Value innovation in the functional foods industry: Deviations from the industry recipe

PurposeThe purpose of this paper is to focus on how new value creation can be driven by value innovation. It aims to study the process of value innovation within the functional foods industry, one of the fastest‐growing segments of the food industry. The paper seeks to highlight value innovation efforts by ingredient suppliers in the functional foods industry and to describe how suppliers seek to break the dominant logic, highlighting drivers of and obstacles to doing so.Design/methodology/approachThe paper builds on a qualitative methodology. Two focus groups with participants from different levels in the industry's value chain were organized, combined with in‐depth interviews with managers and industry experts. This interpretive approach allows for the identifications of managerial cognitions, considered a necessity, given the fact that these types of innovations are hard‐to‐detect strategic “embryos” and they must be continuously contrasted against the experienced “industry recipe”.FindingsThe study pin‐points contrasting business logics at different levels in the chain, which might block value innovation. Value innovation initiatives in this industry are undertaken along two dimensions: breaking the dominant chain logic through new forms of collaboration and/or by crossing existing industry boundaries; and breaking the dominant product focus through introducing original value concepts. This study also revealed that upstream companies increasingly build competencies for value innovation.Research limitations/implicationsGiven the qualitative methodology, the study remains explorative in nature. Nevertheless, it can form the basis for further research by offering an approach to “operationalize” the identification of value innovation initiatives.Practical implicationsThis research provides tools for managers in the food industry to question their value creation processes. For food companies the paper contains interesting thoughts on the industry recipes, methods for value innovation in this industry and suggestions on how to boost the value innovation propensity.Originality/valueThis is a first application of value innovation in the functional foods industry. The methodological approach used to identify the industry recipe and the dimensions found for categorizing value innovation efforts are also contributing to the “general” value innovation literature.