Latin America health focus for new sterol, tocopherol supplier

By Jess Halliday

- Last updated on GMT

Advanced Organic Materials, the new sterol and tocopherol supplier
on the Latin American scene, is aiming to bring the benefits of
healthy ingredients to a local market that has previously been
underserved by larger, international food companies.

The Argentinian company announced earlier this month that it has reached a stage in technological development where it can start producing tocopherols and sterols for the market. Until now it has only been able to offer high value-added raw materials to other suppliers.

Alejandro Luis Abad, a member of one of two families that founded the business in 2003, told that its market aims are two fold: the offer the ingredients regionally and obtain penetration that has not been seen so far in Latin America; and to supply on a competitive cost basis to the US and other parts of the world.

The primary local market consists of Argentina, Chile, Uruguay and Brazil, with extension into other areas such as Mexico envisaged for the future. Although high-end products containing these ingredients have been available in the past, for example sterol-containing milk and margarine, these have had very limited market penetration, and have not been available to a broad slice of the population.

"We want to grow the Latin American market, as it has not been through the development process for all of these products. We are looking to fill that need,"​ he said.

The company is working on end-user applications to facilitate its ingredients' use in consumer products, and is working with a WHO-affiliated organisation called Propia, which has sterols as one of seven dietary recommendations to help meet health needs in the area.

Propia has already undertaken work to promote the use of omega-3 and omega-6 in food products.

"There is the opportunity, especially with sterols, to affect the health profile of Latin American,"​ said Abad.

Sterols are plant-derived compounds that have been shown to have a cholesterol-lowering effect on humans. According to the InterAmerica Heart Foundation, the English-speaking Caribbean, Canada, Argentina, Chile and Uruguay come close to the United States in having the highest mortality rates for all cardiovascular diseases in the Americas. In the US, 37 percent of all deaths in 2003 were down to coronary heart disease.

Despite these plans, 85 percent of sales to date have been to customers in the US, with some also in Europe and Japan. has been supplying large international companies in the same field, such as ADM and Cargill, with advanced raw materials which had gone through an initial stage of processing.

Now that its own technology is fully developed to allow it to fully process for itself, Advanced Organic Materials has ceased providing other suppliers with raw material.

For export, its point of differentiation for vitamin E is that it is of pure sunflower origin. Most of the world's natural vitamin E is derived from other sources, such as soy or other oils. But Argentina is the world's largest sunflower producer, so the company can be sure of a strong, high quality supply.

It also aims to compete on pricing: There is a wide spread on pricing for what are becoming high-end commodities, with the likes of ADM, Cargill and Cognis occupying one end, and low cost Chinese manufacturers at the other.

Advanced Organic Materials aims to be as close as possible to the low-cost end, but Abad does not think that his company's entry should have ADM et al quaking in their boots, since it does not yet have the capacity to compete with them on such as grand scale.

Rather, the emphasis will be on targeting price-sensitive customers.

On the Latin American market, however, dominance is the goal. "We will be very aggressive in obtaining a market share,"​ he said.

The company already has plans to up capacity, by as much as 50 percent in the next 18 months. Current annual capacity is 250 metric tonnes of tocopherols and 200 metric tons of sterols.

What is more, it aims to start developing new offerings in about 12 months time - although for the first 24 months the primary emphasis will be on rolling out the tocopherol, vitamin E and sterols business.

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