ABF Ingredients seeking expansion in China

Stephen Catling, head of ABF Ingredients, told AP-Foodtechnology.com that China is already one of the top four markets for the group, with fast growing demand for ingredients like enzymes and proteins.

"Asia has been our fastest growing market for enzymes for the last three years, and particularly China," said Catling.

The region now accounts for more than 20 per cent of the group's enzyme sales, with annual growth of between 25 and 30 per cent.

In food applications, China sees annual growth of 12 per cent said Catling, helped by a growing bakery industry as well as traditional flour-based foods, fruit juice processing - enzymes are used to break down fruit pulp - and brewing.

ABF has also done enzyme development programmes for steamed bread and noodles, and is working closely with its sister company AB Mauri, which has a bakery R&D division in Guangzhou.

In proteins too, the Ingredients division is reaping the benefits of the rapidly developing infant nutrition market.

Lacking any cheese manufacturing capacity, China has to import all of its whey proteins and ABF, like many of the dairy ingredient groups including Fonterra and Glanbia, is benefiting from strong demand for dairy proteins, particularly in infant nutrition products.

ABF bought US firm Protient last year, allowing it to build a portfolio around proteins - whey and milk isolates, enzymes, yeast extracts and cereal derived proteins.

Earlier this year it developed heat stable whey protein concentrates for using in infant nutrition recipes in cans that are heat processed.

"We're shipping a lot of that and some of the products where it has been used are being sponsored by the government," said Catling.

But while the ABF group already has 14 factories and 5,000 staff in China, ABF Ingredients still has no manufacturing in China, shipping most of its product from Europe.

This is clearly an area set for change.

"With the size of ABF in China, we have a good infrastructure to research in investment opportunities.

We've looked at a lot of things and have let go of some while others we're still waiting on."

"Adding manufacturing is the first priority and the second will be finding good Chinese partners for production, or even acquiring some directly," said Catling.

Overall sales from the Ingredients division and yeast business AB Mauri combined passed $1 billion last year, with profits up by 25 per cent.

Catling says a third of the ingredients business' growth is from Asia, and China is a large part of this.

"I do expect to take a step forward in 2007 with an acquisition.

China represents our largest development opportunity in Asia."

Next year it will also open its own sales office in Japan, where there is strong demand for its specialty flour in confectionery applications.