International Flavors & Fragrances (IFF) has opened a new flavors facility in Guangzhou, China, as part of a $100m investment in Greater Asia as it looks to increase its presence in emerging markets.
Commercial production at the 19,000m2 site - which comprises sales and administration offices, laboratories, factory buildings, and support services - will begin in Q3, 2013.
Its projected annual capacity is approximately three times that of the existing manufacturing site, said IFF CEO and chairman Doug Tough, who said the facility was built with an emphasis on energy efficiency, low water consumption and minimal waste.
“With the opening of our Singapore and Delhi facilities in 2012 and our Guangzhou site in 2013, IFF is well-positioned to support our customers’ growth now and into the future, both regionally and globally."
Over the coming months, the plant will undergo testing and production trials to help ensure products meet the highest global standards before they are available commercially, he said.
'The emerging markets have been growing at 2 to 3 times the rate of the developed markets'
IFF, which generated revenues of $2.8bn and delivered a $488m adjusted operating profit in 2012, told delegates at the recent Consumer Analyst Group of New York (CAGNY) conference that 47% of its sales were generated in "the fast-growing emerging markets... which is among the highest of any of our competitors".
This is important, said CFO Kevin C. Berryman, "because as our customers expand into these markets, they have the ability to leverage our long standing presence and our extensive market knowledge to drive their brands".
He added: "The emerging markets have been growing at two to three times the rate of the developed markets, and this is primarily due to the expanding middle class and their increased levels of disposable income, which is allowing them to increase their purchase of consumer packaged goods."
Novel production method for producing natural vanillin
However, growth will also come via innovation, said Berryman, pointing to IFF's tie up with Switzerland-based Evolva to produce natural vanillin via a yeast-based fermentation method.
Natural vanillin is a compound from the vanilla bean, the ‘fruit’ of the flowering vanilla orchid, which provides vanilla flavor. However the vanilla orchid must be propagated by hand, which is very labor intensive. As demand for vanilla flavors is increasing all the time, global vanilla production is struggling to keep up.
Under the terms of the collaboration, IFF will commercialize the product and Evolva will receive royalties on product sales.
"Vanillin is a key flavor ingredient used in many, if not the majority, of flavor food products, and so a dependable, and cost-effective source of this key material will be very welcomed by our customers", said Berryman.