Dow AgroSciences and Food manufacturers and Health Care & Life Sciences and Life Science & Biotech

Dow AgroSciences wants food industry to hunger for healthier deep-fryer oil

August 7, 2006

Guilt-free French fries? The golden-fried potato sticks might never top nutritionists' lists, but an Indianapolis company is hoping its product makes the quintessential American snack food a little easier to swallow for the diet-conscious.

Dow AgroSciences LLC has brought on a team of people to push Natreon vegetable oil to purveyors of French fries and other deep-fried foods in the quest to eliminate much of the trans fat that now clogs arteries around the country.

While Dow Agro doesn't actually sell Natreon, it does sell the seeds for the canola and sunflower plants used to make it under the brand name Nexera. Those plants produce an oil that is low in saturated fat and virtually free of trans fat, but holds up in deep fryers just as well as fattier oils now on the market.

And its push into the restaurant and food-service industries could hardly be more timely. Federal officials and consumer groups are on the rampage to drastically reduce trans fat in American diets.

The U.S. Food and Drug Administration recently began requiring food producers to list trans fat along with tallies of total and saturated fats on food labels. The Washington, D.C.-based consumer group Center for Science in the Public Interest in June made headlines for suing Louisville-based Yum! Brands over its use of partially hydrogenated oils to fry chicken and other goodies at its KFC restaurants, saying the chain turned chicken into a product that could cause "a Kentucky Fried Coronary."

Once all-but-unheard-of, trans fat is in the spotlight following research showing the fat to be more damaging in some respects to the human body than saturated fat because it simultaneously lowers "good" cholesterol and raises "bad" cholesterol. Although trans fat occurs naturally in animal fat and dairy products, the main source of the estimated 5.8 grams of trans fat that Americans consume daily is partially hydrogenated oils, according to the FDA. Those oils are widely used by restaurants and commercial food producers in everything from deep-fried foods to salad dressings.

In the restaurant industry, trans fat is a hot topic.

"Chains have been criticized for not getting rid of [trans-fat-laden oils] faster," said Carolyn Walkup, senior editor for Nation's Restaurant News, a New York-based trade magazine.

Restaurants are beginning to respond. Beginning this month, Dublin, Ohio-based Wendy's International will cook its fries, chicken nuggets and fried chicken breasts in a soy/corn oil blend that is nearly trans-fat-free, becoming the first chain to make the switch. After more than two years of research and testing, Wendy's decided on an oil made by Minnesota-based Cargill, said company spokesman Bob Bertini.

Illinois-based McDonald's Corp. was among the first chains, in 2002, to announce it would find a lower-trans-fat oil in which to cook its signature French fries, but the company has yet to settle on a replacement. Tests are ongoing, said McDonald's spokeswoman Julie Pottebaum, but the company won't divulge whose oils it's testing.

Likewise, Dow Agro won't say if its oil is among those being tested by McDonald's, but it said at least two major national chains and a half-dozen regional chains are giving Natreon a go in their test kitchens. So far, a handful of food-service and institutional users have converted to Dow Agro's oil, including Georgetown University's Law Center, said David Dzisiak, the local company's global business leader for oils.

The problem with most naturally trans-fat-free oils, such as the liquid vegetable oils most consumers find on supermarket shelves, is that they don't hold up well in commercial fryers, Dzisiak said. Restaurants and food-service providers need oil that can be used repeatedly for many hours of frying, and partially hydrogenated oils--those with hydrogen molecules added to make them more stable--fit the bill.

Dow Agro's solution was to create sunflower and canola plants that naturally produce oils low in saturated fats and high in the fatty acids that make the oil last longer. Although Natreon costs about 25 percent more than typical partially hydrogenated oil, it lasts longer, meaning restaurants have to replace it less often. Therefore, the cost difference between partially hydrogenated oil and Natreon is negligible, Dzisiak said.

The question, then, becomes taste, and Dow Agro engaged a fleet of taste-testers and researchers to show potential Natreon users that diners--including the ever-important teen-age market--like foods fried in Natreon as well as or better than those cooked in fattier oils.

In its aggressive push to sell Natreon, Dow Agro is entering a new realm of "demand creation" for its products, said Dzisiak. The company developed the oil, but it's actually made by unaffiliated oil producers who buy canola and sunflower plants from farmers. Those farmers buy Nexera seeds from Dow Agro.

So far, Dow Agro's demand-creation team has only eight employees--five in Indianapolis and three in a research center in Canada. But eventually, the company sees its oil business, from Nexera and other oil-plant seeds under development, reaching $500 million a year.

That's big bucks for a company that last year brought in $3.6 billion in sales, and it's an important part of Dow Agro's evolution from herbicide and pesticide maker to biotechnology company. The stakes also are high for parent company Dow Chemical, which has been battered by rising raw material costs in many of its traditional chemical and additive business segments.

Dow late last month disappointed analysts with its second-quarter earnings, which came in below estimates. Several analysts have placed Dow's stock rating under review as a result.

But some see Dow's investment in specialty products such as Nexera as key to the company's overall growth because of such products' greater immunity to cyclical fluctuations than its traditional chemicals and commodities business.

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