New aspartame distribution tie-up for UK focused on security of supply
The ingredients supplier said it has just formalised a partnership with Chinese giant Sinosweet aimed at those markets. ACT already supplies other global markets with aspartame through its existing collaboration with the Chinese producer.
The new partnership sees Sinosweet UK become a wholly owned subsidiary of the ACT group and gives ACT the exclusive sales and marketing rights for Sinosweet's products in the UK and Irish markets.
“This is a long-term project for us. We are not simply focused on the dividend return potential of the deal but see it as an opportunity to strengthen our presence in the UK, one of Europe’s largest sweeteners market and one that is also fiercely competitive,” said ACT’s UK and Ireland sales director Richard Sheehan, speaking to FoodNavigator.com.
Sinosweet has a significant share of the aspartame market in the UK and Ireland but its previous exclusive tie-up on distribution for the two countries was wound up recently, he added.
While ACT was already supplying the food, beverage and confectionary industries in the UK through other smaller Chinese producers, Sheehan admits the company’s lack of a real presence on the market - through a strong tie-up - was one of the perceived weaknesses of the ACT's UK and Ireland portfolio.
Reliable source of the sweetener
“The extension of our partnership with Sinosweet to the UK and Ireland reflects well on our existing working relationship. We are confident that, by the end of 2012, we will be a leading player for aspartame in those two countries, as we already are with other sweeteners,” remarked Sheehan.
He said that 2010/2011 have proved difficult years for aspartame with the Japanese earthquake hitting supplies: “And a lot of Chinese aspartame producers source raw materials from Japan,” explained Sheehan.
Coupled with this is the fact that, for various production related reasons, the available capacities fell short of demand on occasion during the second half of 2010 and into 2011, he continued.
These challenges, added Sheehan, further highlight the need for food and beverage producers to form strategic supply partnerships with reliable partners.
He makes the point that Sinosweet’s capacity of 7,000mts and, crucially, its own production of the raw material L-Phenylalanine means ACT’s customers can be assured that they have security of supply in terms of aspartame.
According to Leatherhead, aspartame remains one of the most widely used and widely recognised of the intense sweeteners, mainly as a result of its strong position in the US, which accounts for 60% of global demand.
However, the sector has come under increasing pressure from sucralose and stevia-based sweeteners, with its share of the US table-top sweeteners market having decreased by more than 15% in 2010, said the UK market analysts in a recent report on the global additives market.
Leatherhead reports that the global market for aspartame was worth 17,500 tonnes in 2010, equivalent to $320m in value terms. During the last year, market value dropped by 7.2%, whilst volume sales decreased by 2.8%.
The global aspartame market has been in a period of decline since the middle of the last decade, with global oversupply having eroded prices, it added. "This was a major reason for DSM’s exit from the category in 2006," concluded the researchers.
The aspartame industry has also been hit by falling demand in other parts of the world, such as Latin America and the Asia-Pacific region, continues the Leatherhead publication.
“It is highly possible that neotame could make inroads into aspartame’s territory in the soft drinks industry in the near future, which would result in a further decline for the category,” predict the UK food industry specialists.
Leatherhead further notes that negative publicity linking aspartame consumption with cancer has also adversely affected the market, and it added: “Although this claim remains unproven, there are still calls in some quarters for aspartame to be banned in food manufacture.”
However, ACT’s global sweeteners manager, Lorenz Meister, argues that aspartame remains the most tested sweetener in the market: “Aspartame is used in thousands of products, consumed by hundreds of millions of people worldwide and its safe use has been proved by numerous studies and governmental bodies."
And Sheehan said ACT remains confident that the current re-evaluation of the sweetener by the European Food Safety Authority (EFSA) will give the Parma-based agency the opportunity to “reconfirm the ingredient's safety.”