A method of producing an emulsion and an extrudate for a powdered nutritional product is provided. The method includes utilizing an extruder (10) that contains a high shear element (32) positioned within the barrel of the extruder (20). The use of a high shear element (32) positioned within the barrel of the extruder (20) allows both emulsification and extrusion of the ingredients to occur within the barrel of the extruder (20). A first portion of ingredients comprising a slurry is processed by the high shear element (32) to form an emulsion. The emulsion is then combined with a second portion of ingredients and extruded to form an extrudate for the desired powdered nutritional product. In some embodiments, the high shear element (32) may comprise a shearing disc or a pair of shearing discs. The extruder (10) may comprise a single screw extruder, a twin screw extruder, or any other suitable type of extruder.
