Blended functional food ingredients company Premium Ingredients merged two weeks ago with portable blending company BlendHub. Premium Ingredients, owned by the same group as BlendHub, says transparency about pricing will help small and medium enterprises (SMEs) in particular.
According to the Smart Powder Blends website, this new system will open up the middle section of the food manufacturing chain - between the raw material producers and the food producers and distributors - which currently involves a kind of 'black box' phase, meaning food producers cannot know entirely what they are getting for their money.
In theory, this ambiguity is in place to protect the expertise of blenders and their R&D departments. Yet Albert Adroer Premium Ingredients VP head of ingredients division told this site that in reality black box formulations provide a cover for inflated margins and the application of related costs. By providing food producers with a comprehensive breakdown of pricing from raw material to QA/QC, companies will be able to make informed decisions and outsource ingredients for cheaper if necessary.
According to these new system supporters, small and medium companies that do not have the technological resources to have full control over their raw materials and production processes are particularly affected by this 'black box' model. These companies account for 85% of food producers.
Transparency and traceability
This uncertainty centres primarily on the idea of ingredient traceability, quality control and cost of the blends, explained Patrick Berry, VP head of services division at Premium Ingredients. “It is increasingly important for companies to know where ingredients come from as customers want more and more transparency,” he said.
“The black box era has finished. Companies need to be able to formulate knowing what they are adding,” Berry said.
Open and anywhere: portable blending
Adroer and Berry explained also their hope that they had created a "new economic category" that would open up business opportunities to food producers of all scales and locations. Duties on products and unstable political situations in certain countries can make importing ingredients difficult and expensive, Berry explained.
One solution proposed to tackle these issues would be portable powder blending equipment from companies like BlendHub. Adroer said this would enable short time to market and flexibility in new markets with minimum investment risk at the same time as ensuring IP protection.
This would mean that food producers would be able to produce their own blends on site using locally sourced raw materials, Berry explained. “They will be able to react better to changes in the market,” he added.
Encouraging competition
Berry said that if successful the Smart Powder Blends system would encourage competition via open pricing by blending companies.
“Of course we recognise that we cannot say [Smart Powder Blends] is a category if we are the only ones doing it. To say this we need competition. But we believe in it,” said Berry.
"From now until the end of the year Premium BlendHub will be visiting 200 companies - raw material producers, formulation companies, other blenders and food producers - to tell them about Smart Powder Blends. We're not trying to keep this a secret, we are even talking to competitors," he said.