Asian Xylitol production receives investment boost

By Charlotte Eyre

- Last updated on GMT

Related tags: Xylitol, Sugar substitute, Chewing gum

Private equity fund 3i yesterday announced its purchase of a
minority stake in Futaste, the leading Xylitol producer in the Asia
Pacific region, as the company aims to expand its presence in the
global sweetener market.

"As the Asian market leader in a fast growing sector, Futaste has a huge opportunity to dominate the market on a global scale,"​ Albert Xu, representative of 3i's Shanghai office, said in a statement. Xylitol belongs to the polyol group, which consists of sweeteners that are carbohydrates and not sugars. These sugar replacements are used in a wide range of products including chewing gum, sweets, ice cream, baked goods and fruit spreads. Production of Xylitol is currently booming on the back of the trend for healthier confectionery, as the sweetener can be used by manufacturers to drastically reduce the calorie content of a food product, as well as lower its glycaemic index (GI) level. In Asia, Xylitol is particularly in demand from gum manufacturers, and experts estimate that 80 to 90 per cent of chewing gum sold in the region now has the sweetener in their formulations. The China-based Futaste currently produces 35,000 tons of Xylitol each year, as well as 20,000 tons of xylose and other types of sweeteners. Speaking in the UK, 3i spokesperson Rachel Richards told ConfectioneryNews.com that the company already supplies major confectionery firms such as Wrigleys, Cadbury and Kraft all over the world. Figures from Business Communications Company​ pitch the global market for polyols at an estimated €0.97 billion. 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. Richards declined to detail what precise effect the investment will have on the future of the Futaste company, although she did say that "international expansion" is now on the cards. The financial details of the investment were not disclosed, nor was the size of the stake. China in particular is currently a hothouse of Xylitol production, and last year analysts Frost & Sullivan warned that the region's manufacturers are now providing stiff competition to their Western counterparts. "Typically, Asian manufacturers focus on boosting their volumes in order to maximise their market strength,"​ the analysts said, stating that the market is consequently turning to be increasingly price sensitive. Some manufacturers have moved into the Asian market in order to keep profits up, such as global leader Danisco, which in 2005 signed a joint partnership with of the largest xanthan gum suppliers in China, the Henan Tianguan group.

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