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January 2017

Finding Alternatives for Vanilla, Pectin (Food Business News)

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(Jeff Gelski)

KANSAS CITY — While the bearish market continues for commodity prices in the food industry, food companies are not completely out of the woods when it comes to high ingredient prices. Vanilla and pectin are two examples where alternatives may be considered to address costs.

Prices for wheat, corn and soy generally were down in 2016, and prices for corn and soy ingredients were below that of a year ago.

The pricing situation is different for a few other ingredients. Poor crops years have affected the ingredient prices for vanilla and pectin (a gelling and texturizing agent). Finding alternatives to both ingredients may take some effort.

Madagascar’s vanilla blues

A majority of the commercial vanilla beans sold in the world comes from Madagascar. The vanilla crop in that country was expected to be about 2,000 to 2,400 tonnes this year, according to an August report from Aust & Hachmann, a vanilla supplier based in Pointe-Claire, Que.

A majority of the commercial vanilla beans sold in the world comes from Madagascar.

“Now many exporters talk about a crop no larger than 1,300 to 1,500 (tonnes),” the report said.

The 2016 Madagascar crop looks to be both unsustainably expensive and substandard in terms of quality, the report said. Prices in excess of $80 for a kilogram (2.2 lbs) of green vanilla beans were being seen. The market situation possibly could eclipse the vanilla crisis of 2001-04, when prices surpassed $500 per kilogram. Less than three years ago, first-grade extraction beans sold for less than $30 a kilogram.

“On the ground in Madagascar it is a total speculative frenzy where prices for vanilla are increasing on a daily basis,” the report said. “Attempts to regulate quality and vacuum packing have been brushed aside in the rush to take advantage of what seems to be a market with no limits.”

Prices also have risen in Indonesia and Papua New Guinea, according to the report.

Paris-based Prova is addressing the current situation and the long-term sustainability of vanilla.

“At Prova, we work closely with our clients by supporting their purchasing strategy across short-, medium- and long-term needs,” said Alessandra Ognibene-Lerouvillois, chief sustainability officer and chief revenue officer for Prova. “Having valid and reliable information about the vanilla supply is critical to their materials planning, but our expertise does not stop with that information.

“There are times when using vanilla extract simply becomes too expensive. When that happens, we apply our expertise in materials processing and flavor creation to innovate alternatives that perform well while meeting cost constraints.”

Prova offers a portfolio of compound vanilla flavors, including naturals, WONFs (with other natural flavors), synthetics, and naturals and artificials, she said. Provanil, an alternative to vanillin, is designed specifically for application in high-fat systems and products that undergo high baking temperatures.

Prova also applies resources to improve the vanilla supply situation in Madagascar and make it more sustainable long term.

“We concentrate our efforts on education and training through the administration of domestic resources,” Ms. Ognibene-Lerouvillois said. “We support the farmers with several GAPP (Good Agricultural and Preparation Practices) training elements.”

Prova stresses to farmers that high quality vanilla is the only guarantee of a stable market. A Vanilla Durable Bemanevika (VDB) program addresses the root causes of precarious living conditions in Madagascar. The program seeks to improve livelihoods by increasing farmer income through better vanilla bean quality, higher yields, strengthening proportions of cured vanilla sold and diversification into other crops.

Pectin problems

Pectin, a hydrocolloid sourced from citrus peel, has risen in price after poor crop years in Argentina. High methoxyl (HM) pectin was priced at $9 per lb in an IMR Quarterly Review of Food Hydrocolloids earlier this year, which was more than double its price in 2006. Low methoxyl pectin (LM) was priced at $10.60 per lb. San Diego-based IMR International puts out the quarterly review.

Pectin works as gelling and texturizing agents for use in bakery fillings as well as jams, jellies, dressings and beverages, according to CP Kelco, a hydrocolloids company based in Atlanta.

Citri-Fi, a citrus fiber ingredient from Fiberstar, River Falls, Wis., has been shown to provide assistance for companies wanting to alleviate the current high costs of pectin. Citri-Fi has high water-holding capacity and emulsification properties, said Jennifer Stephens, vice-president of marketing for Fiberstar. It provides multiple benefits, including textural improvements, nutritional enhancements and potential cost-savings in various food products.

Citri-Fi 100, a citrus pulp, is comprised of both insoluble and soluble fiber, which contains the highly esterified native pectin that gels under certain conditions with low pH and high brix being examples.

“Because the Citri-Fi is not pure pectin, the usage ranges from 1% to 2%,” Ms. Stephens said. “At the same time, Citri-Fi is easy to incorporate. It does not need to be pre-hydrated, which can save manufacturers a process step, and this natural fiber, when mixed with sugar, disperses easily into solution.

“Moreover, Citri-Fi is baking stable so that it can also replace the more costly low methoxyl pectins in high brix and low pH applications. Citri-Fi can extend/replace added pectin in fruit fillings, fruit spreads and fruit preparations for yogurt. Moreover, this natural fiber can be used to replace or used in conjunction with other hydrocolloid blends to replace pectin. Citri-Fi 100 is offered in several particles sizes to provide textures ranging from smooth to pulpy.”

Citri-Fi also has been shown to reduce oil and/or fat in baked foods such as cookies, cakes and muffins.

Pectin peel supply conditions will remain challenged, and peel costs are expected to remain at elevated levels, according to CP Kelco. The company said it is building a new peel processing plant in Brazil that is scheduled to be operational in 2017. The plant should reduce CP Kelco’s exposure to peel availability and price fluctuations.

CP Kelco already has completed an expansion of pectin capacity in Europe and expanded capacity at a manufacturing facility in Brazil. Debottlenecking projects in Europe, already in progress, should lead to additional capacity during 2017-18.

“Pectin is a highly functional and complex stabilizer that provides targeted performance in specific product markets,” said Drew Kleven, product line manager, functional systems and hydrocolloids for Minneapolis-based Cargill. “While there is no replacement for pectin’s robust functionality in these markets, we have the deep well of expertise and a broad toolbox to partner with our customers to create the best possible system in order to promote success.”

Food formulators also may want to keep up to date on the price of xanthan gum, another hydrocolloid. Transparency Market Research, Albany, N.Y., expects the global xanthan gum market to have a compound annual growth rate in revenue of 7.7% from 2016 to 2024, possibly reaching $1.25 billion. The C.A.G.R. in volume could be 7.3% from 2016 to 2024.

“The key end users of the global xanthan gum market include the industries of food and beverage, oil and gas, pharmaceuticals, personal care, and other minor end users such as lab research prospects and agrochemicals,” the report said.

Xanthan gum is used as a thickening and emulsion stabilizing agent in various food applications such as sauces, dressings, bakery and dairy products. The food and beverage industry was responsible for consumption of over 50% of the xanthan gum produced globally in 2015, according to the report. Growing preference for xanthan gum from pharmaceutical and personal care industries as a bio-based stabilizer is anticipated to bring opportunities in the market.

Save money through shorter product development times

Switching to more cost-effective ingredients is not the only way food companies may save money. Think cutting back on product development time or buying an entire ingredient system instead of one ingredient at a time.

Ingredion, Inc., Westchester, Ill., offers Dial-In technology, a consumer-centric approach to product development. Ingredion’s five-step process guides companies. The five steps are setting goals, gathering insights, setting sensory targets, understanding the process and formulating product. Ingredion’s Dial-In technology explores a company’s business and technical priorities, including functional performance standards, manufacturing requirements, potential label claims, cost goals and timeline.

The functional systems group from Minneapolis-based Cargill enables companies to lock in one price for a tailor-made ingredient system, saving time and internal resources by purchasing, stocking and formulating with one functional system instead of multiple ingredients.

“Bakers benefit by not needing to carry multiple minor ingredients and knowing production will have less batch-to-batch variance,” said Bill Gilbert, certified master baker and principal food technologist for Cargill. “In addition, sourcing one system, instead of multiple ingredients, allows customers to save time and money. We will source any ingredient needed by our customers, or we carry stock blends.

“Icing stabilizers are a perfect example of a stock functional system. We produce stabilizers for white and chocolate icing as well as glazes. We can also help our customers modify stock functional systems to make signature icings or glazes to meet their individual needs.”

Save money through fermented sweeteners

Food and beverage companies have sought ways to save on stevia costs ever since December 2008 when the U.S. Food and Drug Administration said it had no questions about two petitions regarding the safety of using Rebaudioside A, an extract from the stevia plant, in foods and beverages.

Eight years later, fermentation has arisen as a promising way to lower costs for such high-intensity sweeteners.

Ingredion, Inc., Westchester, Ill., will become the exclusive distributor of stevia-based sweeteners from SweeGen, Inc. in all markets except China under an agreement reached by the two companies on Dec. 1 of this year. Ingredion will be a non-exclusive distributor in China.

A fermentation process used to develop its stevia-based sweeteners ensures sustained availability and a commercially feasible pricing structure for use in foods and beverages, according to SweeGen, Rancho Santa Margarita, Calif.

Minneapolis-based Cargill in June of this year said it had received a letter of no objection from the F.D.A. for the use of its EverSweet sweetener in foods and beverages. EverSweet contains Rebaudioside M and Rebaudioside D, two of the sweetest steviol glycosides. The stevia plant produces trace amounts of Reb M and Reb D. Cargill and Evolva partnered to produce Reb M and Reb D through a fermentation process involving baker’s yeast that makes the sweetener more commercially and sustainably viable.

Stay prepared for any changes in nuts and eggs markets

Nut and egg ingredient prices have fallen from 2015. Still, food companies may want to recall knowledge learned about alternative ingredients last year. There’s no guarantee prices will stay low.

The U.S. Department of Agriculture in May forecast California almond production at 2 billion lbs in 2016, or nearly 6% above the 2015 production of 1.89 billion lbs. California almonds were trading at $1.80@2.80 a lb on Dec. 9, according to the U.S.D.A., which compared with $2.75 a year ago. California pistachios were trading at $5.20@6.70 as compared with $6.50 a year ago, and California walnuts were trading at $1.70@2.50 as compared with $2.50 a year ago.

When considering nut ingredient alternatives, food companies may look to Inclusion Technologies, L.L.C., Atchison, Kas. The company offers nut-free Nadanut nut analogs based on stabilized wheat germ and expeller-pressed oil with natural antioxidants and naturally sourced colors and flavors. The Non-GMO Project-verified products are available in a variety of sizes and shapes. They come in such nut varieties as almond, hazelnut and peanut.

Grade A, large eggs were selling at 53.50@61.50c per dozen on Dec. 9, which compared with 198c per dozen a year ago, according to the U.S.D.A. Dried egg whites were selling at $2.75@2.85 per lb on Dec. 9, which compared with $7.90 per lb a year ago.

Grade A, large eggs were selling at 53.50@61.50c per dozen on Dec. 9.

An avian influenza outbreak was responsible for the high prices in 2015. A new wave of avian influenza outbreaks potentially could shake up global marketing conditions in 2017, affecting the outlook for Asia, Europe and Africa, according to a report issued this month by Nan-Dirk Mulder, senior analyst — animal protein for Rabobank Food & Agribusiness Research Advisory, Utrecht, The Netherlands.

“It will also be a test for the U.S. industry after last year’s A.I. outbreaks,” Mr. Mulder said in the report.

The global egg replacement ingredient market is anticipated to register a compound annual growth rate of 5.8% from 2016 to 2026 and is estimated to be valued at $1,533.3 million by the end of 2026, according to a report issued in October by Research and Markets, Dublin, Ireland.

“Egg shortage crisis due to avian influenza, increasing demand for plant-based ingredients and increased cost of eggs are factors expected to support the growth of the global egg replacement ingredient market over the forecast period,” the report said.

Many ingredient suppliers promoted egg extenders and egg replacers when egg prices were high in 2015.

J&K Ingredients, Paterson, N.J., offers the Vita-Ex egg extender that has been shown to cut the cost of using eggs in sweet goods, Danish pastries, rolls, donuts, cookies and cakes. Vita-Ex ingredients include egg yolks and whole egg solids.

MGP Ingredients, Atchison, Kas., offers Arise wheat protein isolates as alternatives to egg-based proteins. They may work as inclusions in such flour-based products as bread, pasta and noodles, and batters and breadings.