Commodity-avoidance is a driver for ingredients R&D

By Jess Halliday

- Last updated on GMT

Related tags: Wheat, Maize, Beer

Rising commodity prices are putting manufacturers under pressure, but some ingredients companies are developing ways to save their customers' margins by reducing or eliminating the need for commodities in formulations.

The price of grain products has soared this year, and last week wheat reached the unprecedented heights of US$7.54 per bushel as a result of low harvest, sparking panic buying and fears for a knock-on effect for food prices. Soy, corn and barley have also carried high price tags, and the emergence of biofuel technology is oft-cited as a force for driving up the digits. But explanations aside, these prices have carried through to food manufacturers' financials, where they are listed as unexpected impacts on operating profits and margins. One way of countering the effects of these expenses is to raise the cost of food products. It may work of a while, but the consumer's willingness - or ability - to spend more will stretch only so far. In light of this, and together with a recent report from the FAO and OECD that said it could be as long as a decade before the sky-high prices come back down to earth, it could be prudent to cast about for other, more sustainable ways to mitigate the effect on food supply. On the other hand, manufacturers are already quite reliant on their suppliers for R&D solutions that ingredients be slotted into their formulations without ado. So it should come as no surprise that ingredients firms are rising to the challenge to help them reduce reliance on commodities. One company that has risen to the plate is Danisco. Last month it announced a new range of emulsifiers intended to reduce the use of high-cost wheat, gluten, and vegetable oils in food formulations without affecting sensory properties. The first two solutions to be launched allow the vegetable oil content in margarines and spreads to be reduced and replaced with water; and for the gluten in bread to be reduced without affecting bread volume. Regional emulsifier director for Europe Dorte Petersen told FoodNavigator.com that these applications were the "most obvious"​ for Danisco, since the company has particular strengths in these areas to counter the problem. But it will also be looking at other commodity ingredients and food applications, and seeking to cater to its customers' needs. Danisco is not alone in identifying commodity trouble spots. Novozymes has been keeping its ear to the ground and developing enzymes to help producers overcome difficulties, particularly in the beverage sector. CFO Benny Loft said that brewing enzymes have benefited from the poor barley quality in recent years, which has pushed up brewers' costs and led them to look to enzymes to do the same job instead. "They can replace some of the barley with enzymes, helping the big brewing companies maintain costs at a certain level,"​ he said. On the other hand, enzyme sales have suffered in relation to beverage alcohol production, since grain prices have led beverage alcohol producers to cast about for alternative raw materials, which do not require many enzymes. FoodNavigator.com would be interested to hear from other companies that are targeting commodity reduction in their ingredients solutions. Please email jess.halliday 'at' decisionnews.com.

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