FMC announces latest hydrocolloid acquisition

28-Jul-2008 - Last updated on 29-Jul-2008 at 15:43 GMT

FMC Corporation has strengthened its hold in the hydrocolloid market and entered into an agreement to acquire CoLiving Food Ingredients, based in Guangzhou, China to serve the rapidly growing dairy market there.

The company said the acquisition will enhance FMC’s leadership position in supplying specialty hydrocolloid products and services to the rapidly growing food ingredient market in China.

It is expected that the transaction will close within four to six weeks following approval from Chinese regulatory authorities.

CoLiving will be integrated into FMC Specialty Chemical Group’s BioPolymer division, which recently opened a new technology and commercial center in Shanghai.

Following the acquisition, FMC will add specialty blending capabilities and an application laboratory in Guangzhou.

Mike Smith, general manager, FMC BioPolymer, said: “We are excited to broaden our customer reach and strengthen our ability to offer innovative solutions to the Chinese dairy market through the CoLiving acquisition.

“This acquisition is an excellent complement to further accelerate the strong growth BioPolymer has realized supplying specialty stabilizers to Chinese dairy companies as well as improve service and supply chain efficiencies to the Chinese food ingredient market."

Demand for dairy products is increasing in emerging markets, such as India and China, which is having an affect on global consumption volumes.

The dairy products market in China was worth $19,356mn in 2007, according to Euromonitor. It had grown 159 percent between 2002 and 2007 and the forecast market growth from 2007 to 2012 is 85 percent.

Dennis Seisun, of IMR International, a consultancy that publishes the Quarterly Review of Food Hydrocolloids, said: “Everybody in the food industry is either starting up or expanding in China and it’s a trend that can be expected to continue.

“It is an acquisition that makes sense and it’s an indication that they are really focusing on their food ingredients business.”

Hydrocolloids

The acquisition follows FMC’s deal in May to acquire International Specialty Products (ISP) alginates and food blends business in order to expand its alginate profile and strengthen cost competitiveness. This will also to be integrated into FMC's biopolymer division.

Alginates are hydrocolloids derived from alginic acid obtained from seaweed (kelp) and are very versatile biopolymers used in a wide range of food, pharmaceutical and specialty applications.

The world food hydrocolloid market is valued at $4.2bn, with pectin ($443mn), xanthan ($225mn) and MC/HPMC ($57mn) predicted to experience the fastest growth rate over the next five years (5.7 percent, 5.2 percent and 6.2 percent respectively).

The increasing demand for healthy, low-fat products has provided new innovation opportunities for manufacturers of some hydrocolloids, which can be used as replacers.

However, hydrocolloids have been subject to rising raw material and energy costs, which have affected manufacturers across the board.

FMC Corporation is split into three segments; Agricultural Products, Specialty Chemicals and Industrial Chemicals and employs about 5,000 people globally. Its total revenue in 2007 was $2,632.9mn compared to $2,345.9mn in 2006.

FMC says its BioPolymer division competes with direct suppliers of cellulose and seaweed extract as well as suppliers of other hydrocolloids, which may provide similar functionality in specific application. Over 60 percent of BioPolymer sales occur outside of the US.