Tate & Lyle has highlighted the potential that its Splenda sucralose products could have in emerging markets, where obesity and diabetes is becoming more prevalent.
The UK ingredients group said today (27 May) that it sees an opportunity to expand its footprint in markets where consumers’ “taste preferences” are “less well established” and where the “heat stability” of Splenda makes the product “suited to less well-developed supply chains”.
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As part of these plans, Tate & Lyle has changed its management team in Asia Pacific to provide “fresh impetus” to its operations in the region, the company said. The company is also building new application laboratories in Mexico and Brazil to add to its global network and strengthening its sales teams in Latin America and China.
As well as growth in emerging markets, Tate & Lyle is also looking at getting more small and medium enterprise and private-label customers in developed markets. It has put dedicated resources in place in Europe and the US to service these groups.
Amid the moves to grow its sucralose business, Tate & Lyle plans to re-start production at its plant in McIntosh, Alabama. The facility was mothballed during Tate & Lyle’s 2009 financial year when it consolidated its sucralose production at a plant in Singapore.
The company plans to invest GBP13m in reopening the plant during the first half of the financial year ending March 2013.
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By GlobalDataChief executive Javed Ahmed said re-opening the McIntosh site “reinforces our commitment to the sucralose business, provides further resilience in our supply chain and further strengthens our position as the leading global manufacturer and supplier of sucralose”.
The announcement was made as Tate & Lyle reported its annual results for the year to the end of March.
Revenue from high-intensity sweeteners fell 1% to GBP185m during the year.
Tate & Lyle said average selling prices were lower than in the previous year, which it claimed reflected its strategy of “securing long-term sucralose contracts with volume incentive arrangements”.
The company said that it expects the decline it has seen in the selling price of Splenda sucralose to moderate towards the end of this financial year as contracts renew.
However, while the company expects an improvement in sucralose sales, Ahmed cautioned that the profit growth seen from the division over the last 12 months would slow next year.
Lower sucralose manufacturing costs are now being reflected in the performance of this division, Ahmed said, and “accordingly, the level of profit growth in the coming financial year is expected to be more modest than the strong result achieved” in 2010/11 financial year.
The announcements came as the group posted an increase in net profit for the year ended 31 March. Net profit reached GBP167m (US$274.2m) against GBP19m in the previous year. Meanwhile, sales rose 7% to GBP2.7bn.
