When is it not a good time to work on flavor system cost reduction?

Trick question. It’s always a good time to work on reducing your flavor system costs. With inflation and the rise of raw material costs, now more than ever brands and manufacturers are needing to find ways to reduce costs to maintain healthy margins.

Knowing your total cost of goods is important in understanding where you could be reducing costs without compromising the quality of your product. The flavor system plays an important role in your brand differentiation and can make or break the success of your product, so special care must be taken. In this article we will be discussing FIVE MAIN WAYS to reduce cost of your flavor system specifically, while maintaining a great-tasting product consumers will continue to love and keep coming back to purchase.

Here are five tips for reducing the cost of your flavor system:

1. Know Your WHOLE Flavor System Budget
2. Understanding Actual Cost in Use
3. Diversify Your Flavor System
4. Flavor Match Your Major Cost Drivers
5. Flavor Optimization and Consolidation

Let’s look at each one of these in detail.

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1.) Know Your Flavor System Budget

The flavor system includes not only the flavors, but also acids, sweeteners, colors, and gums we might use to make your product taste amazing. For some, coming up with a comprehensive flavor system budget can be difficult. The process we recommend is to work with your manufacturing partner to understand what your raw material costs are, and how much of those are included in your flavor system.

Sensapure can help you determine a healthy flavor system budget: Companies should plan for an average flavor system budget of 5 cents per serving. This leaves plenty of room to develop a great-tasting product. Some product types require a higher budget, such as organics, protein drinks, and products with high levels of energy or other active ingredients. A reduced flavor system budget may be achievable but upfront communication on specific budget requirements will ultimately save time and money.

2.) Understanding Actual Cost In Use

It is wise to remember that not all pricing per pound is created equal if you need to use more of it to achieve your desired result. More concentrated flavors mean less flavor is needed, but they may have a higher price per pound. If you look at the flavor system in terms of price per serving rather than price per lb, you will see your actual cost in use – AKA cost per serving in the finished good product.

Example

If you are comparing two flavors (and all other elements of the flavor system are unchanged), where one is $20/lb. and the other is $30/lb. The $20/lb. flavor may require twice as much flavor to achieve the desired taste profile, which would ultimately make the higher-priced $30.00/lb. flavor the more cost-effective choice.

3.) Diversify Your Flavor System

Using a combination of flavors, sweeteners, and acids (rather than simply increasing the amount of just one input) can often help offset unnecessary costs. Sensapure is expert at using the optimal combination of acids and other flavor modifying properties to help your great-tasting flavor stand out – while reducing the amount of overall flavor needed.

Example

Using the right combination of natural sweeteners will not only make your product taste more well-rounded but can also offset the cost of more expensive sweeteners. High-intensity sweeteners like RebM can be great for achieving the amount of desired sweetness, but using a less expensive Stevia RebA to carry the majority of the weight, is a more cost-effective option. The same can be said for acids. Flavors need acids to make them pop

Malic acid

Tumeric acid

Citric acid

4.) Flavor Match Your Major Cost Drivers

Flavor matching on your highest cost inputs is a win / win. First, having a perfectly matched alternative to your flavor can often reduce the cost of your current flavor system. Second, in today’s world, the ability to have much-needed supply chain redundancy is key. Flavor matching using our in-house Gas Chromatography / Mass Spectrometry (GC-MS) Technology provides you with an exact organoleptic flavor match – and more often than not, at a reduced cost. Almost all major global brands are designed to be run with more than one flavor source. They know the risks of being dependent on a single source for a successful product.

Another benefit of Sensapure’s GC-MS technology is that we can help you create all-in-one flavors that reduce cost not only for your product COGS, but for shipping, manufacturing, and raw material overhead. Identify the bundles of flavors that are your main cost drivers and have Sensapure provide a reduced-cost solution.

Flavor Matching

5.) Flavor Optimization and Consolidation

One unforeseen consequence of having a wide variety of flavors in your products is that they can lead to higher rates of expiring flavor and material obsolescence. Consider consolidating your flavor palette to use the same flavors in multiple product SKUs. This will help you achieve economies of scale and reach a higher MOQ, resulting in better-tiered pricing.

Look at your top-performing flavors and annual volume to determine if you can benefit from purchasing in larger quantities or have the sales history to realistically predict your flavor needs for the year.

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