Due to its cutting-edge products, Natural Ovens chooses to keep all product development in-house.

Bakeries are continually developing new products or trying to improve existing ones, both of which require extensive R&D. Bakeries have to determine if they should keep all product formulation in-house or outsource it. Due to staff cutbacks, many bakeries no longer have resources for full in-house product development and are turning to outside sources. However, some bakeries are unable to divulge all the specifics of a formulation, leaving suppliers guessing exactly what to provide. To understand both sides, Baking Management spoke with suppliers and bakers to get their perspectives on product development.

Natural Ovens, located in Manitowoc, Wis., keeps all product development completely in-house. The bakery is continually adding new and unique blends for breads, muffins and cookies that enhance the health of its customers.

"Product formulation is kept in-house because we are on the cutting edge," says Paul Stitt, president and owner of Natural Ovens. "We are not copying or trying to duplicate anything that anyone else is doing. We want to do things wholly new and different. My belief is that if you want to be cutting edge, you have to do it yourself. Otherwise, you are just paying somebody else to show you how to do it their way."

The bakery does turn to its suppliers for information about new ingredients, and the suppliers usually have enough generic examples for the Natural Ovens’ technical staff to work out new formulations in its own test lab.

On the other side, some see R&D as a cost drain. Time is money and money is always an issue in this low profit margin industry, says Cincinnati-based Kroger Co.’s Joel Payne, senior scientist, corporate food technology, bakery. He estimates that the bakery formulates about 80% of its new products in-house, depending on time and need.

"We will use outside sources to handle specific ingredient formulas that we’re not set up to deal with," he says. "As for experimenting with new ingredients, I learned the hard way by wasting time conducting trials on a product that didn’t work. Now, when someone comes in and says that they can save us a lot of money by using their product, I simply hand them our exact white satin cake formula and tell them to show me. I tell them to match it exactly for texture, flavor, volume and appearance. If it works, we’ll talk further."

Payne says that like any other bakery, Kroger would love to be able to cut costs, but it’s more important to maintain or improve the product’s flavor and quality.

In terms of product creation or R&D work in general, Julius Walls, president and C.E.O. of Greyston Bakeries, Yonkers, N.Y., says his bakery uses a variety of R&D methods.

"We work with our contract customers on product development and split the work between their R&D departments and ours," he says. "My staff also develops ideas internally, and we will hire outside consultants on contract. I believe with the range of products we make, one person simply can’t know it all. We hire expertise in many special areas. We try to use the full supply chain."

Walls notes that he relies a lot on his own instinct when dealing with outside sources."If I don’t have a feeling that I can implicitly trust a person, a confidentiality contract is not going to make me feel comfortable doing business with them," he says. "I don’t want a vendor telling other people what I’m doing. That does put up somewhat of a barrier. The vendor has to provide as much expertise as they can while I have to protect the proprietary nature of our recipes at the same time. It’s a balancing act." J. Bohn Popp, vice president of marketing for Aunt Millie’s Bakery, Fort Wayne, Ind., says the key to effective supplier interaction for Aunt Millie’s is the bakery’s director of technical services and the vice president of baking operations. "They’re not afraid to use the expertise of our trusted suppliers to make a better product or make existing products in a better way. Trusted is the keyword here. Our company is very guarded. We decide very carefully who we work with. We get to know them very well before we deal with them on a proprietary level."

Popp says his staff prefers to work directly with suppliers at the source rather than through distributors. The suppliers are invited to the plant where their products are tested in real life situations.

When bakeries do rely on outside suppliers for R&D, it is a balancing act on what information they can share. With proprietary formulations, suppliers are often left to guess which products match what the bakers are looking for.

"Often when bakers are not getting the results they want, they just don’t know how to use the product," says Jenny Reuter, product development specialist, Foremost Farms, Baraboo, Wis. "I go to the customer and work with them. I bring their application back to my lab and work on the formula using different ingredients, mixes and ratios to see what works best. Most bakers will talk to a lab formulator more readily than a sales person. I would encourage bakers to always call to get first-hand technical information rather than rely on experimentation or a distributor for information. We are here to do what we can to help them make better products using our ingredients."

Performance history
As Natural Ovens’ Stitt notes, suppliers typically have formulas and products that have been tested in their own labs for virtually every need. While it is not a "real world" scenario, it provides some performance history.

"We have a library of formulas we provide to potential customers," says Grace Harris, manager of applications and business development for Hilmar Ingredients Inc., Hilmar, Calif. "We’ll demonstrate the benefits of our products both on the nutritional as well as the functional side. We approach deeper projects through relationship building and confidentiality. Once that is established and the trust is cemented, it opens the door to working on more in-depth projects."

Lois Baker, applications scientist, Davisco Food Products, LeSueur, Minn., adds "There are differences, but I have a full applications lab where I can develop finished prototypes. Seeing products on this level gives bakers a much better idea of what might happen in full production. Every company knows that they will see changes as they scale up and they expect that."

Bakers also can seek formulation help from professional baking associations, such as egg boards or dairy associations. These organizations have no vested interest in selling particular products.

"When bakers have problems integrating any egg products into their formulations, they often call me," says Dr. Glen Froning, food technology advisor, American Egg Board (AEB), Park Ridge, Ill. "I’ll share some of the many formulations that the AEB has prepared. The AEB has a published list of egg suppliers all over the country, but we never recommend any specific product or supplier."

Dr. Froning also suggests bakers contact the food labs at large universities. "Most large universities have food labs that can be quite beneficial. The food processing center at the University of Nebraska has helped many start-up bakeries in Nebraska get up and going," he adds.

No matter the method bakers choose to use for R&D, building equity in the bakery’s brand is the most important thing to remember, Aunt Millie’s Popp adds. "Develop valuable resources–first it’s your people, then it’s the brand," he says. "Equipment is important, but it falls third to your people and your brand. If you don’t manage and protect that brand, you are not going to go anywhere. I believe that with all my heart."