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New Cargill center to focus on Asia markets

By Sarah Hills , 08-Aug-2008

Cargill says it will create innovative new dairy and confectionery products and help bring them to a growing market in Asia with the opening of its new application centre.

The South East Asia Food Application Centre is in Kuala Lumpur, Malaysia, was opened to expand Cargill’s capabilities to partner with food and beverage manufacturers in the region and bring its product formulation expertise for palm oil refining, texturizing and flavoring businesses under one roof.

At the center Cargill will develop flavors for beverage, dairy, sugar and chocolate confectionery. To help with development there will also be a “flavor library” of nearly 800 flavors for customers to choose from.

Formulation testing of fats for baking and chocolate making will take place at the center as well as fats formulation tests for frying for chicken and French fries. It will also carry texturizing tests related to dairy and non-dairy products, juice beverages, confectionery (gummies, pectin fellies) and processed fruits (jams, baking jams and decorative jams).

Lawrence Low, general manager of Cargill Texturizing Solutions, said: “We have brought together our global expertise in many fields, including texturizers, sweeteners, flavors and fats, to be housed in the same facility so that we can build synergies for our customers in the region.”

Flavors

The global market for flavors is worth an estimated $7bn, and in South Asia it is worth $1.2bn, but that is expected to grow by another $0.5bn in the coming five years, according to Cargill.

Cargill director of corporate affairs in Malaysia, Venu Ramalingam, told FoodNavigator-USA.com that this growth will come as more and more people are able to afford better food and quality of food. Also each area in the region has a slightly different taste profile, with some preferring more sweet than spicy, for example, or the other way around.

Ramalingam added: “Having the application centre in this part of the world makes it easier to work with the taste preferences in the South Asian market.”

“We will be able to formulate the product to meet the needs of the local market.”

Dairy and Confectionery

According to Euromonitor International the chocolate confectionary market in Malaysia has increased from US$83m in 2002 to $100m in 2007 with growth forecast to increase 17 percent between 2007 and 2012. In Indonesia the market was worth $186m in 2002 but shot up to $541m in 2007. Growth there over the same five year period is put at 67 percent.

The figures for dairy forecast a 60 percent growth in Indonesia between 2007 and 2012 with a 10 percent growth in Malaysia.

Palm oil is used in a diverse range of food formulations including bread and crisps and as a substitute to dairy fat.

It is also considered an alternative to trans fats which are out of favor in the food industry and are being removed from many formulations amid health concerns. Trans fats have been linked to health risks as diverse as cardiovascular disease and prostate cancer.

Tapping market potential

Cargill is a privately owned company and doesn’t release financial results. However it is not the only ingredients firm to target the Asian markets.

Earlier this year Kerry Ingredients said in Asia-Pacific, the company has seen great growth potential with sales revenue increased by 17.1 per cent to €425m. China also saw strong growth through customized solutions for the ice-cream industry and snack offerings, while beverage applications grew strongly in Japan, Korea, Malaysia, the Philippines and China.

And last year, the European Commission approved Kraft's acquisition of France-based Danone biscuits, which will gain Kraft access to critical emerging markets such as Malaysia, China and Indonesia, as well as Russia and Poland, which together will account for 25 per cent of business.

Meanwhile Symrise has been investing in emerging economies. Last August it announced a dramatic expansion of its regional Sensory and Consumer Science Center in Singapore. It is aimed at understanding how best to cater to consumers who are rapidly adapting to Western eating habits but who also adhere to local twists in taste and other preferences.

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