The UK baking industry faces mounting pressure to reduce costs. Pressure is coming from the consumer and the retailer, but equally importantly, pressure is coming from within its own organisation to ensure survival in these difficult times. Finding ways to reduce costs and make more profit are key drivers.
In developed countries, more and more consumers want quality and luxury, for which they are willing to pay a higher price. They are not just interested in having what they perceive as an everyday treat; they are now looking for a real indulgence as a reward for dealing with the growing pressures of 21st-century living. This trend has been coined "premiumisation".
Research*, recently carried out by an independent market research company on behalf of Muntons, clearly showed that consumers perceive products with the word malt included in the title to be of a higher quality than non-malted equivalents. And they understand that they have to pay more too. Adding malt to a product, to the ingredients declaration and, importantly, to the product title, will bring benefits to the product and also increase consumer desirability. Products with malt in the title can carry a price premium without impacting negatively on consumer demand.
The extra cost of including some malt in the recipe is much less than the extra revenue generated by the higher price of the retail product. Customers will taste the difference too.
Compare, for example, malt whisky with blended whisky, malt vinegar with "non-brewed condiment" and a standard white loaf with a malted loaf. Which is better and which products carry a premium price? The malted versions cost more, but consumers are happy to pay, because they offer better quality and the taste is superior; the malted version is seen to be a better product.
Achieving market premiumisation is also possible by simply adding another flavoured version of an existing product to your range. This strategy is often seen as a form of innovation, with brand extensions appearing in many guises to gain extra shelf space and tease more sales away from competitive products. Remember Kit-Kat? The consumer could only choose between either a four-finger or a two-finger size. Now, in addition to the two different sizes, there are mint, coffee and orange flavours, not to mention Senses, Chunky and ’Peanuts’.
Adding malt in one of its forms to one of your standard products and the label creates this simple brand extension and allows premium pricing, boosting profitability plus the consumer benefits from the flavour and texture of malt in the product.
Malt is made from barley or wheat, sprouted and kilned, then either ground into flour, flaked or mashed and extracted into malt extract. It is naturally sweet and has that well known "malty" aroma and flavour. What is less well-known is that when added in small amounts (under 5%) to sauces, gravies, biscuits and ice creams, for example, it acts as a flavour enhancer, bringing out the flavours naturally present, which in turn means that fewer spices, flavours and other expensive ingredients are needed, thus reducing cost.
For example, when 5% malt extract was added to cheese crackers, it was found that the relatively expensive powdered/dried cheese content could be reduced by at least 10% without any noticeable effect on the final taste.
The same effect was noticed in pie fillings, in the sauce or gravy, where the addition of malt extract enhanced the flavour intensity, permitting reductions in other costly ingredients. The sauces also picked up a healthy shine, improving their visual appearance. In both cases, the low percentage of malt inclusion meant there was no addition of malt flavour.
In both these examples and in many other instances, the addition of a small amount of malt not only lowers the overall cost of manufacture, but also brings about subtle product enhancements.
*Independent market research undertaken by Cogent Research, April 2009