Cognis keeps up the growth spurt in nutrition

Cognis' focus on nutrition and health, and the on-going boom in
sterols and sterol esters, helps the business unit to retain its
position as one of the group's strongest for the first half of

The unit, which includes functional ingredients for the dietary supplements market such as vitamin E, CLA and phytosterols, as well as ingredients falling into the food technology subsection, accounted for 9.8 percent of Cognis' overall business in the six months ended 30 June 2005. Sales in this area were up six percent to €156 million for the period, but the growth was more marked in 2Q, which experience a 13 percent sales increase to 81 million compared to the same three months of last year.

These figures were bolstered slightly by the attribution of around €1 million in foreign exchange and sales of its PharmaLine range of naturally-derived excipients for the pharmaceutical industry, which would previously have been placed in the care chemicals, oleochemicals and functional products units.

The decision to bundle these into nutrition and health was taken in 2Q to provide a consistent and integrated approach to customers in the pharmaceutical industry, according to a company spokesperson.

Even with this €1 million taken out of the equation however, nutrition and health growth was still around 11.5 percent for the quarter - considerably higher than the overall growth in sales revenue of 5 percent across all five of its business units, which was impacted by a decline in process chemicals and a relatively even performance in functional products.

The latest results continue the run of good fortune seen in full year 2004, when sales by the Cognis health and nutrition segment grew 8.9 per cent to €287 million and organic sales growth was 11 per cent.

The company said at the time that it had benefited from strong sales of phytosterols, Tonalin CLA and carotenoids, however despite higher volumes, sales of vitamin E declined due to the weak US dollar.

Vitamin E has continued to pose a problem over the past five months due to debate over safety - both public and within the scientific community - that was roused by the publication of studies concluding that the vitamin may increase the risk of serious health conditions when taken in high doses.

The impact of this was offset by particularly good sales of plant sterols, such as Vegapure sterol esters.

According to Frost & Sullivan, Cognis is the world's largest supplier of plant sterols and held almost 50 per cent of the $75 million European market in 2003.

Since 2Q came to a close, the company announced that it has opened a new €20 million facility for increased production of its plant sterols and CLA in Illertissen, representing the biggest single investment made by the company since its foundation in 1999.

However, with new US suppliers entering the European space in the hope of tapping into demand generated by regulatory approval for the cholesterol-lowering ingredient in more types of foods, competition is hotting up.

ADM has developed a range of sterol esters with good formulation properties for low-fat or fat-free foods, and in July added new supply of IP-certified non-GM plant sterols.

Forbes MediTech and newcomer Arboris are also bringing their non-GM wood-derived sterols into Europe.

Cognis has said its new facility would strengthen its position in the market for non-GM plant sterol esters, although it did not reveal how much extra capacity for this product would be added.

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