National Starch drives deeper into China food market

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ICI subsidiary National Starch is the latest ingredients firm to
drive into the soaring Chinese food market, unveiling a new
technical centre adjacent to its recently opened production plant,
writes Lindsey Partos.

Growing affluence in China is transforming the landscape for food: industry sales took off in the mid 1990s, quadrupling from under 100 billion yuan (€9.2bn) in 1991 to well over 400 billion yuan (€37bn) just ten years later.

Food makers and retailers from the West are all staking a position in the burgeoning Asia Pacific region slated to advance at about 7.3 per cent, year on year, until 2008; and 'to keep up' with their customers, ingredients players must follow suit.

"We now have the local capabilities and expertise required to assist customers in quickly developing and commercialising innovative new products,"​ said National Starch, that supplies speciality starches to stabilise and bring texture to a wide variety of food applications.

In November last year National Starch Food Innovation, the firm's food division, unveiled a new 68,000 sq metre plant in Shanghai to produce food starch ingredients from corn, tapioca, potatoes and rice. The new technical centre has linked up with the plant, "to provide full resources to support customers" across the continent.

Hard pressed in European and US markets that are currently experiencing sluggish growth of 3.7 and 3.3 per cent growth respectively, ingredients companies are looking east to prop up these tougher markets.

Driving the booming food market is the increased spending power and changing eating habits of China's 1.3 billion people, who are gradually transforming the country's food sector, both domestically and in foreign trade.

An increase in per capita income levels, and the consequent rise in disposable incomes has brought about a shift in favour of branded and packaged food.

Changing lifestyles and growing urbanisation in larger cities have also contributed, bringing a wider acceptance of newer products and driving sales for foods like ready meals, pasta and frozen food.

A focus on adding value to food starches has started to pay off for National Starch, that also produces adhesives, electronic materials and healthcare products.

The firm is hooking onto 'value-added' products to drive profit growth through higher prices in the starch market, forecast in Europe to reach €2.1 billion by 2006.

Annual results announced in February this year show that in 2004 the food and beverage industry represented about a quarter of turnover for National Starch.

In its entirety National Starch brought £202 million in operating profit to the £439 million total for the ICI group, that includes flavours and fragrance firm Quest.

John McAdam, ICI's chief executive, said that the growth in starch sales in 2004 reflected the firm's strategy to 're-focus the business on added-value food starches.'

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