Environmental and political events, regulatory shifts, and economic pressure will continue to challenge beverage companies’ ability to purchase ingredients and supplies affordably. Re-evaluating which ingredients to use and how much can help keep products on shelves amid sourcing challenges. General Mills recently shared that some of their products have been reformulated over 20 times in 2022.
While any formulation change must be carefully considered, Kevin Barasa, Global Product Manager – Extracts at Sensient Flavors & Extracts, says many brands can benefit from adjusting their formulations to incorporate, or lean more heavily on, extracts.
Extracts are advancing beverages across categories for consumers demanding natural ingredients and cleaner labels. Some well-known formulation advantages of extracts include their unique role in creating better-balanced, more consistent flavor profiles, and differentiated, dialed-in products.
But Barasa says extracts provide another layer of beverage business benefits during economic and supply chain uncertainty.
“The more people understand and explore extracts, the more creative and effective beverage formulations are becoming,” says Barasa. “Extracts are a more versatile and effective tool than most people realize, especially when it comes to adjusting for volatile supply and demand for raw materials and manufacturing capacity.”
Extracts and Ingredient Availability
The chaos created by the pandemic, natural disasters, labor shortages, and periods of political and economic instability has made it increasingly difficult to predict if an ingredient that may be easy to obtain today will be accessible and affordable tomorrow. Barasa says extracts can help beverage brands survive and compete with creative sourcing. He cites the recent example of the impact of Hurricane Ian on the availability of orange juice vs. orange extract.
“Extracts rely on oranges, but they aren’t vying for the same part of the fruit,” says Barasa. “So while the market for orange juice tightens, extracts, which utilize the rind, not the part that is being juiced, are significantly less affected.”
In addition to natural disasters and seasonality, the availability of fruits used in juices is reduced by high demand from large companies like Tropicana and big retailers using their purchasing power to stock stores. As the availability of fruits is impacted by everything from climate change to pesticide regulations, extracts are poised to play an even more critical role in helping brands strategize around creating more supply chain certainty.
When supply is severely constrained, the government can regulate price points to ensure retailers get priority pricing on certain hard-to-procure products before the industrial market can buy up the remaining supply. The potential for a shift like that is a risk that not all beverages have accounted for while planning and formulating.
“Whenever there is a change in the demand or requirements around a widely-used product, it takes a while for supply to catch up,” says Barasa. “Especially at those times, leaning on extracts can save a company from competing for a scarce or unavailable ingredient.”
In addition to improving ingredient availability, strategically leveraging extracts can help companies in several ways when it comes to shipping and logistics.
Potent extracts help beverage formulators build more dynamic and varied flavor profiles while reducing the volume of liquids a beverage company needs to ship.
“You don’t need to use a lot of an extract to match or overtake the flavors from juices,” says Barasa. “Building back flavor with extract for some formulations, we’re able to go from 15% juice to 5%.”
In addition to needing less of them, extracts are more stable than juices, increasing shipping options and reducing costs. While juices are often frozen in 55-gallon drums, extracts can be shipped ambient, creating an added source of savings for beverage brands.
“We’ve seen significant increases in transportation costs over the past several months, especially for refrigerated ingredients,” says Barasa. “A pallet shipping for $300-$500 ambient can easily cost closer to $1,000 if it requires refrigeration. When you compound those costs or savings over production runs, it adds up.”
The stable nature of extracts also offers a competitive edge by adding flexibility to a beverage brand’s logistics.
Extraction removes the volatile components of organic materials that tend to oxidize and lose flavor over time. The result is a more stable ingredient with a longer shelf life, which increases in value as products take longer to ship nationally and internationally.
The longer shelf-life provided by extracts also means beverages can survive sitting in inventory for longer without negatively impacting product quality. This flexibility ensures beverages are available for consumers and gives brands more control over manufacturing, transportation, and storage costs.
“Although it’s not always something brands like to plan for, extending a product’s shelf-life through extracts allows a beverage business to produce larger runs,” says Barasa. “This means they can take advantage of available materials and production time while maintaining quality.”
Is it Time to Re-Envision How You’re Using Extracts in your Formulation?
How do you know if your beverage formulation could make better use of extracts? The answer depends on a range of factors, from the current and anticipated state of the supply chain to your product vision and the ingredients you and your target market are willing to consider.
Whether they’re right for your formulation or not, Barasa says extracts will remain a powerful tool for the beverage industry.
“Extracts are helping build innovative formulations to face today’s opportunities and challenges while creating stronger, more stable beverage companies for the future.”
Let MyDrink’s team of formulation experts review your beverage’s formulation and provide you with informed strategic insights and tactical tips to optimize your product and plans for the future.