Balchem's acquisition of the encapsulation and agglomeration business of Loders Croklaan shows that the company believes there is a strong future in encapsulation technology.
"The integration of Loders' fluidized bed encapsulation and agglomeration technologies with our current technologies will provide superior product lines that will address many needs in the food industry," said Dino A. Rossi, president and CEO of Balchem Corporation.
"This acquisition enhances Balchem's strategic initiatives as a supplier of encapsulated and agglomerated ingredients."
Demand for microencapsulation within the food ingredients industry has grown significantly in recent years. US suppliers of microencapsulation products and services now generate revenues over $150 million a year, and new solutions are continually hitting the market.
Loder Croklaan's fluidized bed encapsulation, also known as air suspension coating, can be used when particles are too small to coat with traditional pan coating technologies. Traditionally used in the pharmaceutical industry, it can now be used by food ingredients firms to encapsulate functional ingredients such as nutrients for energy bars.
The advantage of this process is that it allows food manufacturers to create very specific effects. It can also help food makers achieve good coverage, leaving less tan one per cent of particles uncoated.
"We are particularly excited about expanding our technology capabilities, specifically designed for the pharmaceutical and supplementation industries," said Eric Smith, Balchem's vice president of sales and marketing for Human Food & Nutrition.
"The prospect of developing novel applications for these markets is significant, and supports our commitment to technology growth and strengthening our business."
Indeed, since the mid 1990s there has been an explosion in sales of functional food products that offer some positive benefit to the consumer other than basic nutrition. Examples of such products are probiotic milk drinks or vitamin fortified sports bars.
The problem is that many of these beneficial ingredients are unstable or difficult to handle. But these problems can be overcome by the use of microencapsulation.
Balchem Corporation consists primarily of three business segments: ARC Specialty Products, Encapsulated/Nutritional Products and BCP Ingredients. Through ARC Specialty Products, Balchem provides specialty-packaged chemicals for use in health care and other industries.
The Encapsulated/Nutritional Products segment provides proprietary microencapsulation solutions to an expanding variety of applications. BCP Ingredients, the group's unencapsulated feed supplements segment, manufactures and supplies choline chloride and derivatives used primarily in the poultry and swine industries.
Balchem says that it will continue to operate the acquired business out of Channahon, IL, with certain product manufacturing moving to other Balchem operations.
Loders Croklaan, a unit of the IOI Group, had sales of approximately $6 million in fiscal year ending June 30, 2005. The purchase was financed from the cash reserves of Balchem.