Two new market leaders for xanthan
already crowded market this week when US chemicals firm Huber
announced it would buy the world's number one xanthan gum supplier
CP Kelco. Huber steps into the leading position just weeks after
French firm Rhodia gave up its number two xanthan gum slot to
Danisco when the Danish firm acquired its food ingredients arm,
reports Lindsey Partos.
With a new market leader for this popular hydrocolloid - used in a wide variety of applications from salad dressings to beverages - the market could expect some changes. Danisco, in particular, has identified xanthan as part of its growth strategy.
The Danish firm appears to be confident that the Huber acquisition will not have a major impact on the number two player.
"This is a vertical integration for Huber that sees it expanding into food ingredients business, " Dan Togo Jensen, investor relations at Danisco said to FoodNavigator.com.
Danisco is itself a relative newcomer to the competitive xanthan gum market. While it has always bought-in the ingredient, two recent acquisitions will allow the firm to manufacture the product for the first time - ensuring savings and synergies on a variety of levels. "We want to serve our current customer base and our own functional systems with xanthan gum," said Jensen.
In a deal worth €320 million, Danisco bought the food ingredients arm of struggling chemical company Rhodia in March this year, and with it a substantial slice of the hydrocolloid market, including facilities to produce xanthan production.
Acquiring the capacity to manufacture xanthan gum - obtained by microbial fermentation from Xanthomonas campestris - has given Danisco the opportunity to build on its one-stop supplier philosophy with the firm no longer required to buy in the commodity.
On the European side, former Rhodia xanthan gum production sites are mostly based in France, with other facilities in the US. The status quo is likely to remain for the immediate future with Jensen commenting that here has "not been much movement of people" under the Rhodia integration. "Of course, there are synergies - for the sales force, production and administration," he commented.
The Rhodia acquisition builds on Danisco's announcement in October last year that it had linked up with one of the largest xanthan gum suppliers in China, the Henan Tianguan group, in a new joint venture to tackle the emerging - and burgeoning - Chinese market.
The new venture - Danisco Tianguan (Nanyang) - gives the firm 80 per cent of shares in the xanthan production of Henan Tianguan, a production capacity that hits approximately 2 million tons. "Although we are not yet producing out there, we will shortly expand production facilities," commented Jensen.
With a total market value in the range of €230 million, xanthan volumes are approximately 40-50 million tons per year, of which about 60 per cent is used in the food and pharmaceutical market. Growth rates for xanthan gum are currently coming in at the higher end - 5 per cent - of the generally lacklustre growth figures in the food ingredients industry.
"Xanthan is still one of the fastest growing hydrocolloids. Its versatility and, now its low price, make it a hydrocolloid of choice," Dennis Seisun from market analysts IMR International recently mentioned to FoodNavigator.com.
Earlier this year both CP Kelco and Rhodia announced a price hike for xanthan gum, but according to Seisun, as a result of the recent Cargill, Staley and now Danisco entries into the xanthan market, it will be difficult for any price increases to stick.
UK ingredients company Tate & Lyle, which owns Staley, joined the list of xanthan suppliers at the end of last year.
In 1980, the EU approved xanthan gum under the E-number 415, some eleven years after the FDA cleared the high molecular weight polysaccharide as a food additive for the US market.
