MGP Ingredients CEO Ladd Seaberg commented that the anticipated improvements in fiscal 2005 "are expected to result primarily from further increases in sales of our speciality ingredients, particularly sales to manufacturers of food and pet-related products."
Ingredients companies looking to up margins are increasingly heading into the value-added ingredients domaine and away from commodity ingredients. MGP reported that opportunities for growth have come from the burgeoning fad for the low-carbohydrate Atkins diet - currently with over 30 million American followers - that has upped demand for its speciality wheat protein isolates - Arise - and FiberStar 70, a resistant wheat starch.
"They are attracting a tremendous amount of attention for both their functional and nutritional qualities in creating high-protein, low-carbohydrate products. The popularity of various high-protein, low-carb diets continues to build momentum, which many industry sources believe may not level off for possibly two to three years," Mike Trautschold, vice president of marketing and sales at MGP, said recently.
Sales of the Arise line has more than tripled compared to a year ago, and sales of the new FiberStar 70 resistant wheat starch, launched onto the market in 2003, are already showing strong interest, added Trautschold.
Earlier this year the firm said that second quarter sales of Wheatex, MGP's line of textured wheat proteins, have more than doubled on the previous year.
"Demand for Wheatex has grown substantially in the grain-based foods area, which the new $4.5 million expansion at our Kansas City facility will greatly strengthen our ability to serve." The new plant is slated for completion by September 2004.
For the first nine months of 2004, sales of the firm's speciality ingredients, consisting mainly of wheat proteins and starches, increased by nearly 100 per cent over sales in the first nine months for the year before. In February this year the Kansas-based firm reported a net profit for the quarter ended 13 December of $1.8 million (€1.5m), a massive leap from $48,000 the year before.
Both the wheat-based and potato-based resistant starches supplied by MGP specialty starches are based on a technology invented by Kansas State University grain science researchers and subsequently patented in 1999 by the Kansas State University (K-State) Research Foundation. In March 2003, the Research Foundation licensed the technology exclusively to MGP Ingredients.
According to the university, K-State grain science professor Paul Seib is the inventor of the resistant starch technology, a way to modify plant-based starches to resist digestive juices and the enzyme amylase.
Former K-State graduate student Kyungsoo Woo, who completed his Doctoral research on starches under Seib's direction, is the co-inventor on US Patent No. 5,855,946. After graduation from K-State in 1999, Woo was hired by MGP Ingredients.
The patent covers a special modification of any starch derived from the cereal grains, roots, tubers and legumes; for example, from wheat, corn, oats, rice, potato, tapioca and mung beans.
Any product that uses flour can be made with these resistant starches, including breads, buns, crackers, biscuits, chips and pastas. Seib said in a recent K-State university article that when incorporated into food products, the new starches have two potential health benefits. "Some of the starch is slowly digested, which results in a sustained, low elevation of blood sugar."
A low glycaemic load to the blood has been associated with delayed hunger and with a reduced incidence of type-II diabetes - a condition affecting nearly 18 million Americans. Secondly, the portion of the starch that totally resists digestion is fermented in the large intestine and is thought to lower the incidence of colon cancer. In food products, the resistant starches contribute to a lower caloric intake and a higher fibre diet.
According to Kansas State University's Intellectual Property Policy pertaining to inventions, the K-State Research Foundation retains a negotiated percentage of royalties and an inventor or co-inventors share 25 per cent of royalties.
MGP Ingredients introduced the new potato-based starch, MGPI FiberStar 80 ST, in late April.