Sustainable spices: Olam highlights traceability platforms

Sustainable spices: Olam highlights traceability platforms

15 Aug 2018 --- As the demand toward highlighting traceability around spices continues to grow, Olam International is working on plant-based innovations and tapping into the opportunity to market sustainable spices. Innovation within the diverse company, which this week released its latest financial results, includes new formulation solutions for plant-based alternatives within chocolate milk.

Speaking with FoodIngredientsFirst recently at the IFT Food Expo in Chicago Jill Houk, from Olam SVI, explains the latest trends in spices and how important it is to highlight traceability around spices and seasonings.

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Jill Houk, Olam SVI

 “Spices are just blowing up all over the place. The American palate is getting spicier and spicier with a greater percentage of people who embrace higher heat and also great spicing opportunities in terms of plant protein. Plant proteins often times have flavors that may need some masking and those would benefit from some onions, garlic, capsicums and cumin,” she says. 

“Also the reduction of sugar and replacement of sugar with spices versus artificial sweeteners is very much on-trend. People are looking for free-from food so if you’re looking for a reduced sugar beverage you could, for example, make a lemonade with a little bit of ginger and jalapeño and reduce the sugar by about 25 percent and get that same flavor impact.”

“You really want to look at deep indigenous spices so peppers will give instant credibility because you will get that high spice level that you find in the countries of origin. Also things like cassia or cinnamon. The beautiful cassia from Vietnam would be a terrific way of getting that authentic flavor into your beverages and foods.”

Olam’sAtSource program is promoted as a comprehensive sustainable sourcing solution for agricultural raw materials and food ingredients.

Watch the full interview with Jill Houk and learn more about Olam’s AtSource program here

The power of plant-based proteins
The demand for plant-based proteins is being pushed up as more people look for a high protein diet and move away from animal-based proteins. Although there are many opportunities in this space, there are technical challenges to overcome in terms of offsetting some of the off notes and flavors often associated with proteins. 

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Wouter Stomph, Olam Cocoa

Wouter Stomph, from Olam Cocoa, also spoke with FoodIngredientsFirst recently about the company’s latest cocoa concepts and formulation solutions for plant-based alternatives within chocolate milk.

“There is a big push for cleaner label in terms of flavors and colors and cocoa can be an excellent ingredient to help with some of the challenges. It’s a very common ingredient; everybody knows it and loves it,” he says.

“Using cocoa powder to mask some of the bitter notes can be a very powerful tool. At Olam, we have a vast variety of different types of cocoa and we have carried out a lot of work on which powders are more bitter and which powders have a more rounded chocolate flavor and how that balances with some of the bitterness and some of the off flavors that are in the proteins.”

At IFT 2018, Olam presented a pea-protein based chocolate beverage with pumpkin seed protein as well. Innovators used a dark red cocoa powder that Stomph describes as “really vibrant” and able to round off very well some of the bitter and off flavors linked to the pea protein. 

Watch the full interview here. 

Olam Q2 earnings slide 36 percent – coffee, peanuts and edible oils performance poor
Olam International has seen its profits decline to S$94.0 million (US$68m), a 36.4 percent crash from the same period a year earlier – and it’s partly down to weaker earnings from edible oils, coffee and peanuts. However, the Singapore-based commodity trader and agri-business giant says that revenue climbed 13.9 percent to S$7.4 billion (US$5.3 bn), supported by its food staples and packaged foods business.

The weaker performance and sluggish sales from the coffee, peanuts and edible oils segment has hit earnings, according to Olam International’s latest financial statement. 

Olam’s profit after tax and minority interests also fell 13.6 percent to $252m (US$182.5m) in the first half of the year. 

The company says that Free Cash Flow to Equity (FCFE) in Q2 2018 improved significantly to S$242.1 million (Q2 2017: S$28.7 million) and the Board of Directors has declared interim dividends of 3.5 cents per share for H1 2018 (H1 2017: 3.5 cents).

“While our first half results were lower than the previous corresponding period, we expect stronger prospects for our business for the rest of the year,” says Co-Founder & Group CEO, Sunny Verghese.

“Our investments in improving operational excellence (stronger cash, cost and capital focus), the launch of AtSource, and digitization initiatives have progressed well and will strengthen our business going forward.”

By segment, the following results were reported:

H1 2018 segmental performance: edible nuts, spices & vegetable Ingredients (SVI)
Olam says that revenue grew marginally by 0.2 percent to S$2.1 billion (US$1.5bn), in line with volume growth, while EBITDA fell by 7.2 percent to S$236.7 million (US$171.5m) when compared with strong results in H1 2017. 

Edible Nuts reported a lower EBITDA as improved performance from cashew, almonds and hazelnuts was offset by peanut farming in Argentina, while SVI, excluding tomato processing, had a steady performance

Confectionery & beverage ingredients
Revenue decreased 17.9 percent to S$3.6 billion (US$2.6bn) on lower volumes and lower coffee prices, while EBITDA declined 4.5 percent to S$178.3 million (US$129mn) against a strong H1 2017. The period recorded weaker results from coffee, which continued to face difficult market conditions that started in Q4 2017, although this was partly compensated by better results from Cocoa supply chain and processing.

Food staples & packaged foods
Revenue was up 50.7 percent to S$6.0 billion (US$4.3 bn) on significant volume growth. EBITDA declined 23.2 percent to S$167.3 million (US$121 mn) against a very strong H1 2017. The segment was mainly impacted by Edible Oils platform, which experienced volatile trading conditions, higher period costs in Olam Palm Gabon and reduced share of income from Nauvu Investments after it was sold in March.

“Satisfactory across the business”
Executive Director and Group COO, A. Shekhar adds that Olam’s performance was “satisfactory across the business” and must be seen against the particularly strong performance in the same period last year. 

“Our Q2 2018 results were impacted by the continued down cycle in coffee, unprecedented weather conditions in peanut farming in Argentina and lower contribution from Edible Oils,” he says. 

“We continue to take proactive action to strengthen our balance sheet. We have significantly reduced net debt, lowered finance costs and diversified our funding sources with initiatives including undertaking Asia’ first sustainability-linked club loan and issuing private placements.”

Olam says that while global markets are experiencing heightened political and economic uncertainties, the company believes that its diversified and well-balanced portfolio provides a resilient platform to navigate the challenges in both the global economy and commodity markets. 

Olam will continue to execute on its 2016-2018 Strategic Plan in H2 2018 and pursue growth in its prioritized platforms. It remains focused on turning around underperforming businesses, ensuring gestating businesses reach full potential and delivering positive free cash flow.

By Gaynor Selby

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