Food makers go increasingly high-tech

CHICAGO Sun Mar 20, 2011 3:43am EDT

CHICAGO (Reuters) - Food companies are using a growing arsenal of technological advancements to try to make what we eat closer to nature.

From sweeteners to proteins to texturizers, companies such as PepsiCo Inc (PEP.N), Cargill Inc CARG.UL and Burcon Nutrascience Corp (BU.TO) are employing an army of food scientists to help make the next generation of foods healthier and tastier, with a more understandable ingredient list.

"We are trying to make our products much more simple, much closer to nature," said Kerr Dow, Cargill's vice president of global food technology.

"What is great for technology is that that is really quite difficult," Dow said at the Reuters Food and Agriculture Summit, held this week in London, Paris, Singapore and Chicago.

Dow, who oversees about 1,000 "food technologists" that make ingredients and other applications for the food industry, said that 20 or 30 years ago, scientists were trying to change ingredients.

"Today all of our scientists are more interested in how do you take natural materials and make them easy to use in food products, which is just as difficult."

Cargill on Wednesday unveiled a new technology that improves the taste and texture of reduced calorie drinks. It works especially well with Truvia, a natural no-calorie sweetener Cargill developed with Coca-Cola Co (KO.N), Dow said.

Craig Binetti, president of DuPont's (DD.N) nutrition and biosciences unit, said such "innovation partnerships" abound, since about 92 percent of all food companies are "actively working" to improve the health profile of their products.

"So it's everybody if you think about it," said Binetti, whose company has partnerships with Nestle (NESN.VX) and Kellogg (K.N) and spends half of its $1.6 billion R&D budget on agriculture and nutrition.

INVESTING IN HEALTH

Global population growth and rising middle classes are driving the need for more high-quality food, which experts say will only come with technological advancement.

"By 2050 we will need 100 percent more food and 70 percent of that will come from new technology," said Tim Hassinger, vice president of the Crops Global Business Unit of Dow AgroSciences, which is part of Dow Chemical Co (DOW.N). "We believe that."

Burcon Nutrascience, a Vancouver-based research and development company, recently signed a deal with Archer Daniels Midland Co (ADM.N) to sell a soybean protein it developed that can boost the nutritional value of baby formula, sports drinks and juices without a "beany" taste or texture.

Johann Tergesen, Burcon's chief operating officer, told the summit that Wall Street recently "woke up" to the value of ingredient companies.

"I've received so many new, unsolicited inquiries from investment bankers," Tergesen said.

For a large packaged food maker like Sara Lee Corp SLE.N, constantly improving products is critical, said Christopher J. "CJ" Fraleigh, head of North American Retail and Foodservice. He said that often means reducing the number of ingredients.

"You're also putting a lot of technology and science to actually clean up the label and take stuff out," Fraleigh said, noting that the maker of Jimmy Dean sausages has about 100 employees focused on R&D and works with agricultural and ingredient companies to do this.

Mehmood Khan, chief scientific officer of PepsiCo, said the maker of Frito-Lay snacks and Tropicana orange juice has "significantly increased" its investment in R&D and continues to do so as it seeks to address several challenges.

"Can we improve the cost structure of healthier products? Can we improve the taste and desirability of healthier products? Can we think about our commodity supply chain and improve the yield? Can we improve distribution? All of this is going to have a positive impact, not only on the top and bottom line, but also on consumer and society health," Khan said.

And even when the goal is just business-driven, science and technology are still necessary.

At the Reuters Summit, Fortune Brands FO.N introduced half a dozen products that will launch in coming months, from Effen cucumber-flavored vodka to Jim Beam "Devil's Cut" bourbon, which uses a "revolutionary technology" to extract concentrated bourbon from the wood barrels in which it ages.

FOOD OF THE FUTURE

Despite the big push for new products, most guests at the Reuters Summit expect the world's diet to remain largely unchanged, though with a bigger role for more functional food.

Dr Pepper Snapple Group (DPS.N) Chief Executive Larry Young, who has been in the soft drinks business for decades, said talk about health does not always change behavior. Still, the big question for the future is "how do we put functionality and fun together," he said.

John Ramsay, chief financial officer for Swiss agricultural company Syngenta (SYNN.VX), said future generations will likely consume more meat and genetically modified wheat.

Charles Viligrain, chief executive of Agrogeneration (ALAGR.PA), said genetically modified organisms were "rather inevitable."

(Reporting by Martinne Geller; Editing by Phil Berlowitz)

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