Weaker US bread consumption hits Novozymes sales

Related tags Carbohydrate Low-carbohydrate diet

A fall in bread consumption in the US impacts sales for food enzyme
leader Novozymes in the third quarter with the Danish firm
reporting a 7 per cent fall in sales for this segment to DKK373
million (€50 million) this year from DKK399 million (€53.6 million)
in 2003.

Food enzyme sales in the US were bruised by the low carbohydrate diet frenzy, which has an estimated 30 million followers, and has encouraged consumers to turn away from carbohydrate products, like bread and pasta, while concurrently fanning a rise in protein purchases.

But counterbalancing the fall, the 3900-strong firm reports that food enzyme sales to the brewing industry in the US were positively impacted by the low-carb trend, "partly due to an increase in demand for low-carbohydrate beer produced using enzymes."

On a comparative basis Bagsvaerd-based Novozymes claims that the final third quarter figures for food enzymes were hit because "taking the third quarter in isolation, sales have been negatively affected by the fact that sales to the wine and juice industry started in the second quarter of 2004, rather than in the third quarter as usual."

Food enzyme sales for the first nine months of the year came in at DKK1.06bn, representing about 25 per cent of overall sales for the group that include technical and feed enzymes as well as a branch for micro-organisms. Net profit for the group for the period reached €81.8 million, a 13 per cent rise on the previous year boosted by stronger sales in micro-organisms.

But there are signs that the bakery enzyme market, that currently constitutes about a third of the overall food enzyme market, could actually bring the strongest gains in the near future with recent research from market analysts Frost and Sullivan pinpointing these enzymes as the fastest growing segment with a compound annual growth rate of about 7.2 per cent.

The report, that covered the three largest segments of the food enzyme industry - starch and sugar processing enzymes, dairy enzymes and bakery enzymes - pitched them collectively as worth $142.4 million (€117m) in 2003.

The market for bakery enzymes came in at $42.1 million in 2003 and is expected to climb to $68.7 million by 2010.

With $62.2 million in value and 43.7 per cent of the total revenues, starch and sugar processing enzymes are the largest market but with a slow growth rate hit by industry consolidation, says the Frost & Sullivan report, tipping the CAGR at a low 2.3 per cent between 2003 and 2010.

Novozymes and competitor Genencor International represent the top two players in starch and sugar processing enzymes controlling 97 per cent of the market between them. In the US their major customers in the industry include agribusiness Cargill, starch firm AVEBE, and UK sugar and sweeteners group Tate & Lyle.

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