Now that you have found the right oil in terms of functionality and availability, what are the financial ramifications? In general, you want to choose the most cost-effective oil for your needs. Considering the circumstances discussed above, the most cost-effective product is not always the least expensive product. The need to reformulate or re-source could easily negate any savings that may have resulted from focusing on the lowest price.
Newer technologies may be more costly at the onset – Most food companies are in a marathon rather than a sprint. While none of us predict the future, we must nonetheless always consider the future in terms of responsible product management. Growth, expansion, and product extensions are always critical for maintaining and assuring the long-term success of a business. Newer products such as high oleic soybean oil are going to be more costly at the onset—acreage, infrastructure, demand, etc. must all be developed essentially from the ground up. Until the process approaches full maturity, there will be a price premium for such products. However, if the evolution of the oil has followed the tenets outlined above, as is the case for high oleic soybean oil, its cost will significantly decrease over time to the point where it is considered to be the optimum product in terms of functionality, availability and cost-effectiveness. While perhaps being a bit more expensive in the short-term, early adoption of such ingredients will be much more cost-effective in the long-term.
Newly developed trait-enhanced oils carry a premium – Enhanced nutrition and functionality add significant value for consumers and food product companies. Although such oils may carry a premium relative to commodity oils, they represent significant economic value in terms of improved quality, nutrition, extended shelf-life and increased sales. These benefits will be enjoyed by all segments of the value-chain, increasing value all along the way.
Price predictability – By their very nature, boutique and specialty oils can carry a significant amount of price unpredictability. Changes in availability, unexpected demand, and even favorable press can drive very significant increases in price. Sometimes the marketplace can absorb these sudden increases but more often than not, it is very difficult to pass increases along to customers. As counterintuitive as it might sound, unexpected demand for a product could actually result in decreased profitability for a food producer. The ability to hedge oil purchases and to utilize futures contracts is very often a critical determinant in a product’s profitability and ultimately its success. Trait enhanced soybean oils such as high oleic soy are priced directly against prevailing Board of Trade futures and cash prices, making it very straight forward to predict long term oil costs and product margins. The ability to utilize futures contracts is often a requirement for users of large quantities of edible oils.
Oil Batch Life Cycle / Fry-life – The longer an oil lasts in the fryer, the more cost effective it will be. A corollary to this may be “the less downtime, the greater the efficiency”. As examined in more depth in “Fryer Maintenance & Clean Up” above, the whole cycle of oil use and cleanup must be considered. Extending fry life and decreasing downtime will have a significant effect on the bottom line of a frying operation. The use of high stability oils such as high oleic soybean oil will result in both a much longer period between oil change outs and significantly shorter downtime due to easier clean up. This one-two punch means more efficiency, productivity and profitability.
Total Polar Compound by Day of Test
The fry-life of high oleic soybean oil has been measured to be on-par with high oleic sunflower oil, considered the “gold-standard” oil for frying