Danisco expands its business platform with xanthan
Danisco is the latest entry into the increasingly crowded Xanthan market. Following a similar model to Carghill, Danisco have entered upon a joint venture with Henan Tianguan Group Co., Ltd to distribute their xanthan gum globally. CyberColloids have commented before that we can expect to see this kind of deal more often as price pressures increase on hydrocolloid companies with western production plants.
The full announcement is reproduced below:
Danisco enters into a joint venture with Chinese Henan Tianguan Group Co., Ltd. in producing xanthan gum to the global market.
The joint venture consolidates Danisco´s presence in China where the company already produces a broad spectrum of ingredients to the global food industry.
On 14 October, Danisco signed a joint venture agreement giving Danisco 80 per cent of the shares in the xanthan production of the Chinese company Henan Tianguan Group Co., Ltd. The production capacity has over the recent years been expanded to approx. 2000 MT, and Danisco expects that its position in the food ingredients market will allow the company to become a significant player in the growing global xanthan market.
"Xanthan is a new product in Danisco´s product portfolio. However, we already have extensive knowledge about xanthan through Danisco´s Functional Systems division which is a large user of xanthan. As part of our growth strategy, and in line with the one-stop-supplier-strategy, we will be able to produce high quality xanthan and sell it at competitive prices to both internal and external customers," says CEO at Danisco, Alf Duch-Pedersen.
The xanthan business will be organised under Danisco´s Textural Ingredients division and the joint venture will be named Danisco Tianguan (Nanyang) Co., Ltd. The company employs approx. 90 people.
The joint venture requires an initial cash investment and will fulfil Danisco´s general financial target of achieving a return that exceeds the cost of capital in the third financial year after the establishment of the joint venture.
Danisco Tianguan (Nanyang) Co., Ltd. is another step in Danisco´s growth ambitions in profitable growth markets. Earlier this year, Danisco made an investment in its Mexican pectin plant and expanded the production capacity at its Czech pectin plant by 40 per cent.
The joint venture establishment is conditional upon required regulatory approvals.
About Danisco, China and xanthan
China is known for its xanthan production, and Danisco´s new partner is one of the largest xanthan producers in China.
Danisco Tianguan (Nanyang) Co., Ltd. will benefit from Danisco´s well-established worldwide sales network, innovation centres and technical service facilities. Before the joint venture, the plant primarily produced xanthan for the Chinese market. Now, the plant will target the international food markets, the largest being Europe and the United States.
The world market for xanthan is estimated at approx. 40-50.000 MT of which approx. 60 per cent belong to the food and pharmaceutical market. The growth rate for xanthan is approx. 5 per cent which is at the upper end for food ingredients. The advantages in establishing Danisco Tianguan (Nanyang) Co., Ltd. allows Danisco to expect a significant market share with growth above the average market growth.
Xanthan is a hydrocolloid used in a wide range of applications in the food industry as well as agent in different industrial applications, e.g. in the oil industry. Within food applications the main use of xanthan is as a stabilising agent in salad dressing, sauces, beverages, mayonnaise, ketchup, bakery products and dairy desserts.
- For more information, please contact:
- Søren Olsen, Business Director Xanthan, Danisco Textural Ingredients, tel.: +45 8943 5018
- Natalie E. Weber, Media Relations Manager, tel.: +45 3266 2927
About Henan Tianguan Group Co., Ltd.
Henan Tianguan Group Co., Ltd. was founded in 1939 by the municipal government in Nanyang, Henan Province, China. Nanyang is located approx. 1300 km southwest of Beijing and approx. 1300 km northwest of Shanghai. The main activities of the group are to produce and sell alcohol, beer, glacial acid, CO2, electricity, steam and xanthan. The group employs in total approx. 5,000 people and is headed by Chief Executive Mr. Zhang Xiaoyang. The company is among the more significant companies in the Henan province.