DSM pulls out of aspartame market
citing price erosion and unprofitability as key factors.
"The main reason for the withdrawal is that this market is not profitable any more, and we see no chance of it being so in the nearby future," DSM senior communication officer Nelleke Barning told FoodNavigator.
"Although we have made many efforts to cut costs, low market prices mean that we just couldn't make this profitable."
DSM's involvement in aspartame, a key sweetener, is through Holland Sweetener Company (HSC), a 50/50 joint venture between the Dutch ingredients firm and Japanese firm Tosoh Corporation.
It is now envisaged that the business will cease to function by end of 2006 with production of aspartame phased out in the fourth quarter of this year.
Barning insisted that negative press surrounding the safety of aspartame has played no part in informing this decision.
"This has not been a factor," she said. "We believe the product is safe, and there have been as many studies supporting this as there have been studies suggesting otherwise."
The fundamental reason behind the withdrawal, she said, was the simple fact that the global aspartame market is currently facing structural oversupply, which has caused worldwide strong price erosion over the last five years.
"Competition has driven low market prices, resulting in a persistently unprofitable business position for DSM's aspartame interests."
The company believes therefore that the decision to withdraw from this business is firmly in line with DSM's Vision 2010 - Building on Strengths strategy, in which profitable innovative growth and value creation are key objectives.
The termination of HSC's business operations will affect around 100 jobs on the site in Geleen, the Netherlands. DSM expects to be able to re-assign the majority of these people to other positions.
DSM does not expect the decision to have a material impact on its overall corporate financial performance in 2006. In Q1 2006 DSM will - in relation to this decision- record an exceptional item of approximately € 10 million net.
Aspartame was first authorised for use by several EU member states in the 1980s. European legislation harmonising its use in foodstuffs was introduced in 1994 following safety evaluations in 1984, 1987, 1988.
Since then there has been ongoing debate amongst scientists and the media about the safety of aspartame itself and its components, aspartic acid, phenylalanine and methanol, although so far the fears have not been borne out by the available evidence.
DSM 's involvement began in 1985. In 1988, the first aspartame production unit was started up in the Netherlands, with subsequent expansions making HSC the largest aspartame producer in Europe.
Twinsweet was discovered in 1995 as part of a research program to develop aspartame-based new sweetener concepts for the food and nutraceutical industries. HSC has filed several patents on the Twinsweet product, the production process and the use of the product.
