Milling & Baking News - June 5, 2018 - 12
Beyond just millennials, Ingredion
targets 'pyramid' of consumers
NEW YORK - Executives of Ingredion, Inc. discussed ways the company may help create products for
the whole "pyramid" of global consumers, and not just millennials, May
17 at the BMO Capital Markets Farm
to Market Conference in New York.
Rising freight rates and an improved
economic situation in South America
were other topics discussed.
"We're not just focused on the highest value, highest end of the pyramid,
millennials that pay $4 for a Muscle
Milk," said James P. Zallie, president
and chief executive officer. "We're
very focused on affordable foods and
affordable formulating for the masses
as well around the world."
He listed providing affordable food
products in Brazil as an example of the
middle of the pyramid.
The food-anywhere trend, such as
food ordered through the internet or
food that is delivered, is another focus for Ingredion. Food deliveries are
placing more of a burden on the distribution system, Mr. Zallie said, and
gave the example of an egg souffle
that needs delicate eating quality
along with the ability to withstand the
rigors of distribution.
"So that's something where our
deep knowledge of texture and how to
make products taste good is very, very
important," he said.
Specialty starches serve as a backbone
to texture in many products, he said.
"That's why we're rounding out our
portfolio today with protein-based ingredients because proteins and hydrocolloids, along with specialty starches,
really kind of round up the map of texturizing to give you mouthfeel stability, etc.," Mr. Zallie said.
Ingredion, Westchester, Ill., is taking
two approaches to rising freight costs,
said James D. Gray, executive vice-president and chief financial officer. One is
working with brokers and carriers and
trying to find a more competitive cost
'We're not just focused on the highest value,
highest end of the pyramid, millennials that
pay $4 for a Muscle Milk.'
- James P. Zallie,
for each route. The second approach is
communicating what the freight costs
are to Ingredion customers.
"Structurally, our dry van, about
one-fifth of our contracts, have some
type of freight pass-through," Mr.
Gray said. "It's the other four-fifths
that we're working through this year,
tends to be more medium and small
customers. They rely upon us to figure
out the best delivery price (for) them."
Ingredion is talking with these customers about how dry van rates have
risen and how that increase will be
passed through to customers.
N.G.F.A. seeking changes in rules on
food/ingredient imports and FSMA
ARLINGTON, VA. - The National
Grain and Feed Association on May
25 submitted a statement to the U.S.
Food and Drug Administration recommending that the agency make
several changes to its draft guidance
for industry titled "Foreign Supplier
Verification Programs for Importers of
Food for Humans and Animals." The
statement suggested how the F.D.A.
might better inform importers on how
they might comply with the import
rules established under the Food Safety Modernization Act.
The N.G.F.A.'s statement also included recommendations on certain
Foreign Supplier Verification Program
(F.S.V.P.) issues that it said, if implemented, would result in meaningful
12 / June 5, 2018
Milling & Baking News
"Obviously, some of that in the second half, fourth quarter, but definitely,
as we reset the contract in the fall of
this year for 2019, I think we'll be operating at a different freight rate to get
our starches to our customers," Mr.
Ingredion has a track record of passing
through price increases, Mr. Zallie said.
"Just to give you an example, look
at our results when we weathered the
drought in 2012 to 2013, when corn
was at $7.50 to $8 a bu," he said. "It's
about $4 a bu now. We've weathered
that type of inflationary, which is our
largest input costs."
Ingredion's first quarter ended
reduction in regulatory burdens and
costs on the regulated industry, while
still enabling the F.D.A. to
fulfill its public health mission and statutory obligations.
Among the recommendations made by the N.G.F.A.
were that the F.D.A. should:
* Provide a more proactive system to inform entities when
they have been named as the importer
for purposes of the rule to avoid inaccurate or false designations that
would create potential compliance obligations.
* Designate pulse raw agricultural
commodities (e.g., dry peas, lentils,
chickpeas, and dry beans) as "grain,"
March 31 delivered the best first-quarter results in South America since 2014,
Mr. Zallie said. South America accounts
for 17% of Ingredion's total sales. Brazil's economy has picked up after
coming out of "almost depression-like
macroeconomic challenges," Mr. Zallie
said. Argentina is dealing with interest
rates at 40% and inflation at about 25%.
Ingredion will watch how that situation might affect Argentine consumers
and Ingredion volumes, he said.
"It's too early to tell," Mr. Zallie
said. "It's kind of a period right now
that we're watching closely." MBN
so that the agency's previously announced enforcement discretion for
certain importers of grain raw agricultural commodities intended for
further processing would be appropriately extended to such commodities.
* Clarify that the agency
intends to exercise enforcement discretion for animal
food contact surfaces with regard to F.S.V.P. requirements.
* Limit the scope of potential economically motivated
adulteration hazards that
importers need to consider to those
for which there has been a pattern of
economic adulteration in the past.
* Update its web site to provide
clearer and more concise information
pertaining to countries the agency recognizes as having a food safety system
that is comparable or equivalent to
that of the United States. MBN
bakingbusiness.com / world-grain.com