MARKET WATCH
Making Profit Out of Potential: Product Diversification Tips
DATEJULY 6, 2026
AUTHORANGELA CLARE AGPAWA
READ10 Min
It’s a common route for food manufacturers and agricultural enterprises to start with a single commodity before expanding into several profitable products. If you’re stuck in planning how to diversify products in your business, you may be overlooking the full potential of what you have on hand.
The following guide provides steps on how to create multiple finished goods from one raw material.
How to create multiple products from a single raw material
Extract the core properties of the material
This is the true meaning of understanding a raw material’s potential.
Study its characteristics, properties, durability, and compatibility with different manufacturing processes. If it’s food, list its nutritional value, texture, moisture content, flavor profile, shelf life, and oil content. The key is to think outside the box; imagine what it can be beyond its traditional use.
The Philippine pili nut is a great example of this. At first glance, it’s a snack high in healthy fats and protein—good for nothing else beyond food consumption. But scientific research has identified several components that can be processed into different commercial products.
Its pulp can be processed into oil, and the shell and resin have industrial applications. This allows manufacturers to maximize nearly every part of the harvest instead of producing only roasted nuts.
Its pulp can be processed into oil, and the shell and resin have industrial applications. This allows manufacturers to maximize nearly every part of the harvest instead of producing only roasted nuts.
It is rare for any raw material to be divided into “usable” parts and “trash.” Almost every time, every part can be utilized, and nothing is considered waste.
Research other uses
Product diversification has already yielded countless products over the past few years, the result of technological development and innovative scientific research.
They also harvested oysters, shellfish, gastropods, bivalves, coconut crabs, and other marine resources. Freshwater environments yielded catfish, mudfish, and other river species.
Studying these existing products and observing the presumed thought process that happens before manufacturing can serve as inspiration for creating new products. Successful diversification of products can simply begin by studying consumer behavior, academic research, international markets, and emerging food trends.
Coconut is another example. According to the Food and Agriculture Organization of the United Nations, a wide range of coconut products are internationally traded. From 9 major coconut parts, there are more than 50 unprocessed, semi-processed, or processed coconut products entering international markets in small and big quantities.
Aside from coconut oil, coconut milk, coconut cream, coconut flour, coconut sugar, desiccated coconut, coco vinegar, and other common integrations, there are also more niche ones like copra meal, cocochemicals (fatty acids, fatty alcohol, methyl ether), shell charcoal and activated carbon, and fibre products.
There are also oats, which have evolved from breakfast cereal into oat milk, flour, and snacks; almonds into almond butter, plant-based milk, and even cosmetics; and cocoa, which now produces nutraceutical products.
These are only a few examples of raw materials and their finished goods that show how one crop can spark several business opportunities.
Measure capability of own resources
It’s a common mistake for startup business owners who diversify products for the first time to look into new equipment or hire additional workforce to materialize their idea. Taking the time to figure out the capabilities of your existing resources can not only save on costs, but also help you discover new ways to maximize their use.
Aside from equipment and workforce, resource maximization can also include storage facilities, packaging, distribution, and the production process.
A company selling fruit puree, for example, most likely already has machines for washing, peeling, pasteurizing, and filling. After washing and peeling, the fruit can be cooked with sugar to make jam, blended with other ingredients to create smoothies, or concentrated by removing water for fruit concentrates. The pasteurizer keeps these products safe and extends shelf life, and the filling machine packages them into jars or bottles. With this technique, it is possible to extend the product line without investing in entirely new equipment.
The 15th working paper published by the
United Nations Industrial Development Organization (UNIDO)
states that:
“Strategies to increase manufacturing capacity include adding shifts to use existing equipment for longer periods; outsourcing and/or repurposing equipment; making more efficient use of existing equipment (higher productivity); or purchasing new equipment (Vorne, 2021).”
Start with complementary products
Your first diversified product does not have to be mind-blowing or completely life-changing; it simply has to have something to deliver.
One of the safest product diversification strategies for beginners is to create products already related to your business instead of entering a category you are unfamiliar with.
Complementary products share similar ingredients, customers, distribution channels, and branding.
A coffee business, instead of venturing into new drinks like milk tea or smoothies, may simply expand into offering coffee beans, ready-to-drink coffee, coffee concentrate, coffee capsules, and coffee syrups. This expansion already takes advantage of its existing raw materials and equipment.
Moreover, this approach improves brand recognition and increases customer spending all while limiting marketing costs.
This is a fairly common strategy for successful Philippine food companies, such as Universal Robina Corporation, which expanded from very limited products and is now offering snacks, beverages, bakery products, confectionery, and ready-to-drink products through continuous product innovation and market-driven product development.
Testing
Sometimes, reality does not turn out as good as the idea. Before investing in commercial production, mandatory testing is important.
This is done by “offering” the product on a small scale—producing a small pilot batch, gathering feedback, testing pricing, measuring shelf life, observing packaging performance, and evaluating market demand.
Testing will save you from making costly mistakes and help you perfect your product before a full-scale launch.
2025 data acquired by Medium shows that 20% of new businesses fail within their first year, 50% by their fifth year, and a staggering 80% don’t make it past their tenth year. Aside from poor planning, neglecting the needed process of testing out products is basically setting yourself up for business failure.
The importance of diversification in business
For business owners, especially small and medium enterprises, product diversification is beneficial in many ways. When facing industry-related challenges, offering multiple products means there is one that can compensate for the other. This helps mitigate financial risks and allows the business to continue operations, therefore bolstering protection and stability.
Product diversification is also a core element in building brand strength. Offering more products, especially in a very specific category, gives people higher chances of associating your brand with these products.
Given pili nuts as an earlier example, producing a specialty product instead of common pili products (like plain roasted pili nuts) immediately elevates a brand’s image. Pili Poppers used this technique and created a product that combines the benefits of pili nuts and other advantages sought by health enthusiasts, such as sugar alternatives and effective mineral absorption, instead of relying solely on the nut’s organic features.
There is always something yet to discover, not just in your raw materials, but in your existing machines and processes, which can help your product line expand exponentially.
