Amid Economic Uncertainty, Four Out of Five Food & Beverage Brands Plan to Boost Innovation Spend in 2025, Yet Only 2% Are Fully Digitized

TraceGains Survey Reveals Tech Adoption Disconnect Between Brands Going "All In" on AI and New Product Development Despite Weak Infrastructure and Manual Processes

WESTMINSTER, Colo., July 29, 2025 /PRNewswire/ -- TraceGains, the leading provider of compliance, quality, and innovation solutions for the food and beverage (F&B) industry, today released the results of its 2025 survey, R&D and Product Innovation in the Food and Beverage Industry. The findings reveal a paradox at the heart of F&B: while innovation investment is rising rapidly - 83% of brands plan to boost new product development (NPD) spend this year - only 2% say their product development processes are fully digitized.

The updated 2025 report builds on 2024 showing 76% of brands planned to increase innovation investment. That number increased to 83% this year, with over half of respondents planning to raise budgets by more than 10%.

"We're pleased with the results of this year's report showing genuine excitement around AI and digital transformation," said Paul Bradley, Senior Director of Product Marketing, TraceGains. "The downside is that progress is being throttled by outdated workflows and a lack of automation. Amid intense pressure to compete by offering healthier, more sustainable products the majority of brands still operate in the stone age managing product development with emails, spreadsheets, and paper files."

Manual Processes Undermine Modernization

Despite growing investment in AI and digital tools, most F&B brands remain heavily reliant on outdated manual processes, slowing innovation and increasing risk.

• 82% of brands still use manual tools like spreadsheets, paper documents, or email to manage NPD.
• More than half (53%) don't use a Product Lifecycle Management (PLM) system at all, slowing speed to market, increasing compliance risk, and hindering cross-functional collaboration.
• Just 2% of brands have fully digitized and automated their NPD workflows, underscoring the scale of the digital maturity gap in F&B.

AI Gains Ground, But Hesitation Remains

AI usage in product innovation is gaining ground, but most brands are still in the early stages of experimentation.

• 17% of brands are "all in" on using AI to power NPD, up from 10% in 2024.
• Another 45% are experimenting, and only one third (32%) remain skeptical, dropping from 44% in 2024.
• Mid-sized companies (1,000-5,000 employees) are leading adoption, while smaller and larger firms show more hesitation.
• 25% of respondents cited analyzing market trends and consumer insights as their top AI use case.

Innovation Investment Clashes with Cost and Supply Pressures

While innovation remains a strategic priority, cost pressures and supply chain instability are forcing many brands to slow or scale back.

• Nearly 70% of brands cite macroeconomic conditions as their top innovation barrier - up 15 points from 2024.
• More than half (53%) say production costs, including labor, are a major concern, and 50% are still struggling to secure key ingredients and materials.
• Among brands reducing their innovation pipeline, 41% attribute it to financial uncertainty and margin pressure.

The Future is Healthier and More Sustainable

Despite headwinds, brands remain focused on better-for-you and sustainable innovation. This year's top product development priority? Healthier food - named by 67% of respondents, up from 60% in 2024. Sustainable packaging (41%) and personalized nutrition (289%) are also key areas of interest. Enthusiasm for plant-based products is waning, with only 19% of brands identifying it as a top innovation focus, down sharply from 33% in 2024.

Brands are also putting sustainability into action:

• 48% are working to improve supply chain traceability
• 38% are sourcing more sustainable ingredients
• 41% say environmental goals are influencing packaging decisions

To download the full report and explore how F&B brands can digitize and scale their NPD efforts, visit https://www.tracegains.com/.

Survey Methodology
From June 16 through July 21, 2025, TraceGains conducted an online survey of 190 food and beverage leaders at small and large food brands worldwide.

About TraceGains
TraceGains, a Veralto company, is transforming the food and beverage industry with the first Source-to-Shelf global business ecosystem powered by AI. We digitize compliance, audits, labeling, product development, ESG, and packaging processes into integrated modular solutions that give customers efficiencies and a competitive edge.

1,500 global brands, including half of the top 100 food and beverage manufacturers, rely on TraceGains to accelerate innovation, reduce costs, and ensure safer, compliant products. Our vast network connects buyers, suppliers, and service providers across 90,000 supplier locations and 600,000 ingredients to safeguard the supply chain.

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SOURCE TraceGains