Focus on dairy ingredients: Hard life in the land of milk and money

Customisation is the new keyword in the dairy ingredients sector. Tate & Lyle has been working with manufacturers to design customised dairy stabilisers that can help manufacturers save money through increasing efficiency in production, says business development manager for Tate & Lyle in Europe and the Middle East, Kerstin Werner. For example, Tate & Lyle has developed stabilisers that control the viscosity of a dairy product as it progresses through a manufacturing line leading to better control of speed of process, heat and texture-stability.

In a similar vein, Dairygold has created pumpable soft cheeses that come in a variety of flavours, improve production line efficiency and minimise waste, says Fitzsimons.

Meanwhile, marketing executive at dairy company Meadow Cheese, Robert Kennedy says the company is working with manufacturers to create better cheeses for cooking during production. A recent example has been the creation of a mozzarella cheese that holds its shape when being deep-fried, which helped to improve production line efficiency and cut down on wastage. Colour, fat content and melt characteristics can all be tweaked to fit customer needs, he says.

Companies are also looking for ingredients that provide the same characteristics but at reduced costs. Karl Douglas, business manager for dairy ingredient company, Arla, says that when the dairy prices start to rise, Arla fields more calls for cheeses containing higher proportions of vegetable oils. Tate & Lyle has been developing stabilisers to be used in situations where companies are including reduced-fat dairy products. The correct blend of stabilisers can help control the texture and emulsion of a product to the point where the consumer will only experience a slight difference, says Werner. Not only does this help companies to cut costs by reducing the proportion of the potentially expensive dairy component, it also provides a healthier lower-fat product.

By extending the life of products, companies can also better manage market volatility. Tate & Lyle has created stabilisers that increase shelf-life of final products containing dairy ingredients. Fitzsimons says Dairygold has seen increased demand for its cheese powder for similar reasons. The cheese powder can be bought when dairy prices are low and, due to its longer life, can be stored and used over a longer period. This can better allow companies to avoid periods of high dairy prices, says Fitzsimons.

The premium way​

Werner says Tate & Lyle has seen the highest growth in demand for ingredients for the premium end of the dairy sector. According to a study from Leatherhead Food Research, provenance, especially buying British, will be one of the top trends of this year across the food industry. By emphasising issues such as this that focus more on the premium sector, manufacturers may be able to justify escalating prices. A report from market intelligence company Mintel on the dairy sector predicts that companies will increasingly look towards areas such as provenance and authenticity as a way to add value.

Premium products offer firms the potential for better margins, which would help to offset increases in ingredient costs, claims Mintel.

Mintel also says demand for UK territorial cheese has grown significantly in recent years and that the number of cheeses claiming provenance from a particular region is greater than ever before. At the same time, many retailers tapping into these trends have signed up to voluntary guidance on country of origin labelling (COOL) under initiatives supported by the British Retail Consortium and others.

There are benefits to manufacturers of emphasising the regional or authentic aspects of products they produce, says Kennedy. He gives the example of yogurts and cheeses that state the farms the milk was sourced from. This provides processors with an opportunity to give products a backstory as well as a chance to establish an individual connection between producer and consumer. He says more general details, such as 'made with mature Irish cheddar', can also add value and differentiate a product from its rivals.

Controversies​?

But initial enthusiasm for COOL may prove a mirage. Stuart Shotton, consultancy services manager at labelling and legislation specialist Foodchain Europe, questions whether the whole drive behind it originated with consumers or was more led by politics and industry. COOL could just be a back door justification for what is essentially protectionism. By guiding consumers through voluntary measures, governments can effectively promote domestic products without infringing free trade legislation.

Retailer Iceland is notable by its lack of support for COOL. Shotton suggests that this may be because retailers serving the lower end of the consumer market may see COOL as an additional expense they do not want to pass onto their customers or cover itself. "I used to work for Iceland and I don't remember many people asking where the cheese in products came from," says Shotton.

If provenance is not consumer driven it could suffer the same fate as organics, says Douglas. He notes that the premium charged for organic ingredients halted companies' enquiries once demand for luxury foods started to dry up during the recession. Consumers will buy products containing British ingredients if the price is right, but will look elsewhere if they cost much more for similar product quality, says Shotton.

Provenance becomes a gamble on whether consumers desire (and have the cash) for premium products.

Although predictions say they do, is it a risk companies are willing to take?

Contacts​

Arla Ingredients - 00 45 8938 1000​

Carbery - 00 353 2388 22200​

Dairygold - 0845 519 0137​

Foodchain Europe - 0167 547 5775​

Meadow Cheese - 0153 163 1300​

Tate & Lyle - 00 49 4511 6040​

Volac - 0122 320 8021​