New food colour factory to open up opportunities for Chr Hansen

- Last updated on GMT

Related tags: Chr hansen, Food, China

Chr Hansen breaks into the lucrative Chinese market constructing
its first production facilities to provide more flexibility to
serve the burgeoning local food industry, reports Lindsey
Partos.

The move is expected to lead to considerable savings for the Danish ingredients firm that has up to now been supplying the market from facilities in Italy, Denmark and India, consequently involving higher sourcing and freight costs.

China food industry sales took off in the mid 1990s rising from under 100 billion yuan in 1991 to well over 400 billion yuan just ten years later. Driving the market is the increased spending power and changing eating habits of China's 1.3 billion people who are transforming the country's food sector, both domestically and in foreign trade.

Food ingredients suppliers are gradually moving into China. Danisco for example announced last year its link up with a Chinese xanthan firm, driven for the most part by international customers tackling the growing Chinese market.

Foreign brands of soft drinks, yoghurt, sausage, crisps, breakfast cereals, jellies, wine, and other foods and beverages comprise about 5 per cent of products in Chinese supermarkets, but many of those products are also manufactured with local ingredients, claims the US department of agriculture.

If this is the case, international food ingredients suppliers need to break into the local market in order to effectively compete.

"The main driver in China is the agility and flexibility we will have to serve the local market,"​ group vice president JanBoeg Hansen told FoodNavigator.com.

An example of which is rooted in new opportunities for sales of food colours specifically designed for the Asian market, "using traditional plant extracts that are not on the market in Europe,"​ continues Hansen.

"These food colours have been traditionally used in China, but do not figure in European markets. The fact that we have a facility in China means we can source the local materials to produce the food colours to feed this local market."

The global leader in natural colours, Chr Hansen took the first key steps into China last year, employing a sales force to start building up the local market. It will be, "to my knowledge, the first international natural colours player with production facilities in China,"​ said Hansen.

The firm has poured just under €1 million into the facility located in Tianjin, about 120 kilometres southeast of Beijing, due to be up and running before the end of the year.

It can start to recuperate some of the costs made in the previous year that saw the firm sourcing and supplying colours from the outside but selling the product on at local Chinese market prices.

Now, after this interim stage, the firm can justify the investment in the factory that will serve food applications such as yellow fats spreads, confectionery, and beverages, commented Hansen.

Future developments for the firm in China could bring small blending processing facilities dotted around the country. "Obviously, the most important aspect of this venture is to be where our clients are so that we are able to deliver locally manufactured products of global quality at competitive prices,"​ concluded Mogens Riber-Nielsen, regional vice president of Asia Pacific & Middle East for Chr. Hansen.

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