Caramel colour leader spears Nordic firms
driving deeper into the Nordic countries, signing a deal with
Swedish food distibutor Norfoods to build growth in the
increasingly mature caramel colour market.
The distribution agreement will stretch the reach of the US firm's caramel stocks into the Nordic network through AB R. Lundberg in Sweden, Norfoods in Denmark and Finland, and Norfoods Handel in Norway.
Tibor Hanzely, European sales manager at DD Williamson, claims that Norfoods' "proven record of delivering innovative ideas for customers' new product development" was a deciding factor in the decision.
The move swiftly follows the US firm's acquisition of Cargill's Cerestar caramel colour operations in Manchester, UK, earlier this year. The facilities, together with a 25 year-old plant in Ireland, churn out some 50 different caramels and burnt sugar products used in baked goods, biscuits, cereals, sauces, meat products and beverages.
Not only facing high raw material prices, European ingredients companies working with caramel colours - used extensively in soft drinks such as Coca-Cola - must inject growth into a mature market that sees average levels bundling along at only 1 - 2 per cent per year.
Market analysts Frost & Sullivan valued the total European caramel colour market at €22.7 million in 2001, forecast to creep up to €24.1 million by 2008. But this is just fraction of the total European food colours market estimated at €193.4 million in 2001.
The analysts predict that revenues for companies in caramel colours - of which privately held DD Williamson is the number one supplier - are expected to be higher in the short term as the soft drinks market continues to grow. But the impact of higher global prices for sources of carbohydrates - notably wheat and corn - will eat into these revenues.
Competition in Europe stepped up at the beginning of the year when the US caramel leader bought Cargill's Cerestar caramel colour facilities. Under terms of the agreement DD Williamson sources glucose syrup via a pipeline from Cargill's Cerestar starch refinery in Manchester to manufacture 'a broader line of caramel colour and burnt sugar products for global markets'.
