Danisco gets go-ahead for emulsifier buy

By Jess Halliday

- Last updated on GMT

Related tags Vice president Danisco

Danisco has obtained European approval for its planned acquisition
of ABF Ingredients' Abitec emulsifier business, which is expected
to strengthen its position in some key European markets.

The Danish firm's intention to acquire Abitec was first announced in January, but was subject to approval by European competition authorities.

Now this has been granted, the transaction - for an undisclosed sum - is expected to close at the end of August.

Danisco's regional director for emulsifiers, Europe, Dorte Petersen, told FoodNavigator.com that the rationale for the buy is driven by access to markets.

"In some areas Abitec has a stronger market position than we do," she said.

One example is the UK market, as Abitec's production plant, which employs 55 people, is based in Northampton.

The acquisition does not include ABF Ingredients' emulsifier business in the United States.

In terms of product offerings, she said there are areas which the two companies cover in common, so the move will not bring a whole new slate of emulsifier offering to Danisco's customers.

"It is a question of growth," Petersen said, adding that acquisitions are critical to Danisco's overall growth strategy.

Emulsifer demand Martin Klavs Nielsen, Danisco's executive vice president for emulsifiers, said that strengthening the position in emulsifiers is important as it will allow the company to meet increasing demands of customers.

According to Leatherhead International's recent report The food additives market: Global trends and developments, the global emulsifiers market was worth around US$1.6bn (around €1bn at today's exchange rates) in 2007, an increase of 8.1 per cent on the previous year.

The report attributes about 35 per cent of this total to European sales, with the US accounting for "slightly less" .

Petersen said that there are some key drivers in the market that are stimulating emulsifier use.

For instance the healthier eating trend means manufacturers are working to develop low fat concepts, and emulsifiers can be used to create a texture that is still acceptable to consumers.

In bakery, the focus is on healthier, high fibre products, in which emulsifiers can be used to ensure the bread does not turn out too heavy.

Products with lower salt also make use of emulsifiers.

Emulsifier sales Abitec's annual sales of emulsifiers are said to be in the region of DKK 220m (€29.5m).

In addition to food, it also serves the nutrition, personal case and cosmetics markets.

For full year 2007 Danisco's emulsifiers fell under its Texturants & Sweeteners division, which reported sales of DKK 6785m (€910m) in 2007/8.

(from 2008/9 emulsifers will be accounted under Enablers).

Organic growth of 1 per cent for Texturants & Sweeteners was said to be driven in part by strong growth in emulsifiers, with solid double-digit growth rates year on year.

This, the company said, came from higher prices.

Margins were down, however, as emulsifiers were hit particularly hard by soaring raw material costs.

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