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Product developers understand the challenge. Dairy products deliver incredible flavor and functionality, but they also come with high variability and cost. Dairy prices fluctuate greatly, refrigerated storage and handling requirements are demanding, and inclusion rates dramatically impact margins.
Finding ways to optimize this critical ingredient without compromising taste or texture has become a top priority for product developers, as margins come increasingly under pressure from rising ingredients costs.
Dairy concentrates offer a proven solution. By delivering consistent, concentrated flavor in a stable, consistent format, dairy concentrates allow developers to achieve the same sensory impact with far less real cheese. For food brands, this translates to improved margins without sacrificing quality.
To make the optimization process easier, we built a Cheese Substitution Calculator designed specifically for product developers. However, the calculator only tells half the story. To show the actual potential cost savings of using cheese concentrates, let’s look at an actual case study from a recent cost optimization project with a large food manufacturer.
We had a customer come to us recently with a goal of reducing the costs of the cheese sauce they use in their packaged mac and cheese. When taking on a project like this, we first assess the potential for a partial or complete dairy replacement with concentrates. In this example, there were six dairy ingredients used.
In theory, we could develop a formula that would replace all these natural dairy products with concentrates, but the impact to the formula and processing requirements would be too great.
Instead, we looked at a partial replacement of dairy that would deliver cost savings with minimal impact to the nutritionals, labeling and processing of the sauce. Our team quickly identified sharp cheddar cheese as the ingredient to target for replacement. It’s expensive, and at 5% usage, has the potential to deliver significant cost savings.
Before digging into the specific cost savings of replacing sharp cheddar cheese with a cheddar concentrate, it’s important to understand two factors that go into every ingredient substitution:
For the cheese sauce example, our goal was to not add any new ingredients other than our CNC0001 Factor 10 Cheddar Concentrate. To accomplish this, we had to adjust existing micro ingredients as you can see in the Test % column. These minimal adjustments are highlighted in yellow and are factored in the overall cost savings.
By using cost-in-use calculations in the cheese sauce formula, we look at two types of savings:
That’s a massive contribution to any cost savings effort, especially when you consider that we preserved the flavor, color, texture and mouthfeel of the original cheese sauce.
There’s also more to the cost savings than what shows up in the formula. Cheddar cheese has up to 39% moisture content. So, when you’re using it, you’re shipping and storing a lot of water. That adds significant costs to your formula. It also has to be refrigerated, which adds even more costs. Our cheddar concentrate costs less to ship and store, and some Bluegrass Dairy Concentrates do not need to be refrigerated. There’s also not the wide price volatility in dairy concentrates that you see in other dairy ingredients.
In today’s economic environment, formulation decisions carry both functional and financial implications. By leveraging dairy concentrates, food brands can unlock cost savings that improve margins. Our Cheese Substitution Calculator is a great place to start. Check it out, and then contact our formulation experts to gain even more valuable insight on the true cost savings of partial or whole replacement of dairy ingredients.
