Out to capture the projected double-digit growth in lactic acids in Asia, Purac has signed off €98 million to build a new plant in Thailand.
The biochemical division of Dutch bakery ingredients supplier CSM, Purac said it expects the lactic acid and lactic acid derivatives market to continue to grow by more than 10 per cent annually in Thailand.
Heat stable and non-volatile, lactic acid is used extensively by the food industry as a flavour agent, preservative, and acidity adjuster in foods.
"The main driver for this growth is the strongly increasing attention for food safety, health, and the environment," comments Purac this week.
The expansion will provide the firm with a lactic acid capacity of 100,000 tons undiluted, and 15,000 tons for the sodium/potassium lactate.
The Thai location gives Purac ample local supplies of sugar, the key raw material used to produce lactates and lactic acid. Thailand produced some 47.8 million tonnes of sugar last year, of which Purac is likely to use about 170,000 for its needs.
Located at Map Ta Phut, Rayong Province in eastern Thailand, the plant, due for completion by end 2007, will be close to Thailand's container port Laem Cha Bang.
Sodium lactate, a humectant, is used in cakes to produce a tender crumb and to reduce staling. This non-meat ingredient is also absorbed into meat formulations for specific flavour, shelf-life and safety aspects.
The move into Thailand has the appeal of more attractive gains for Purac when compared with a saturated European market.
The European market faces a dip in demand as consumers call for natural foods or products without synthetic or chemical preservatives.
In the first half of 2005, food processors released a total of 564 products in Europe labelled as either without preservatives or additives, or billed as "all natural", compared to 438 released over the same period last year, according to statistics compiled using Mintel's Global New Products Database.
Feeling the squeeze of higher prices for chemical raw material sources, including caustic soda and a range of smaller chemicals, Purac passed price rises for lactic acid and lactate products onto the market in June this year.
Prices rose between five and ten per cent across its portfolio for lactic acid and lactate products.
Rising costs for energy and packaging materials have also made an impact, and spurred the move to hike up European prices from 15 June.
The Purac range, from €0.70 to €3 a kilo, spans food and feed grade to the higher pharma grade.