Asian promise for Palsgaard with new emulsifier factory

By Ben Bouckley

- Last updated on GMT

Related tags: Milk, Supply and demand

Danish food ingredient supplier Palsgaard is building a new US $30m emulsifier factory in Asia, with production scheduled to start in the second half of 2012.

Although the precise location of the cutting-edge 20,000mt facility is yet to be decided, Palsgaard said it had narrowed the choice down to either Malaysia or neighbouring Singapore.

Chairman of the board, Birger Brix, told that the factory will solely supply the Asian region, and said the move was logical, enabling the firm to effect logistical savings by situating a dedicated production facility within a major growth market, with closeness to key raw materials such as palm oil.

Demand due to food industrialisation

Palsgaard is a specialist manufacture of emulsifiers, stabilisers and other specialised ingredients for bakery, dairy, chocolate, ice cream, margarine and fine food applications, and Brix said demand for prepared food was driving Asian demand.

Irrespective of the eventual site choice, Palsgaard will have an (already complete) application centre situated nearby in Singapore, with pilot equipment for use with dairy, ice cream, bakery and soya milk products.

“We’re seeing larger growth in Asia than in Europe, and food is being industrialised in these countries so this means higher demand. We’ve posted good growth in the region over the past few years, we thought it was a good time to site a factory there,” ​said Brix.

Asian hope after hard times for industry

Brix’s comments reflect statistics in a January 2011 report on the world emulsifiers market from Global Industry Analysts (GIA), which predicts the Asia-Pacific will lead world growth in this segment with a CAGR of over 8% between 2011 and 2015.

GIA said the emulsifiers market had been hit by a drop in discretionary spending amidst the economic downturn, with ingredient firms switching from health-focused to low-cost products, and a greater emphasis on substitution and reformulation.

This meant major players “stalled plans for new product launches”​ GIA said, with the global emulsifier industry facing challenges due to contracting margins, customer consolidation and high raw-material costs, driven by environmental pressures.

Asked if the Asian market was more cost-driven than more established markets, Brix said: “Cost depends principally on the type of product, but it’s a big issue across the world at the moment, not just in Asia.”

“If you look at the market in percentage terms it’s our largest growth area, but it isn’t our biggest sales area. In that respect we’re still looking at traditional markets: the EU is our base, but we also have a strong presence throughout the Americas.”

Wider market trends

Brix added that refrigeration – traditionally not widespread in Asia – was not generally important for emulsifiers, “which, generally speaking, don’t need refrigeration, products have a very long shelf life in any case”.

As for wider trends within emulsifiers, GIA predicts increasing demand for low-fat formulations amongst customers, sparking interest in non-hydrogenated fats that can match hydrogenated version in texture, flavour and taste terms; multi-purpose emulsifiers (that both stabilise and emulsify) are also tipped for growth.

Specific products tipped by GIA to lead increased sales include lecithin (used in confectionery, bakery) due to its “unmatched functionality and better performance compared with available alternatives”; ​the researchers added that Polyglycin Polyricinoleate/E476 (derived from castor beans and used in confectionery, spreads and salad dressings) was the fastest-growing category in volume terms.

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