Further intensifying its efforts to crack the Chinese market, an Israel-based global premix supplier has inked a distribution agreement to ease into the local food manufacturing space.
LycoRed announced this week that it had signed a a multi-million dollar agreement with Shanghai Lithy Foods, a national distributor of botanical extracts and nutrient pharmaceuticals for dietary supplements.
The deal between the two companies, which was agreed in early September, will be operational immediately, a spokesperson for the company told FoodNavigator-Asia.
This comes after LycoRed opened the doors of its new premix plant in Changzhou, China, which will serve processors of infant formula, beverages, baby food and other food products across the Asia-Pacific region.
At that time, Milo Shen, LycoRed’s sales manager in China, told FoodNavigatorAsia that the company would target makers of infant foods, dairy products, and supplements.
“This business is being supported by the growing population of China, as well as the increasing of awareness about nutritional intake in the country,” said Shen, revealing that the company was already working on projects with customers.
Lithy’ large network
Under the deal, Shanghai Lithy Foods will bring its existing distribution channels in the Chinese nutraceuticals industry and will focus on a number of important market segments that are emerging for LycoRed.
The LycoRed spokesperson added that the option to go with Shanghai Lithy was easy as the Chinese company has a great deal of experience working with international functional ingredients suppliers, for developing and growing the Chinese market.
“They have formed their own unique business model and network cross China from north to south, assuring a wide acknowledgement of LycoRed in the future,” he said, also pointing to domestic pharma brands’ preference for Lithy.
Talking of the deal being deeper than just a distribution agreement, he highlighted how Lithy has been able to conduct demo applications of end-products for customers it has built deep relationships with.
“Therefore this deal is not only working on a marketing and sales basis, but also on the foundations of research and development,” he said.
However, the spokesperson cited bigger challenges for the company, including a lack of awareness among customers about LycoRed’s products.