Food Marketers Using Substitute Ingredients To Boost Profits
The Wall Street Journal , Monday, August 25, 2008 10:30 AM
As food companies face pressure to raise prices to cover fast-rising costs, many are quietly adding fillers and substituting cheaper ingredients to cut costs. Most of the tweaked products still cost the same for consumers, if not more, however.
Hershey is substituting vegetable oil for a portion of the cocoa butter traditionally used in some of its chocolates. McCormick is now supplying food companies with cheaper spices and new flavor blends, such as Mexican oregano instead of pricier Mediterranean oregano. General Mills says that by reducing the number of spice and ingredient pouches in boxes of Hamburger Helper -- and by halving the number of pasta shapes used in the product line -- the company has trimmed manufacturing costs 10%.
Food companies say the changes they are making don't sacrifice quality, flavor or nutrition. General Mills says consumers liked walnuts just as much as the pricier pecans it removed from its Turtle cookies, for example. Still, swapping out ingredients for cheaper ones has the potential to alienate consumers already stretched by high gasoline prices and a weak economy.
Read the whole story at The Wall Street Journal »
Hershey is substituting vegetable oil for a portion of the cocoa butter traditionally used in some of its chocolates. McCormick is now supplying food companies with cheaper spices and new flavor blends, such as Mexican oregano instead of pricier Mediterranean oregano. General Mills says that by reducing the number of spice and ingredient pouches in boxes of Hamburger Helper -- and by halving the number of pasta shapes used in the product line -- the company has trimmed manufacturing costs 10%.
Food companies say the changes they are making don't sacrifice quality, flavor or nutrition. General Mills says consumers liked walnuts just as much as the pricier pecans it removed from its Turtle cookies, for example. Still, swapping out ingredients for cheaper ones has the potential to alienate consumers already stretched by high gasoline prices and a weak economy.
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