In the increasingly competitive world of functional-product innovation, speed to market has become an issue. The big national brands understand the need to innovate, but as extensive as their laboratories are, they are not set up to deal with the emerging science and formulation challenges necessary to quickly bring to store shelves legitimate new entries, properly positioned, that provide an efficacious dose of a functional ingredient.
Typically, it takes national brands as much as 36 months to get such a product out. Once they have, private-label companies can imitate the product and have it sitting next to the original in three to six months, making it difficult to realise the profits necessary to cover the costs of innovation.
Enter TandemRain Innovations, a company founded in 2008 (launched at IFT in June of last year) under the umbrella of Bergstrom Nutrition of Vancouver, Washington, and taking a bold new approach.
"National brands will tell you 'we know how to make sugar, etc., but we don't understand active ingredients,'" says TandemRain's president Tony Keller. "Their science groups aren't set up to know this. They are afraid of interactions of their actives. They tell us, 'Whatever you do, don't bring me a product I have to go back into my lab with.' So we said, how can we jumpstart this?"
The company came up with a business model: it actively pursues ingredients that are completely functional, does all the due diligence that the national brands perform, formulates them into a product, trademarks it, UPC codes it, ensures that it is a proprietary use of the ingredient — all the steps to come up with a finished product. Then it presents the product to the national brand's innovation and business development department, not the research and development department.
"We've done everything — all the proper due diligence, provided them with exclusivity to the actives, we've made sure the price point is correct — and we've done all this in three to six months, providing speed to market that they can't begin to match," Keller says. "We go in with our ideas, giving them an efficient and speedy way to tap the functional-products market."
TandemRain also responds to clients' ideas. "For example, a brand tells us that they would like to have a dark chocolate that includes a shelf-stable probiotic, one that doesn't need to be refrigerated," Keller says. "We can do that very quickly.
"We are not a contract manufacturer, we are a science-based, finished-product supplier. We've heard of a few others who say they do this, but we're confident that we have the only working model. Do they know how to evaluate the science, how the actives work, what to do after formulating? Do they have the ear of the retailers or national brands to present the finished product to them? I'm sure the answer is 'no.'"
Additionally, TandemRain's products include food, supplements, beverages and cosmetics, which is a far broader range than typical contract manufacturers can boast.
It is a bold new approach, one that requires careful management of communications and extreme confidentiality, especially with the national brands and retailers, Keller says. But it is an approach that Keller is clearly excited about.
"I can tell you that the head of P&G calls this type of approach a 'game changer.' We're quite sure that's true."