Grim Christmas prediction shows need for cheap treats

By Jess Halliday

- Last updated on GMT

Related tags: Cocoa butter, Food

UK shoppers are expected to spend money on Christmas food, treats and presents but buy less due to high food inflation – a message that reinforces the need for product innovation in a tough economic environment.

Food and groceries make up 38 per cent of the seasonal shopping splurge, but the retail analyst says that the Christmas feast will cost more this year, since food inflation is running at 6.3 per cent.

This rate of inflation is way over the predicted 2 per cent Christmas spend increase, from GB₤82.3 bn, or ₤1383 per person.

“Unavoidable though this extra expense will be, shoppers will be more careful about what they buy, balancing spending on treats with cutbacks on everyday foods,”​ said Verdict.

Seasonal boon

Festivals like Christmas, Easter and Halloween are usually high profit times for food firms – from retailers through to manufacturers.

While manufacturers will have already developed their seasonal products for Christmas this year – indeed, they will already be stacking up in warehouses and even on shelves – they will have done so with an eye on formulation costs.

However economists and politicians appear resigned to a recession that could take some time to crawl out of. This means that on-going attention to affordability and cheaper formulations will be required for treat foods aiming at next​ year’s festivals.

Formulation measures

There has been a major reformulation drive in the food manufacturing sector in recent years, partly driven by the need to deliver good tasting products that have lower fat, sugar and salt contents, and partly to help reduce the use of ingredients that have now become too uneconomical to use in large quantities.

When it comes to treat foods, however, consumers are unwilling to compromise on sensory properties such as flavour. In short, if a product that has been reformulated – be it for health or price reasons – does not taste as good as the original, consumers will be disinclined to buy it again.

For the flavour industry, the current economic situation is actually being seen as a business driver.

Frans Struiwig, Symrise’s senior VP, strategic business unit, flavour and nutrition global told in a recent interview that manufacturers are turning to flavour houses to replace or boost flavour that is lost when they substitute cheaper ingredients that are not so tasty.

Other ingredient suppliers have turned their creative attentions to helping manufacturers balance the cost-quality issue.

AAK has reported that the high price of cocoa butter (a component of chocolate, which has a longstanding association with festivities) has led to greater demand for its alternative, cocoa butter equivalents, which come from cheaper specialty vegetable oils.

The price of cocoa butter has risen significantly in the last 18 months, from under SEK 30000 (€3193.8 at today’s exchange rates) per tonne in early 2007 to over SEK 50000 (€5325.4) per tonne at this year’s high. Cocoa crops have this year yielded disappointing crops, which has pushed up the price of cocoa globally.

Another example is Danisco, which moved as long ago as July 2007 to developing a range of emulsifiers aimed at reducing the need to use commodity products that were causing manufacturers grief at that time, such as wheat, gluten, and vegetable oils in food formulations.

Palsgaard has announced the launch of its IceTriple emulsifier-stabiliser system, which it says allows for a 20 to 25 per cent reduction in total milk solid content in a standard ice-cream, depending on the recipe and processing conditions.

Related topics: Market Trends

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