The ingredients giant has a yeast extract production plant in the Northern province of Heilongjiang that doubled the company’s yeast extract output in 2011. It also supplies a large amount of its enzymes into the country.
Stephen Catling, CEO of ABF Ingredients (ABFI), said that enzymes and yeast extracts are both strong areas for ABFI in China.
“The Asia region has superior growth rates in enzymes and yeast specialities,” Catling told FoodNavigator-Asia, and “over the next five years this growth is set to continue and so it is logical to target this region.”
“We targeted China because ABF has a large infrastructure there and with infrastructure comes talent and critical mass to work with,” Catling said.
The yeast extract manufacturing facility was built in China to “optimise production efficiency by being closer to the source,” he said.
“We have got a key raw material there, molasses – they by-product of sugar production,” he added.
Not only this, but the raw material is from ABFI’s sister company AB Sugar, he added, therefore business efficiency is optimised.
Export weighted focus
Enzymes are produced outside of China and sold into the market, he said, and the apple juice, bakery and feed segments are targeted as they are strong.
Yeast extracts are produced in the ABFI facility in Northern China for both the export and domestic market.
However, production is predominantly for the export market, he said, and “typically we would expect more than three-quarters of production to be for this market, to the Asia region as well as globally, including the US and Europe.”
The major markets for yeast extracts in Asia are Korea, Japan, Thailand and Indonesia, Catling said, but even China is experiencing a growth in usage levels of around 15% a year compared to a modest 4-5% in most developed markets.
For ABFI overall, China and Japan are significant markets, he noted.
Japan is the second largest consumer goods market globally and China is a large country committed to very strong growth agendas, he said.
He added that Korea is also surfacing as strong target market for ABFI.
“In Korea, we are working on growth in terms of supplying yeast extracts and enzymes to this market,” he said.
“China is such a huge country…. [and] is not necessarily one market, it has multi-markets,” Catling said.
Carefully thought out business approaches need to be implemented when working in such a vast country, he said, as “you are shipping products very long distanced, so you need to work hard on supply chains and distribution structures.”
Chinese management and local knowledge is key to understanding the country’s infrastructure and workings, he noted.
It is also important secure good application knowledge service the local market, he said, for example, understanding the use of yeast extracts in noodles or enzymes in steam bread is essential for successful business.