----- Part 1: Alexis needs to form a team for SS-100, as the development of the product will require expertise from a variety of individuals.

a) Who should be on this team from inside the company and when should they be invited to participate? Please support your answer with a strong rationale. (10 points) b) When should you invite individuals from outside the company to participate in the process? What kind of expertise should they have? Please support your answer with a strong rationale. (10 points)

Alexis Payton, head of New Product Development for LoCal Foods, was contemplating how to approach the development of their new fat substitute SS-100. The product has applications at both the industrial and consumer levels, and Alexis has to make some decisions about how they will approach the process. The product represents a significant development in a competitive and challenging market. Fat substitutes are used in baked goods and processed food as substitutes for butter and oils in order to provide calorie reduction, which is generally seen as a benefit by consumers. All fat substitutes have disadvantages in that they affect the appearance, aroma, taste, and texture in cooking and baking. There are three types of fat substitutes, each with its own particular use (Source: The Encyclopedia of Food and Health, 2016): a. Carbohydrate-based: These include starches and gums and includes Oatrim (an oat grain derived substance). They hold water and give creamy textures to food. They contain some calories. However, they cannot be used in cooking. 58% of the fat substitute market consists of these products. These are for industrial use only. b. Protein-based: These include egg white proteins, milk and whey and are used to replace the fat in liquid products such as mayonnaise and ice cream. They contain some calories. They cannot be used in baking. 35% of the fat substitute market consists of these products. These are for industrial use only. Fat-based: These are calorie-free and provide bulk to products such as baked goods, chocolates and snacks. They were used in both industrial and consumer markets. They provide the most successful substitute for fat due to the superior mouth feel and sensation of fullness when eaten. They contain no calories. They can be used in both cooking and baking. However, two fat-based substances, Olestra and Caprenin proved to have undesirable side effects such as gas, diarrhea, and elevated cholesterol, and are no longer on the North American market. Both suffered from negative press that contributed to their withdrawal. Less than 5% of the market consists of Olestra outside North America. There is currently no fat-based substitute on the market in the North American market. The Market: The food substitute market is valued at $2.57 billion US, and is projected to grow by 6% per year from 2020-2025. The market is primarily in North America. There are five market segments: Liquid/Powder (used in baked goods); Bakery & Confectionary (used in cookies, cakes, candy); Beverages (used in soups); Processed Meat (used in sausages and lunch meats); and Convenience Foods (sweet and salty snack foods). Cargill and Archer Daniels are the key market competitors for the industrial market, and Unilever, P&G and Nestle are the key market competitors in the consumer space (Source: Mordor Intelligence, 2020) The Profile of SS-100: This substance was part of the purchase of a biotech startup in 2020 because of its distinct profile. It is a fat-based fat replacement and represents a significant innovation because it provides the positive properties of previous fat-based substitutes (texture, bulk, and no calories) without their undesirable side effects. It can be used as an industrial fat replacement in the manufacturing of baked goods, chocolates and snacks, but it can also be used by home cooks as a zero-calorie substitute in place of oils and butter - which would make it a new addition to the market. Animal testing is complete and it is safe to proceed to human trials. As a food substitute, it will require limited human safety trials and Health Canada approval. It will be priced at a premium to existing substitutes. The investment required is approximately $2 million, but based on preliminary estimates, expected revenues are $5 million per year by Year 3. Profile of LoCal Foods: It is a mid-size player in a market with large and market dominant competitors. It already produces both existing carbohydrate-based and protein-based fat substitutes for large food companies, and its percentage of sales for each reflects the market trend. Currently, the company does not sell directly to consumers, but is open to considering the possibility given their preliminary analysis of the market. There appears to be increased consciousness among consumers for low calorie options since COVID. They use Stage-Gate for their new product development. Alexis had several key decisions to make, but the first and biggest decision was how to develop a new product development plan for SS-100. Other than acquiring the compound, there is no prototype yet developed for the market, and no decision made on which direction Local Foods should take for developing the concept to either industrial customers or the consumer market. Alexis Payton, head of New Product Development for LoCal Foods, was contemplating how to approach the development of their new fat substitute SS-100. The product has applications at both the industrial and consumer levels, and Alexis has to make some decisions about how they will approach the process. The product represents a significant development in a competitive and challenging market. Fat substitutes are used in baked goods and processed food as substitutes for butter and oils in order to provide calorie reduction, which is generally seen as a benefit by consumers. All fat substitutes have disadvantages in that they affect the appearance, aroma, taste, and texture in cooking and baking. There are three types of fat substitutes, each with its own particular use (Source: The Encyclopedia of Food and Health, 2016): a. Carbohydrate-based: These include starches and gums and includes Oatrim (an oat grain derived substance). They hold water and give creamy textures to food. They contain some calories. However, they cannot be used in cooking. 58% of the fat substitute market consists of these products. These are for industrial use only. b. Protein-based: These include egg white proteins, milk and whey and are used to replace the fat in liquid products such as mayonnaise and ice cream. They contain some calories. They cannot be used in baking. 35% of the fat substitute market consists of these products. These are for industrial use only. Fat-based: These are calorie-free and provide bulk to products such as baked goods, chocolates and snacks. They were used in both industrial and consumer markets. They provide the most successful substitute for fat due to the superior mouth feel and sensation of fullness when eaten. They contain no calories. They can be used in both cooking and baking. However, two fat-based substances, Olestra and Caprenin proved to have undesirable side effects such as gas, diarrhea, and elevated cholesterol, and are no longer on the North American market. Both suffered from negative press that contributed to their withdrawal. Less than 5% of the market consists of Olestra outside North America. There is currently no fat-based substitute on the market in the North American market. The Market: The food substitute market is valued at $2.57 billion US, and is projected to grow by 6% per year from 2020-2025. The market is primarily in North America. There are five market segments: Liquid/Powder (used in baked goods); Bakery & Confectionary (used in cookies, cakes, candy); Beverages (used in soups); Processed Meat (used in sausages and lunch meats); and Convenience Foods (sweet and salty snack foods). Cargill and Archer Daniels are the key market competitors for the industrial market, and Unilever, P&G and Nestle are the key market competitors in the consumer space (Source: Mordor Intelligence, 2020) The Profile of SS-100: This substance was part of the purchase of a biotech startup in 2020 because of its distinct profile. It is a fat-based fat replacement and represents a significant innovation because it provides the positive properties of previous fat-based substitutes (texture, bulk, and no calories) without their undesirable side effects. It can be used as an industrial fat replacement in the manufacturing of baked goods, chocolates and snacks, but it can also be used by home cooks as a zero-calorie substitute in place of oils and butter - which would make it a new addition to the market. Animal testing is complete and it is safe to proceed to human trials. As a food substitute, it will require limited human safety trials and Health Canada approval. It will be priced at a premium to existing substitutes. The investment required is approximately $2 million, but based on preliminary estimates, expected revenues are $5 million per year by Year 3. Profile of LoCal Foods: It is a mid-size player in a market with large and market dominant competitors. It already produces both existing carbohydrate-based and protein-based fat substitutes for large food companies, and its percentage of sales for each reflects the market trend. Currently, the company does not sell directly to consumers, but is open to considering the possibility given their preliminary analysis of the market. There appears to be increased consciousness among consumers for low calorie options since COVID. They use Stage-Gate for their new product development. Alexis had several key decisions to make, but the first and biggest decision was how to develop a new product development plan for SS-100. Other than acquiring the compound, there is no prototype yet developed for the market, and no decision made on which direction Local Foods should take for developing the concept to either industrial customers or the consumer market