Gelnex succeeds with gelatin production in Brazil

Related tags Gelatin Brazil Material

Privately owned Gelnex, which pioneered the production of type A
pork skin gelatin in South America, has recently opened a beefskin
gelatin plant in Brazil. Philippa Nuttall spoke to the
company's CEO about the challenges the industry faces.

Gelnex, set up in 1998, built its first production facility in Ita in southern Brazil. This, according to the company, was the first time a type A pork skin gelatin factory had existed in South America.

On the back of the success of this plant - which has a production capacity of 4000 production tonnes - the company has recently joined the competition and opened a beef skin gelatin plant in south-west Brazil.

The new factory is based further north than plants were traditionally built, explained Ross Priebbenow, the company CEO, because that is where the cattle herds - moved in search of good pasture - are now found. However, neither plant - the beef skin factory will by next year have a production capacity of 3000 metric tonnes - is currently producing to capacity, because of a lack of raw materials.

The lack of raw materials is due to increased competition between the food and other industries, according to Priebbenow.

"Lots of raw material goes, for example, to the dog toy industry,"​ he said.

His company exports to the US and Europe, and despite the BSE crisis and an increasing propensity - especially in the UK - towards vegetarianism, Priebbenow believes that demand for gelatin is growing by 2-3 percent a year.

Growth is also being seen in the East. As China's diet becomes more westernized, its need for gelatin has grown and it now imports the ingredient from other countries. Gelnex, though, does not yet export to China from Brazil because of regulation issues.

Priebbenow noted that the BSE crisis did have an impact on the pharmaceutical business, but believes that Europe has done such a good job of proving product safety that the overall impact was minimal. He added, however, that food companies still like to receive their gelatin from a BSE free country, such as Brazil.

The biggest growth areas in terms of consumption of gelatin, according to Priebbenow, are yogurt in the States and confectionary in the EU.

Gelnex has certainly not ruled out opening more factories in the coming years, but this decision will obviously be based on demand and the supply of raw material.

Pork and beef gelatin have different properties: pork skin gelatin is traditionally clearer and would be used for a gummy bear type product where the gelatin needs to be lighter. Beef skin gelatin, on the other hand, is more often used in food snacks and dairy products.

"The higher clarity comes at a higher cost,"​ noted Priebbenow.

The pork skin gelatin generally sells at around $6-$6.50 a kilo, while beef skin gelatin sells at around $5.50 a kilo.

As far as the future, Priebbenow sees Brazil and China as instruments of growth. He notes there are challenges with the latter's system for western countries, but thinks there is potential, especially as many of the Chinese companies produce gelatin to a level inferior to that coming out of Brazil, Europe or the States.

Related topics Markets Emerging Markets