systems, technology and machinery in and outside the chain and by constantly aiming for continuous development. They also have the chance to take the lead and establish and utilise the concept of coopetition, which will open up possibilities for a dialogue with retailers on mutually advantageous development without losing the competitive edge. Very recently, companies in Sweden were invited to participate in learning and training about open innovation. Future work could analyse the effects of this initiative on innovations and could evaluate the emerging horizontal collaboration between food producers in different countries. 7. Managerial implications Many reasons for collaborating in the chain, including various external competences such as consumers (Von Hippel, 2001, 2005) and open innovation (Chesbrough, 2003), are found in the literature. Assuming that many food manufacturers in Sweden would like to be more innovative and that they realise that more collaboration, not only among themselves but in a wider circle, is necessary, what should they do? As consumers want to be delighted, this is a task for both retailers and producers to look into by offering a more exciting store environment and more interesting products/services that are developed for and with the consumers. A good start would be more transparency in the chain, education, information and more open innovation involving everyone that can contribute. Practically, a number of projects with win-win potential need to be identied where food manufacturers and retailers will commit, establish and agree on a common vision and organise for coopetition. The actors need to secure the projects with actual or future consumers (and/or trends) in mind, dene

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ways of working, identify competence and start a dialogue. Trust can only be established in selected areas/projects. In parallel the food manufacturers need to increase their strength by providing more unique offerings and by collaborating with other manufacturers, inside or outside the country and with innovators in technology, packaging, logistics, etc. This will put the food manufacturers in the driving seat and make them attractive partners in the chain. Last but not least, the paper has illustrated a plethora of key themes and issues related to innovation (see for example results given in Tables IV and V). These emanate from our empirical work and we believe that they will provide invaluable insights to managers working in the food manufacturing and retail industry (and not only). These issues could also support the future activities for other members of the food chain (e.g. farmers), where innovation can play a key part.
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Appendix. Interview guide (translated from Swedish) (1) Your background (education, work experiences [. . .]) and about your company; what is special/what is the company particularly good at? (2) What do you mean by innovations and can you give examples in the food sector, from your company or others on the Swedish market? . Products, processes, other [. . .] any difference in development from earlier and if yes, reasons? . Should others but you innovate/develop (trade, supplier [. . .])? (3) Where/how do you nd innovations (competition, exhibitions [. . .])? . Who comes with new ideas, who is driving and do you have xed processes, decision points etc [. . .] and for different projects? And who takes part (multifunctional, open innovation, with customers, suppliers, etc.)? . Do you work with technology projects alone or together with [. . .] (suppliers, consultants, universities [. . .])? . How long time is a new product given on the shelf before success/failure? . Do you export and where? (4) How do you feel about retailer branded products and do you produce and if yes same product as under own brand, or [. . .]? . Who develops retailer branded products and how new, radical [. . .]? . Would you be able to develop exclusively with one retailer? . Trends for retail branded? Will you be producing more? Who is investing? Dedicated lines? . Are Swedish producers in general more negative to retailer brands than foreign? . Do you feel squeezed by retailers? In what way? (5) How do you see the future for innovations? Trends? . In relation to retailer branded? Do you decrease or increase your brands? . Retailers employ now people with food competence inuence your company? . Do you and/or retailer work with packaging suppliers? Any change from earlier?

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Co-branding X company for Y retailer would that be possible? Barriers? Collaboration in or outside of the chain? . Category manager who, from where? Some general questions: . How local is taste? . How do you look at new technologies like GMO, irradiation [. . .] Do you work with? . What do you feel retailers are missing in relation to you? . Do you participate in exhibitions? Like PLMA (for retail brand producers)? Logistics: . How in your case? . Need/want other (third part)? Collaboration and trust: . Do you trust each other in the chain? . Would you consider involving media more? . Work with other producer, supplier and others outside the chain? . A new logo together with someone (producer, retailer [. . .]) or co-branding? . New ways to sell: shop-in-shop, e-commerce [. . .]? Do you want to grow? How: organic and/or acquisition?
. .

About the authors rit Beckeman obtained her MSc degree from Chalmers Technical University in Gothenburg, Ma Sweden and is now a PhD student at Lund. Previously, she worked for more than 30 years with and Tetra Pak in Sweden and in product, packaging, process and business development at Nestle rit Beckeman is the corresponding author and can be contacted at: marit. Switzerland. Ma beckeman@plog.lth.se Michael Bourlakis graduated with a BSc in Business Administration from Athens University of Economics and Business and compeleted MBA and PhD degrees at the University of Edinburgh. He has held academic positions at Newcastle University, Oxford University, Leicester University Management Center and, most recently, as a Senior Lecturer at Brunel Business School and Director of Postgraduate Studies. Since September 2012 he has been Professor of Marketing and Head of Marketing at University of Kent in Canterbury, UK. Annika Olsson is Associate Professor in Packaging Logistics, and obtained her PhD in 2006 in the area of customer-oriented product and service development. Her research has a special focus on the packaging industry. She has a previous background in the Swedish food and packaging industry and presently is a research fellow and management team member in the Swedish research program, Product Innovation Engineering program PIEp (www.piep.se). Her main teaching activities are related to packaging technology and development. She supervises Master and PhD students in the area of packaging development, packaging innovation and packaging logistics.

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