DSM targets China with new flavour technology
illustrates how increasingly important this region is becoming to
European flavour firms.
The company plans to start work next month on a plant in Shanghai in order to take advantage of both the technological breakthrough and the huge potential that exists in Chinas ingredient sector.
"The technology is based on dynamic mixing of solid materials, and was developed in partnership between DSMs food technologists and its materials technologists," company spokesperson Nelleke Barning told FoodNavigator.
"It is not, as far as we know, used by any of our competitors."
The new facility will be built on the existing DSM nutrition production site in Xinghuo, Shanghai, China. The location underlines exactly where the company sees future growth to lie.
"This investment is again a step in the context of DSM's new strategy Vision 2010 - Building on strengths," said Feike Sijbesma, member of DSM's managing board. It serves two key strategic targets: growing our specialty portfolio in nutrition and expanding our presence in the emerging Chinese market.
"The investment in a new facility provides an accelerated growth path into the Asian and Chinese process flavours market, from which our new and existing customers will benefit."
The market for flavours has, historically, been dominated by suppliers from the US, Japan and Western Europe - in particular, France, the UK, Germany and Switzerland. However these traditional flavour production areas could begin to lose market share to developing areas of the world as the product range and demand expands.
According to a recent report from Freedonia, China leads the way in spurring growth in Asia Pacific, a region slated to advance at about 7.3 per cent, year on year, until 2008. This compares to Western Europe and the US with 3.7 and 3.3 per cent growth respectively.
"Demand for our process flavours has increased significantly over the past few years," said Fedde Sonnema, business unit director of DSMs Savoury Ingredients.
"Especially the Chinese food market has grown over the last years far in the double digit numbers. This new plant will support us in our ambitious future growth plans and gives us the opportunity for expanding our presence in the emerging Chinese market."
Barning added that the new technology is not about achieving cost reduction as such, but about quality. The new process will allow the firm to produce not only DSM's existing Maxavor line of roasted products, but also new types with milder notes.
Process flavours are used in culinary and savoury products, as soups, snacks and ready to eat meals. In these food products, process flavours provide and enhance specific taste donation, like roast beef, sauted vegetables or boiled chicken.
The new flavour plant will double the company's production capacity of process flavours. Capital budget for the investment is estimated around 10 million. Work on the new plant will start in March 2006.
Following a rigorous testing and analysis program during 2006, initial production is scheduled for late 2006, with the plant becoming fully operational by April 2007.
This is the latest in a series of manoeuvres by DSM into the Chinese market. In November, DSM Nutritional Products opened a laboratory in Shanghais Fudan University to develop new methods for production of vitamins, carotenoids and food ingredients.
The deal is part of DSM's strategy to grow its business and R&D activities in the Chinese market. The group, which is aiming to double sales there to $1 billion by 2010, recently gained a controlling interest in two joint ventures with Chinese vitamin maker NCPC.
