The Potential for Innovation in the Swedish Food Sector

Abstract: The food sector in Sweden, comprised of retailers, food manufacturers and packaging suppliers, has been investigated, guided by two research questions: What does “innovation” mean to the different actors (i.e. is there a gap in opinions)? How is innovation performed and what are the key issues? But before this research of the present, the past was studied (the author’s licentiate) to identify and describe the factors and reasons behind the growing food sector in Sweden after World War II, particularly those underlying the major innovations (i.e. what, why, how and who?). It was a historical and qualitative case study based on interviews with people who had experience and knowledge of the food sector in the period after WW II, and on literature reviews. However, in this doctoral thesis the focus is on the present situation in the Swedish consumer food sector, albeit with some comparisons with the past. The method is qualitative, starting with an exploratory study and continuing with three case studies in which three groups of actors in the supply/value chain were interviewed: retailers, food manufacturers and packaging suppliers. In all, 47 people in Sweden were interviewed. During the entire research process, relevant literature was reviewed to guide the analysis of results. The author also has a pre-understanding and personal experience of innovations in the food sector, which has facilitated contacting different actors and performing the interviews based on open-ended questions. The results show that the respondents define “innovation” in a similar way, and that it is more than incremental. Based on this input, a new definition for food related innovations is proposed. However, gaps in the meaning of innovation do exist between the three groups. This is evident from the examples they give of innovations on the market. It may be due to their different roles, their lack of a common vision, and their lack of a supply chain perspective. The food manufacturers and retailers appear to develop for the consumers, not with them, and do not involve anyone from the outside. In other words, they do not apply the Chesbrough’s concept of Open Innovation. When innovating, there is limited collaboration between retailers and food manufacturers. Practically the only time it occurs, it results in private labels for the retailers. Packaging suppliers are quite global and collaborate with customers everywhere but they lack direct consumer insight and rely on their customers to tell them what is needed. Contacts in the chain are mainly transactional, cost focused, and non-relational. Among other key issues are lack of trust and transparency in the chain, the need of food manufacturers to be listed by all major chains, lack of pride and vision among manufacturers. There are several drivers and barriers, such as a strong trend towards sustainability (which will require a total chain approach), “pure” food with no additives, ecological, locally produced, more convenience, higher quality and lower cost. It is difficult to make any direct comparisons between the past and the present as society, the supply chain and its actors, including the consumers have changed. Still some things are worth considering from that time. In the past the major innovations, frozen food and self-service shops, fulfilled consumer needs, were introduced at the right time and with the right conditions prevailing in the country. They resulted through collaboration in clusters and networks and by allowing individuals, ‘Edisons’, from inside and outside to contribute. This was an early example of Chesbrough’s Open Innovation. Trust existed among different actors, including the consumers. Will the present way of working prevail or will it change? There are signs of an emerging shift from a focus on cost to value. This is evidenced by some respondents from each group expressing a wish to contribute and help the others in the supply chain, and by some manufacturers realising that to develop and produce private brands in addition to their own brand is not necessarily bad. Some manufacturers already have separate organisations for developing their own labels and private labels. These signs can be seen as indications of an interest to co-operate and compete simultaneously, which is the definition of coopetition. Coopetition implies trust between the individuals involved in a defined task where resources are pooled to be used for mutual benefit, and it offers a way out of being locked in pure competition – and save costs at the same time.