Taking the biscuit – innovation at heart of Northern Foods strategy

The application for Fox's mini party rings – small circular biscuits with an icing topping – marks a strategic milestone for the Leeds-based group, which hopes to steal a march on rivals by developing protected manufacturing technology and products.

Northern last year appointed chief scientific officer John Coppola to spearhead product innovation, and has also appointed a chief growth officer, Clare Parlour, to develop its understanding of consumer needs.

"Consumer-focused innovation is at the heart of our strategy," said Mr Coppola. "My team is working to develop protectable product technology which could offer Northern Foods a real point of difference."

Mr Coppola was poached from food giant Nestl where he was innovation acceleration director in Paris.

A scientist by training, he worked for drinks giant Diageo as global technical director, Unilever Ice Cream, and met Northern chief executive Stefan Barden at Heinz when he was head of research and development in its babyfood division.

Mr Coppola said the programme is still at an early stage, but has appointed a team of five food scientists – one for each business division – to investigate how products ranging from pizzas to pies can be set apart from rivals'.

Northern is thought to be focusing on chilled food, where it makes ready meals, sandwiches, salads and sushi, as an area which holds the most potential.

It is also working with technology companies and universities, and in the past has collaborated with Sheffield Hallam's Centre for Food Innovation. However, it remains tight-lipped on future developments.

Northern has a track record of innovating, and developed the first chilled ready meal in the 1970s – a chilli con carne for Marks & Spencer. However, it failed to patent any of its innovations, meaning over time it slipped from a dominant market position in ready meals as rivals copied concepts.

Multinationals such as Nestl and Unilever patent new products and processes as a matter of course, but similar-sized competitors to Northern are understood to do little in the way of IP protection.

The group's mini party rings, which are yet to be launched, will be aimed at the snack market and could be sold in small bags.

"Over the decades Northern Foods has created much innovation but to our knowledge has never filed a patent, preferring instead to keep its knowledge in-house," said Mr Barden.

"In the 1970s and 80s this worked – but not today. Our operations must be best in class, but the foundation of our sustainable competitive advantage must be to protect our unique intellectual property.

"This patent application for mini party rings – a fantastic product 'loved by mothers; loved by children' – is a milestone for us at Northern Foods.

"It is a first step towards securing patents from time to time, that will help to protect Northern Foods' intellectual property in the years ahead."

The group warned developing patents is complex and time-consuming, and only new ideas can be patented.

"It declined to quantify potential gains, but said it can afford to invest.

"We've got a decent financial position which gives us the ability to invest in new technology," said a Northern spokesman.

"We can be much more considerate of protecting technology when we have

products that are unique and innovative.

"This is more than just about recipe developments – it's about the science behind the food. But this is going to take time."

Markets watching with interest

Analysts at Shore Capital said while Northern Foods' innovation drive offers potential, it is too early to quantify gains.

They said chief executive Stefan Barden has further to go to translate "his excellent ideas into meaningful applications".

"We will watch with interest to see if this is the milestone that management has stated," said analysts at Shore Capital. "We do believe that Northern may be 'on to something' in these respects, we're just not totally sure quite what.

"The investment in technologists and product/process has yet to deliver meaningful results, but we do harbour some hopes."

In the short term, analysts are focused on the sustainability of Northern Foods' sector-beating dividend and growing pension scheme liabilities, due to pressures from members living longer and fluctuating asset values.