When was the last time you ate at a fast "food" restaurant? Notice anything different?
Major food makers are quietly altering their recipes on candy, dairy products and other top-selling lines, adding fillers and substituting cheaper ingredients to cut costs amid the commodities boom.
I think I’ll run out for a quick lunch of… "fillers." Mmm mmm good! What’s driving this?
Food makers face not only rising shipping costs due to costlier fuel, but also sizeable jumps in the price of wheat, sugar and other basic ingredients. The pricing pressure isn’t likely to dissipate soon: It is driven at least in part by growing demand for meat and milk in developing countries as living standards rise. In addition, government incentives are resulting in more corn being made into ethanol, cutting into the corn available for cooking or livestock feed.
Ah yes, ethanol. The wonder fuel. So much for that crazy idea. How are these food companies scrimping and saving?
Hershey Co. is substituting vegetable oil for a portion of the cocoa butter traditionally used in some of its chocolates.
Spice maker McCormick & Co. is now supplying food companies with cheaper spices and new flavor blends.
McDonald’s Corp. said it’s testing less expensive ways to make its $1 double cheeseburger; already, some restaurants are selling the burger with one slice of cheese instead of two.
Burger King Holdings Inc. CEO John Chidsey said the chain is testing a smaller Whopper Jr. hamburger as it tries to overcome high ingredient costs.
Companies that supply food substitutes are doing well.
Cargill has seen increased demand from food makers for dairy substitutes such as enzyme-modified dairy ingredients and starches and hydrocolloids. Starches and hydrocolloids are thickening and stabilizing agents that can replace costlier ingredients like nonfat milk solids in ice cream, processed cheese, yogurt, sour cream and dairy drinks. Adding enzymes to dairy ingredients can substitute milk or cream in some products.
But nutrition is suffering, as if anyone truly goes to a fast "food" outlet for nutrition.
From a nutrition perspective, "That’s not a comparable replacement at all," says Ms. Taub-Dix of the American Dietetic Association. "What makes dairy so wonderful is its calcium content and other nutrients. Once you start substituting that, you’re changing the nature and benefit of the product."
Cargill’s Ms. Reichert agrees that such changes can lead to a reduction in a product’s vitamin and mineral content, but says they also reduce the fat and calorie content. "Because applications such as cookies and cream sauces are typically not major sources of vitamins and minerals to begin with, one has to weigh the benefits of reducing calories against the impact of a slight reduction of vitamins and minerals," Ms. Reichert says.
So what is "value" to the consumer of fast food? Size that creates a full tummy, and probably heartburn? Nutrition? Some companies are focusing internally to improve efficiency instead of myopically sticking it to their customers.
Packaged-food companies that started trimming costs before the grain-price rally began two years ago tend to be faring better than rivals today. Pittsburgh ketchup giant H.J. Heinz Co. has been breeding sweeter tomatoes in an effort to reduce the amount of high-cost corn syrup in its ketchup. The sweeter tomatoes aren’t yet being used in its product lines. Heinz is also cutting back on packaging and using more rail delivery to cut transportation costs.
Perhaps instead of sneaking in these changes, hoping we don’t notice the increasing aroma of fillers, the companies should work with the customers to identify new sources of value. I would pay more for something smaller and more natural. But then again, I live in California, home of fruits and nuts.