Ajinomoto sees ingredient opportunities in China

By staff writer

- Last updated on GMT

Related tags United states China

Ajinomoto's joint venture agreement with Knorr Foods and three
Chinese firms is the company's latest forage into one of the
fastest growing markets in the world.

Under the terms of agreement, the four companies - Knorr Foods, Xiamen Ajinomoto Life Ideal Foods, Ajinomoto China and Xiamen Ideal Group - will jointly establish with Ajinomoto a new company called Xiamen Ajiraku Ideal Foods.

To be capitalised at about $5.6 million and launched in March, the new company will manufacture and process ingredients for soup products.

The Japanese giant says that Xiamen Ajiraku Ideal Foods will initially produce dried vegetable ingredients for Knorr's soup products using raw materials supplied by Xiamen Ideal Group.

However, the new company plans to produce and process other vegetable ingredients including spinach, qing-geng-cai, mushroom and cabbage starting in December.

The announcement follows swiftly on the heels of Ajinomoto's acquisition of Amoy Food Group from Danone Asia. This HK$1,845 million (€196m) deal includes the acquisition of Amoy's Chinese soy sauce business and frozen dimsum food operations.

In addition, Ajinomoto has also acquired a 60 per cent stake in a Chinese soy sauce joint venture in China, Shanghai Amoy Foods Group, which is again owned by Amoy Food Group.

Ajinomoto believes that the acquisitions will significantly strengthen the firm's global position. Amoy Foods has business interests not only in Hong Kong but in North America and Europe as well, where it sells its goods through HP Foods. It enjoys the biggest share of the Hong Kong soy sauce market and claims to be the number one soy sauce retailer in the UK.

The company's frozen dimsum food business has markets in Hong Kong, southern China, North America and Australia.

Food makers are increasingly targeting China. Although the US, Japan and Western Europe still dominate flavour and ingredient consumption, most of the future growth is likely to be in the Asia Pacific region, particularly in developing countries such as China and India.

China is certainly spurring growth in Asia Pacific, a region slated to achieve economic growth of around 7.3 per cent, year on year, until 2008. This compares to western Europe and the US with 3.7 and 3.3 per cent growth respectively.

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