How to navigate raw material supply and price challenges and optimize sauce formulations

F&B manufacturers are facing tough times. A series of factors, from the pandemic to the energy crisis, has collided in a perfect storm to disrupt supply chains and increase pressure on global food prices.​

Widespread and rapid climate change is impacting agriculture and livestock in every region of the world. Weather extremes including floods, storms, droughts and heat are disrupting crop stability and threatening food security.

A report by the Intergovernmental Panel on Climate Change (IPCC) predicts that, without action, climate change will have a disastrous impact on global food supply.¹​ Global data from other bodies tells a similar story. In 2022, wheat production in the US was impacted by heatwaves, and other extreme weather events had a serious impact on maize and soybean production.²​

In Europe, severe droughts in 2022 impacted all summer crops, including maize and potato; Monitoring Agricultural Resources (MARS) forecasts Europe’s corn crop will fall 16% below the five-year average.³ ​The war in Ukraine – global producer of seed oils, wheat and corn – has upended food production and agricultural exports, raising prices around the world and impacting food security for millions of people.

Against this backdrop, disruption caused by the COVID-19 pandemic overwhelmed global supply chains of raw materials and finished goods; the container crisis ground freight to a halt, as the industry struggled to meet demands.

As inflation has risen, existing fragilities in supply chains have been brought into sharp focus. In the aftermath of the pandemic, and escalated by the Russia-Ukraine war, the global energy crisis, while reported to be easing, has further pushed up inflation and affected all markets and populations.

Impact on manufacturers and consumers

For manufacturers already feeling the squeeze with a higher cost of goods, navigating uncertain market conditions and volatile commodity prices is a challenging line to walk. 

Consumers, meanwhile, are already facing price hikes for daily food and beverage items; consumer spending on non-essential grocery items is forecast to take a hit over the next two years.⁴​ More than ever, consumers are seeking value for money, opting for alternatives if brands increase prices significantly.

So how can manufacturers navigate supply challenges and inflationary pressures and successfully deliver on target requirements and price?

Impact on the sauce category

The sauce category has been particularly impacted by recent supply and cost pressures. Modified starches, especially those made from corn (maize), together with a wider range of raw botanicals, are the backbone for texture and visual appearance in sauces.

Be it waxy maize, corn, tapioca or potato, each botanical used in modified starches offers a distinct set of functional benefits for sauces; their ability to improve texture, such as thickening and gloss, is particularly valued. Therefore, manufacturers with access to a wide range of modified starches are well placed to solve reformulation challenges for their customers, all while meeting required target textures and tastes and keeping costs under control.

“Sauce is a primary food category and an integral part of the daily diet in Asia. This means that a price increase here will have a significant impact on manufacturers, as well as consumers,” says Chik Liang Tan, Starches, Sweeteners & Texturizers, Product Line Leader at Cargill.

Manufacturers are also facing rising prices and supply shortage of the most common bulk ingredient in sauces – sugar. Sugar, or sucrose, is used in a multitude of savoury sauces, from chili sauce to ketchups and marinades. As well as providing sweetness, sugar also enhances mouthfeel and texture. The price of sugar is greatly impacted by supply and demand within a highly volatile market; already this year, it has been widely reported that the price of sugar has jumped to its highest level in a decade.

Modified starches in sauces – access and expertise

Within this challenging economic climate, manufacturers who are armed with the best choice and expertise to reformulate their sauce portfolios can combat the trickle-down effect of cost increases. Moreover, it’s an approach that can deliver value for consumers beyond price.

But reformulation requires technical expertise specific to the sauce category, coupled with an expert understanding of how working with modified starches from different botanicals can impact the finished goods.

This is why partnering with an expert can leverage further opportunities in terms of access to raw materials and technical know-how when it comes to working modified starches into sauce formulations. Cargill’s comprehensive portfolio of modified starches – with solutions based on tapioca, waxy tapioca, dent and waxy corn – combined with a unique understanding of the wider botanical options – and access to these raw materials – can offer a multitude of solutions for manufacturers to reformulate and innovate in the sauce category.

To help manufacturers manage the pricing volatility of sugar, Cargill’s Clearsweet^TM​ liquid solution, a ready-to-use specialty syrup, offers a similar sweetness and taste profile and contributes to a similar gloss-like appearance in sauces. Additional operational benefits to manufacturers, such as automating production and process capabilities, and minimizing waste, further elevates its position as a possible alternative to sugar.

“Leveraging technical expertise across a wide array of offerings is crucial,” continues Chik Liang Tan. “Cargill’s technical understanding of the sauce category underpins our wide range of modified starches across various botanicals. This, combined with the customer’s manufacturing processes and recipes, is key to tackling these rising costs. It puts manufacturers who partner with us in a strong position to navigate ingredient supply disruptions and inflationary pressures.”

The modified starch portfolio includes:

C*PolarTex^TM​ ​A range of highly stable texturizing hydroxy propylated starches that deliver viscosity, exceptional stability (heat/shear/acid/freeze-thaw) and improved gloss to end product applications.

C*Tex^TM​ ​A range of texturizing acetylated starches that deliver viscosity, exceptional freeze-thaw stability and resistance to acid and shear conditions.

EmCap-Instant (C​☆​EmCap)​^TM​​ Emulsifying starches with a very low viscosity profile, designed to replace gum arabic in flavour encapsulation and flavour emulsions.⁵​

Cargill’s ranges of modified starches are also available as tailor-made starch-based solutions, under the TexDesign brand name, offering unique opportunities for specific applications.

References​

1.​ Sixth Assessment Report / AR6 Synthesis Report: Climate Change 2023​ (IPCC), March 2023.
2​. The Economist Intelligence Unit Limited 2023 / EIU Country Analysis Service: Commodities Outlook 2023​.
3.​ Bloomberg​, August 2022.
4.​ ASEAN Food Sector 2023 Outlook​.
5. ​Cargill’s Modified Starches​.