Roquette-Sethness launch joint venture in colours
market French starch manufacturer Roquette has teamed up with US
colour firm Sethness to target manufacturers in and around central
Europe.
In a move likely to bring savings to both companies - a need compounded by the high raw material prices today - the joint venture Sethness-Roquette sees the two private companies linking up to manufacture and market caramel colours at a new plant in France.
"Located adjacent to Roquette's largest carbohydrate plant in Lestrem, France, the new state-of-the-art plant is supplied from the Roquette plant via pipeline," said Sethness in a statement, referring to Roquette's largest carbohydrate.
Not only facing high raw material prices, European ingredients companies working with caramel colours - used extensively in soft drinks such as Coca Cola - must inject growth into a mature market that sees average levels bundling along at only 1 - 2 per cent per year. For companies like Roquette and Sethness Eastern European markets hold real opportunities to attain double-digit growth in caramel colours.
"Many caramel manufacturers have started to look at these countries to maximise revenues," explains Lyndsey Greig, food market analyst at Frost & Sullivan. While the size of the markets might be small and certainly may not be worth developing local production facilities for, Greig claims that companies need a presence in this area.
Although terms of the new Sethness-Roquette joint venture were not disclosed, both firms said the plant - due to be up and running by the end of the year - will serve European, Middle Eastern, Russian, the former Soviet Union Republics, and African markets.
Frost & Sullivan values the total European caramel colour market at €22.7 million in 2001, forecast to creep up to €24.1 million by 2008. A fraction of the total European food colours market estimated at €193.4 million in 2001.
The market analysts predict that revenues for companies in caramel colours - the number one supplier is US firm D.D.Williamson - are expected to be higher in the short term as the soft drinks market continues to grow. But the impact of higher global prices for sources of carbohydrates - wheat and corn for example - will eat into these revenues.
Competition in Europe stepped up at the beginning of the year when D.D. Williamson acquired Cargill's Cerestar caramel colour operation in Manchester. Under terms of the agreement the US caramel colour firm will source glucose syrup via a pipeline from Cargill's Cerestar starch refinery in Manchester to manufacture 'a broader line of caramel colour and burnt sugar products for global markets'.
The acquisition joins the company's first European, now 25 years old, operation located in County Cork, Ireland.
