Cargill races into number three pectin position on Citrico deal

Related tags Pectin Food Food additives Cargill

Hydrocolloid industry sees competition step up a gear as US
ingredients firm Cargill, for the first time, buys into the pectin
market through the acquisition of Citrico, reports Lindsey
Partos.

Mooted earlier this year, with the deal complete Cargill now extends its reach further into food ingredients, leapfrogging into the number three global spot for supplies of pectin extracted and blended from citrus peel.

Pectin is the gelling agent that makes jams and preserves set, but is used extensively by the food industry for enhancing the texture and appearance of a range of foods, as well as contributing to flavour release.

Robert Parmelee, president at Cargill food system design unit, claims Citrico's "ability to leverage pectin with the company's global juice, orange processing and soya protein assets"​ will broaden "new solutions" for Cargill's customer base.

In September 2004 Citrico International went into liquidation, while the firm's German-based production plant and business situated in Malchin did not file for insolvency. Cargill's acquisition includes both businesses.

The €46.7 million German plant produces some 4,500 metric tonnes of pectin annually sold through the firm's international business. When unveiled in 2001 the plant was pushed as the cornerstone of Citrico International's hydrocolloid business.

While mature hydrocolloid products such as alginates have historically witnessed stable prices, pectin, the 'darling' of the industry, can pull in higher margins, amounting to decent gains for the pectin producers.

Dominated by a small number of industry players, makers of hydrocolloids are consolidating, particularly in the larger, more mature markets, spurred on by shrinking margins and consolidation of their international customers.

In 2004, the dynamics in the industry shifted when family-owned US firm JM Huber bought the number one pectin - and xanthan gum - slot with the purchase of hydrocolloid leader CP Kelco. Industry observers pitched the acquisition, which takes the New Jersey-based company deeper into additives and thickeners, in the region of $1 billion (€0.8bn).

The Cargill-Citrico deal is yet more evidence of Cargill's ceaseless drive into the European food sector.

In January the firm signed off over €76 million in investments for polyol sweeteners; with the expansion of plants in the US and Europe, including the firm's Italian Castelmassa facility.

In the same month, Cargill announced it would break ground on its first refinery in Russia, the number one vegetable oil market for the Central and Eastern European region.

In February Cargill acquired Italian firm Pagnan. Without disclosing the purchase price, Cargill said it aims to absorb Pagnan's grain and oilseed meals, import and trading business into a newly formed subsidiary called Pagnan Commerciale.

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