As the biggest supplier of xylitol to Asian markets, the new deal is slated to give Danisco the opportunity to protect current market positions, as well as building leverage to bring in new business in the booming Chinese market.
Rising consumer spending power has marked a change in the eating habits of China's 1.3 billion people; who are transforming the country's food sector, both domestically and in foreign trade.
China food industry sales took off in the mid 1990s rising from under 100 billion yuan (€9.2bn) in 1991 to well over 400 billion yuan (€37bn) just ten years later.
Xylitol belongs to the polyol group of sweeteners, sugar-free sweeteners that are carbohydrates and not sugars, used in a wide range of products including chewing gums, sweets, ice cream, baked goods and fruit spreads.
In the 1990s Danisco identified xylitol for leverage in the Asian chewing gum market.
"As the biggest supplier of xylitol to this market, we saw there were good synergies to leverage the whole product category," Danisco's head of global marketing services Henrik Vesterborg Andersen recently told FoodNavigator.com.
The firm launched a 'value network' to bolster awareness of the ingredient.
"We talked to regulatory bodies, media, dentists, universities et al to promote the product to the professionals," comments Andersen.
Working in parallel, all chewing gum packaging bore the xylitol logo.
Today 80 to 90 per cent of chewing gum sold in Asia has xylitol in their formulations.
In this latest deal with Chinese firm Henan Tangyin Yuxin, Danisco will banking on guaranteeing current, and future, supplies for xylitol in Asian markets.
"Many of our Western customers now produce in China for the Chinese market and so it is logical that we should also be there," said Pekka Sorsa, president of Danisco Sweeteners.
"The Chinese market for xylitol is expanding rapidly," added Danisco's CEO, Alf Duch-Pedersen.
Recent figures from Business Communications Company pitch the global market for polyols at an estimated €0.97 billion, with sales volumes of 1,397,000 metric tons in 2000.
Volume is expected to exhibit an average annual growth rate of 2.7 per cent for the next five years to reach 1,597,000 metric tons but market growth will meander along at about 1.3 per cent.
Danish firm Danisco will have the majority stake in the new Chinese joint venture, to be called Danisco Sweeteners (Anyang).