u.s. starch market

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U.S. Starch Market

N107-88

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Table of Contents

C h a p t e r 1

Executive Summary

Market Overview 1-1

Introduction 1-1

Research Scope 1-2

Summary of Major Findings 1-3

Market Dynamics 1-3

Market Drivers Challenges and Restraints 1-4

Key Industry Drivers 1-4

Key Market Restraints 1-4

Key Market Challenges 1-5

Competitive Analysis 1-6

Conclusions 1-7

C h a p t e r 2

Introduction to the Industry

Market Overview and Definitions 2-1

Industry Overview 2-1

Industry Structure 2-2

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Profiles of Top 3 Market Participants 2-2

CARGILL, Inc. 2-2

TATE & LYLE PLC 2-3

NATIONAL STARCH AND CHEMICAL COMPANY 2-5

Profiles of Other Major Participants 2-6

ADM—Archer Daniels Midland 2-6

Roquette America 2-7

Grain Processing Corporation 2-7

Corn Products International 2-8

Penford Food Ingredients 2-8

Market Dynamics 2-9

Competitive Activities on the Market 2-9

Challenges and Recommendations 2-10

Industry Challenges 2-10

Ambiguity of Opportunity Cost for Companies—Balance between

Food Ingredients and Ethanol Production 2-10

Understanding the Needs of the End Users on the Food and Beverages Market 2-11

Taking more Proactive Role in Providing the Public with Information about

Health and Nutritional Values of Starch 2-11

Growing Investment in Production Capacities of Wet Milling

Industry Renders Production more Expensive 2-11

Strategic Recommendations 2-12

Strategies to Counter Waning Profit Margins 2-12

C h a p t e r 3

U.S. Market for Native and Modified Food Starches

Market Overview and Definitions 3-1

Introduction to the Market 3-1

Resistant Starches 3-2

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Forecasts and Trends 3-3

Market Drivers 3-3

Rising Demand for Processed and Convenience Foods Create New Opportunities for Growth 3-4

Growing Health Awareness of Consumers Boost Growth of Resistant Starch Market 3-4

Emerging Demand for Clean Label and Wholesome Food will Boost the Development of Native Starch 3-5

Growing Need for more Functional and Sophisticated Ingredients

Stimulates Growth of Specialty/Modified Starches 3-5

Microencapsulation as an Incentive for Starch Innovation 3-5

Market Restraints 3-6

Sharp Increase in Prices of Raw Materials Hampers Growth 3-6

Need to Differentiate Product Lines for Exports to the EU Increases Costs 3-6

Market Engineering Measurement Analysis 3-7

Unit Shipment and Revenue Forecasts 3-7

Technology Trends 3-13

Application Analysis 3-14

Confectioneries 3-15

Processed Foods 3-16

Dairy Products 3-16

Baked Foods 3-17

Beverage Products 3-17

Pricing Trends 3-18

Competitive Analysis 3-20

Competitive Structure 3-20

Threat of New Entrants—Low 3-21

Threat of Substitution—Low 3-22

Bargaining Power of Supplier—Low to Medium 3-22

Bargaining Power of Buyer—Medium 3-23

Rivalry amongst Existing Companies High 3-23

Market Share Analysis 3-24

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C h a p t e r 4

Database of Key Industry Participants

Examples of Key Industry Participants 4-1

Key Industry Participants 4-1

C h a p t e r 5

Appendix

Glossary of Terms 5-1

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List of Figures

C h a p t e r 2


2-1 Food Starch Market:

Impact of Top Industry Challenges (U.S.), 2008-2014 2-10

C h a p t e r 3


3-1 Native and Modified Starch Market:

Market Drivers Ranked in Order of Impact (U.S.), 2008-2014 3-4


Market Restraints Ranked in Order of Impact (U.S.), 2008-2014 3-6

3-3 Total Native and Modified Starch Market:

Unit Shipment and Revenue Forecasts (U.S.), 2004-2014 3-8

3-4 Native Maize Starch Market:


3-5 Other Native Starch Market:


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3-6 Modified Maize Starch Market:


3-7 Other Modified Starch Market:



Market Share by Food and Beverage Application (U.S.), 2007 3-14


Average Unit Price (U.S.), 2004-2014 3-18


Competitive Structure (U.S.), 2007 3-20

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#N107-88 © 2008 Frost & Sullivan www.frost.com ix

List of Charts


2.1 Food Starch Market:

Changing Consumer Preference (U.S.), 2007 2-14

C h a p t e r 3


3.1 Native and Modified Starch Market:

Market Engineering Measurements (U.S.), 2007 3-7



3.3 Native Maize Starch Market:


3.4 Other Native Starch Market:


3.5 Modified Maize Starch Market:


3.6 Other Modified Starch Market:



Market Share by Food and Beverage Application 3-15


Average Unit Price (U.S.), 2004-2014 3-19


Market Share by Participants (U.S.), 2007 3-24

1Executive Summary

M a r k e t O v e r v i e w

Introduction

The key role of starch in practically all sectors of food and beverages industry is unquestion-

able. They offer a wide range of qualities which cannot be imitated by other groups of

additives and many of them correspond perfectly with the increasingly popular global

"health and wellness" trend and growing consumers' demand for all-natural food ingredi-

ents. The segment also undergoes significant amount of research, aimed at developing more

sophisticated varieties with new or improved qualities, which are particularly essential for

functional and more refined foods and beverages.

Starch is a polysaccharide found commonly in green plants—those which contain chloro-

phyll—as means of storing energy. In foods and beverages starch appears in a number of

forms, differing from each other not only in terms of key functions, but also the source from

which they are derived and level of processing. Functional properties of starch are closely

connected with the proportion of two types of molecules: amylase and amylopectin, which

affects qualities such as viscosity, solubility or resistance to high temperature. Ingredients

prepared on the basis of starch often perform more than just one function when added to

food—for example, mono-starch phosphate (E1410) serves not only as stabilizer, but also as

a thickener or a binding agent. Other common purposes for which starch ingredients are used

is fat replacing, sweetening, increasing resistance to heating or shearing, preventing unde-

sired hydration, or providing the right texture or mouth feel.

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The key application sectors for food starches are represented by confectionery, processed

foods and snacks, dairy, soft beverages and bakery products. In the United States most starch

is manufactured from corn—over 90 per cent, approximately 6 per cent from wheat and the

rest comes from other sources, among which the most important are potatoes, rice and

tapioca (cassava). Due to the increase in crude oil prices and boom in the govern-

ment-supported biofuels industry, there has been a surge in the prices of commodities—

especially corn, which has become the basic material for ethanol production. A combination

of factors (analyzed further in the study) led to the price growth of starches. By the end of

2006, two major players—National Starch Food Innovation and Cargill Incorporated has

increased the prices of its product portfolio.

The fact that federal authorities strongly support the development of the increasingly profit-

able ethanol industry has led to changes in the agricultural structure of the U.S.; as the

ethanol industry needs more and more corn, farmers are shifting from the production of

other crops like wheat or soy, to corn, which has increased the price of these commodities.

Although there seems to be no real threat that demand from the ethanol plants will lead to

shortages in starch supply for food industry, there is still some uncertainty on the market

concerning the influence of biofuels industry development on prices of corn and corn-derived

starches.

Research Scope

This research study investigates the food starch ingredients on the United States market in

two following segments:

■ Native starches

■ Modified (specialty) starches

The segment of starch-based sweeteners is not investigated in this study, however there are

references to this product group throughout the paper, whenever it proves to be necessary for

the indepth analysis of native and modified starches.

The research study also provides the analysis of food starches—both native and modi-

fied-according to supplication sectors: bakery, beverages, dairy, processed foods and snacks.

The base year for this research service is 2007, with market history since 2004 and forecasts

to 2014.

Geographically, the study covers the market of the United States of America. Any reference to

"America" or "American market" is meant as "the U.S." and "the U.S. market"—Mexico

and Canada, as well as Latin and South America, are excluded from the current analysis.


S u m m a r y o f M a j o r F i n d i n g s

Market Dynamics

In 2007, the total U.S. food starches market was worth approximately $1.63 billion, with an

annual growth rate of 0.7 per cent in terms of volume. The native starches segment accounts

for approximately 43.2 per cent of the market, leaving modified starches with 46.8 per cent

shares. Over 90 per cent of food starches manufactured in the U.S. come from corn. Confec-

tionery represents the single largest application sector for starch and accounts for

47.5 per cent in terms of volume. The compound annual growth rate (CAGR) from 2007 to

2014 for the total starch consumed in the food and beverages market is anticipated to reach

the 6.7 per cent. This growth can be attributed to number of factors, among which the most

essential are the increasing health awareness among the American consumers and the rise in

demand for processed and convenience foods. It is expected that this market will continue to

grow till 2014 and achieve the value of $2.58 billion.

Both native and modified starches segments are going to grow in the forecast period, albeit

not for the same reasons. While the development of native starches depends mainly on the

consumers' desire for natural and "clean label" foods, associated with health and wellness,

the growth of modified starches market will result from increasing demand for more and

more sophisticated food products, especially in the category of convenience foods. The latter

are becoming increasingly popular not only in the U.S., but generally in most developed

countries due to changing lifestyles of the population.

Apart form the convenience/processed foods segment, also other segments, like bakery,

non-alcoholic beverages or dairy are going to grow, although in general not at the same pace.

In all these application segments there are sub-segments which are expected to develop espe-

cially quickly, and these are mainly those incorporating the "health and wellness trend" such

as wholesome bread, functional beverages or yoghurts.

In year 2007, the food starches market in the U.S. was faced with rapidly growing manufac-

turing costs resulting from the increase in prices of corn and other raw materials, which were

driven by booming demand for biofuels, particularly ethanol. In turn, several top market

players, like National Starch, announced the increase in prices of their products. However,

further increase in the cost of raw materials is likely to affect the manufacturers' profit

margins significantly.


Market Drivers Challenges and Restraints

K e y I n d u s t r y D r i v e r s

The study identifies and provides an analysis of several drivers, restraints and challenges

shaping the U.S. food starch market in the forecast period.

Among the drivers with crucial impact on the American food starches market are:

■ Increasing demand for processed and convenience foods

■ Growing health awareness of consumers

■ Growing need for more functional and sophisticated ingredients

The market of food starches in the U.S. is driven by a number of intertwining trends, among

which the most general one is probably the mighty "health and wellness" trend and the

consumers' growing awareness of the importance of healthy products in their lifes. Since

"healthy" is usually understood as "natural", more and more consumers seek "clean label"

foods and try to minimize the amount of artificial or modified ingredients in their foods. This

tendency is likely to be the driver of the native starches segment—ingredients perceived as

natural and "clean". On the other hand, as people are becoming increasingly busy and spend

most of their time working or travelling, they have less time for preparing the meals by them-

selves. This results in the growing interest in convenience foods—like frozen or ready-to-eat

meals—as well as searching for more functional or sophisticated products. This trend is

driving the growth of modified (or specialty) starches segment—as the food itself is expected

to become increasingly refined, so are the ingredients that shape its qualities.

K e y M a r k e t R e s t r a i n t s

Among the restraints with crucial impact on the American food starches market are:

■ Sharp increase in prices of raw materials for starch production, especially corn

■ Need to differentiate product lines for exports to the EU increases costs


The recent crisis in the energy sector, resulting in the sharp increase in the prices of oil, and,

consequently, in manufacturing costs in the U.S. as well as in the rest of the world, had a

great impact on the American starch market. With the boom in the ethanol industry, strongly

supported by the government, the market was faced with rapidly growing demand for starch,

which was used as the base material for biofuels production. The prices of corn—main crop

from which American starch is produced—zoomed and the farmers started to shift massively

from growing other crops, like soy or wheat, to the more profitable corn. As a result, the

prices of these crops grew too, and these trends had a negative impact on overall food and

feed markets. What is more, farmers introduced more and more commonly the GM corn vari-

eties which could yield higher crops—and since the GM varieties are more expensive than

non-GM, this also had a negative impact on starch prices. The fact that the U.S. market is so

dependent—and generally approving—of GM crops, results in another problem. Since in

Europe the acceptance of genetically modified foods is significantly lower than in America,

U.S. companies willing to export starch to Europe must bear additional costs of differenti-

ating the product lines and ensuring that products shipped overseas are GM-free.

K e y M a r k e t C h a l l e n g e s

Among the challenges with crucial impact on the American food starches market are:

■ Increasing investment in additional production capacities

■ Taking a more proactive role in communicating with the final consumer—buyers of food

products

■ Winning or retaining clients by providing a wider, more comprehensive range of services

■ Alternative costs and profits—finding balance between the production of food

ingredients and ethanol or other industrial purposes

With the increasing demand for starch, especially the one derived from corn, the suppliers are

facing the need to invest in expanding their production capacities, particularly in the area of

wet milling. As the demand for starch has been rather stable until recently, the existing

capacities were satisfactory for the general industry and not much extra investment took

place. Now, however, the boom in the ethanol industry forced the market participants to put

additional funds into the development of wet milling, and this massive trend is likely to lead

to at least temporary increase in production costs—until the return on investment reaches the

level of profitability. Moreover, since some of the manufacturers (especially the top market

players) are involved both in production of food starch ingredients and of biofuels, current

situation forces them to carefully calculate the threats and opportunities of choosing partic-

ular proportions of product portfolio and deciding which profile better suits their strategic

objectives.


The market of food starches is becoming more and more competitive, and one of the key

ways of building or strengthening the position on the suppliers side is creating closer bonds

with key customers—offering them customized products and services and aiming at becoming

a valued partner assisting in the client's development in a number of ways. Such approach

requires starch manufacturers to adopt a more proactive role on the market and increase the

knowledge not only about their direct customers, but also about their clients—final

consumers on the market, who are often unaware of the functionality or benefits available to

them in food products thanks to certain starch ingredients. By communicating with these

consumers more directly, starch ingredients manufacturers will make an important step on

the way to improving their competitive advantage on the market.

Competitive Analysis

The U.S. market for native and modified food starches comprises of about 30 to 35 compa-

nies, including manufacturers and distributors. The market is extremely competitive and

concentrated. The top three players – Cargill Incorporated, National Starch Food Innovation

and Tate & Lyle—control among themselves approximately 75 per cent of the market shares.

New entrants are rare, due to high initial costs and market saturation. Companies partici-

pating in this market focus on the trend of establishing themselves as manufacturers of health

and wellness ingredient. There are three tiers of competition within the industry.

Tier 1 includes global native and modified starch manufacturers, tier 2 includes smaller and

niche manufacturers and tier 3 includes distributors.

Tier 1 includes manufacturers such as Cargill Inc., National Starch Food Innovation,

Tate & Lyle, Roquette America, and Corn Products International. These players supply

native and modified starches for use in several application segments of the food industry,

most crucial being confectionery, beverages, dairy, processed foods and snacks.

Tier 2 involves smaller or niche manufacturers, like Grain Processing Corporation, Farbest

Brands or Ciranda.

Tier 3 includes distributors—companies such as Atlantic Ingredients, Gillico Ingredients,

Alfachem and Essex Grain products.

The end users represent global food companies such as Kraft, Nestle, Unilever and Kellogs,

who utilize the various starch ingredients for the production of their processed food

products.


Conclusions

The U.S. native and modified starch market is mature and concentrated. The market is

witnessing a modest growth rate of less than 1 per cent in volumes, which is compromised to

an extent by rising prices. Nevertheless the indispensable nature of starch and the extremely

wide application base has worked for its advantage. The growing "health trend" has also

created ample opportunities as most of the low-calorie products lack taste and mouth-feel

due to the removal of fats. Starches, especially modified starches are increasingly used by

food manufacturers for their positive impact on organoleptic parameters that enhance the

overall "food experience" of the end-consumers.

However, the U.S. starch manufacturers also face a number of challenges such as the rising

cost of raw-materials. Manufacturers, with the help of industry associations can adopt

various strategies to overcome these challenges. Alliances with Asian manufacturers can

provide improved sourcing and pricing options. Other strategies would include acquisitions,

expansion into emerging economies, vertical integration, branding and increased R&D

efforts.


2Introduction to the Industry

M a r k e t O v e r v i e w a n d D e f i n i t i o n s

Industry Overview

Starch is a polysaccharide—a carbohydrate polymer—composed of glucose units linked into

very long chains. It serves as a major means of storage for carbohydrates in all green

plants-that is to say, plants containing chlorophyll—and exists in form of granules, varying

in size and shape depending on the plant in which they were synthesized. The most common

sources of starch are:

■ Corn (maize)

■ Wheat

■ Potato

■ Tapioca (cassava)

■ Rice

In the U.S. more than 90 per cent of starch comes from corn, 5 to 6 per cent from wheat, and

the rest from the remaining sources. In individual application sectors this proportion may

vary—for example, in Bakery sector wheat starches are used more commonly compared to

the food and beverage market in general.

The properties of the starch granules, and as a result, of starch ingredients, depend upon the

proportion and the arrangement of two types of molecules of which starch is composed:

amylose and amylopectin. Amylose exists in the form of straight chains, while the chains of

amylopectin are branched. It is possible to manipulate genetic controls in plants, and in the

U.S. it was corn starch that was the main object of such modifications. Commonly used waxy

starch contains nearly 100 per cent branch-chain starch amylopectin molecules, while high

amylose starch contains 70-80 per cent straight chain amylose molecules. Between these

extremes there is a wide range of starch varieties, which possess different functional proper-

ties and can be used in numerous applications.


The key functions for which starch is used include:

■ Moisture control

■ Thickening and binding

■ Extending shelf life of the product by preventing shearing or other forms of degradation

■ Providing desired texture and mouth feel

■ Encapsulation of other food ingredients, like vitamins or flavours

The main types of starch used as ingredients in food and beverage industry are:

■ Native starches

■ Modified (specialty) starches

Ingredients manufactured from starch through chemical/enzyme hydrolysis such as maltodex-

trin, dextrin, dextrose, glucose and fructose syrups are out of the scope of this research.

Native starches are those which include only physical processes in the production process for

the extraction of the starch portion from various plant sources. A modified starch is one that

undergoes one or more chemical modifications to enhance performance during food

processing. It is worth mentioning that resistant starches, which are growing in popularity

due to their fiber-like properties, exist both among native and modified starches.

I n d u s t r y S t r u c t u r e

Profiles of Top 3 Market Participants

C A R G I L L , I n c .

Cargill is a privately held company, one of the world's top providers of food, agricultural,

health and risk management products and services. It operates in over 60 countries and

employs 149,000 people, serving in and five key customer segments:

■ Agriculture (Crop and Livestock)

■ Food

■ Health and Pharmaceutical

■ Industrial

■ Financial and Risk Management


In 2006 (financial year ending in May) Cargill's sales amounted to $75.2 billion and the

annual growth was 5,8 per cent. The net income grew even more dynamically, by 13 per cent,

reaching $1.73 billion in 2006. The earnings were led by the financial and risk management

segment, while the food ingredients and applications segment in general showed lower results

than in 2005.

Cargill offers a wide portfolio of starch and starch-derived food ingredients, among which

the key segments include:

■ Bleached starches

■ Native and modified starches

■ Instant and cold swelling starches

■ Maltodextrin

■ USP-grade starch

■ Tapioca

■ Salioca

■ Polyols

■ Waxy maize starches

■ Corn syrup solids

■ Resistant starches

Contact Information.

Address: 15407 McGinty Rd. West

Wayzata, MN 55391

Phone: 952-742-7575

Fax: 952-742-7393

T A T E & L Y L E P L C

Tate & Lyle is a global manufacturer of ingredients for food and industry sectors. The

company was founded in 1921 in the United Kingdom, which still serves as corporate head-

quarters, and initially operated as a producer of sugar. In the United States the roots of the

company are connected with the corn milling business and date back to the beginning of the

20th century.


Tate & Lyle operates over 60 production facilities in 24 countries located mainly in Europe,

the Americas and South East Asia. The company employs 7,000 people in its subsidiaries,

and a further 2,300 in joint ventures. It operates mainly in four markets:

■ Food and beverages

■ Industrial

■ Pharmaceutical and personal care

■ Animal feed

And through five business divisions:

■ Food & Industrial Ingredients, Americas

■ Food & Industrial Ingredients, Europe

■ Sucralose

■ Sugars, Americas & Asia

■ Sugars, Europe

There are four services encompassing Tate & Lyle solutions:

■ Tate & Lyle CREATE

■ Tate & Lyle OPTIMIZE

■ Tate & Lyle REBALANCE

■ Tate & Lyle ENRICH

A large subsidiary of Tate & Lyle in the U.S. was formerly known as A.E. Staley, and

currently it operates under the name of TALFIIA (Tate & Lyle Food and Industrial Ingredi-

ents America). It is a processor of corn which serves as the basis of a variety of end products

including food and industrial starches, ethanol, fibres and other animal feed and food ingre-

dients. The U.S. operations are concentrated mostly in the state of Illinois, recently

expanding to Iowa.

Total revenue of Tate & Lyle was £3,720 million in 2006, with nearly 40 percent of this

amount generated in the U.S.


Contact Information

Lower Thames Street

London EC3R 6DQ

United Kingdom

Phone 1: (+44) (0)20 7626 6525

Fax 1: (+44) (0)20 7623 5213

N A T I O N A L S T A R C H A N D C H E M I C A L C O M P A N Y

National Starch and Chemical Company has sales of $3.7 billion, employs over 9,500 people

and operates in 38 countries on 6 continents. Company headquarters is located in Bridge-

water, New Jersey, U.S. It is divided into 4 product divisions:

■ Specialty Industrial Adhesives

■ Specialty Starches

■ Electronic Materials

■ Specialty Polymers

In 2004 the food (Specialty Starches) division was transformed into an entity named National

Starch Food Innovation Group. NSFI is an international leader in supply of functional and

nutritional ingredients for food and beverage industries. The company is strongly concen-

trated on delivering nature-based and innovative products and is regarded as the leader of

innovation in starch ingredients industry.

National Starch Food Innovation offers a wide portfolio of specialty starches for the

following applications:

■ Bakery

■ Cereals and Snacks

■ Dairy

■ Beverages and Encapsulation

■ Meat

■ Dressings, Gravies, Sauces

■ Carbohydrate Nutrition

■ Food service


Contact Information

Address: 10 Finderne Avenue

Bridgewater, NJ 08807

Telephone: +1-800-797-4992

Fax: +1-908-685-5005

Profiles of Other Major Participants

A D M — A r c h e r D a n i e l s M i d l a n d

Archer Daniels Midland Company was founded in 1898 and is based in Decatur, Illinois. Its

primary area of operations are the U.S., where the company has three segments: Oilseeds

Processing, Corn Processing, and Agricultural Services. The Corn Processing segment, the

most crucial from the point of view of starch and starch-derived products, covers the wet

milling and dry milling corn operations. Product portfolio includes many food and feed

ingredients, such as syrups, starches, glucose, dextrose, and sweeteners, corn gluten feed and

meal, distiller's grains and many others. The main sectors of application of ADM products

are: bakery and cereals, candy and confectionery, beverages, dairy, meat products, snacks and

other processed foods.

ADM has over 27,000 employees and over 240 processing plants. the company's net sales for

the fiscal year ended June 30, 2007 amounted to $44 billion. The company has joint ventures

with Alimenta (U.S.A.), Inc., Gruma S.A. de C.V., and Metabolix.

Contact Information

4666 Faries Parkway

Decatur, IL 62525

Phone: 217-424-5200

Fax: 217-424-5447


R o q u e t t e A m e r i c a

Roquette America is a subsidiary of a French company Roquette Freres, one of the leading

manufacturers of food ingredients in Europe. In The U.S. Roquette employs 470 people and

has yearly revenue of $94 Million. The predominant source of starch is corn, but potatoes

and wheat also play an important role. the product portfolio includes such product types as

pregelatinized starches, thin boiling starches, waxy maize starches, wheat gluten, wheat

starch, dextrins, dextrose, and a range of glucose syrups and modified starches. They find

their use in a number of application sectors, from meat and fish products, soups, salad dress-

ings, dairy and confectionery, to bakery, snacks, beers, energy drinks and baby food.

Contact Information

1417 Exchange St.

Keokuk, IA 52632

Phone: 319-524-5757

Fax: 319-526-2345

G r a i n P r o c e s s i n g C o r p o r a t i o n

Grain Processing Corporation (GPC) is a subsidiary of Muscatine Foods (formerly Varied

Investments); it is a privately held company founded in 1943, whose core activities cover the

manufacturing and marketing of corn-based products all over the world. GPC's portfolio

includes a wide range of products, such as: maltodextrins, corn syrup solids, food starches,

starches for pharmaceutical and personal care markets; corn oil; animal feed ingredients, and

pet care products. There are also products for industrial use, like ethyl alcohol (applied in

beverages as well) or starches for the paper, corrugated box, textile, and wallboard

industries.

GPC's annual revenue amounted to $192 Million (fiscal year ending in September 2007); the

company employs 795 people.

Contact Information

1600 Oregon St.

Muscatine, IA 52761-1494

Phone: 563-264-4211

Fax: 563-264-4318


C o r n P r o d u c t s I n t e r n a t i o n a l

Corn Products International, Inc. was founded in 1906 and its headquarters is located in

Westchester, Illinois. The company operates manufacturing plants in Africa, Asia, and both

Americas and sells its products directly to manufacturers and distributors in these regions.

The portfolio includes not only food additives, but also industrial products; the production is

based on the wet milling and processing of corn and other starch-based materials. Over

50 percent of CPI's sales are generated by sweeteners, including high-fructose corn syrup,

which is commonly used to sweeten soft drinks. Apart from HFCS, CPI offers a number of

other products, like glucose or maltose corn syrups, glucose and corn syrup solids, caramel

color, dextrose, polyols, maltodextrins, and starch-derived products both for industrial and

food applications, as well as refined corn oil, salad dressings, shortening, mayonnaise, corn

gluten feed and meal, and steep water. Sectors of application cover food and beverage, phar-

maceutical, paper, textile, and brewing industries and animal feed markets.

The number of CPI's employees is approximately 6600 and the company's revenue in

2006 was over $2.6 billion.

Contact Information

5 Westbrook Corporate Center

Westchester, IL 60154

Phone: 708-551-2600

Fax: 708-551-2700

P e n f o r d F o o d I n g r e d i e n t s

Penford Food Ingredients Corporation (PFI) is a subsidiary of Penford Corporation and a

provider of high quality specialty starches, dextrose and dextrin. PFI's area of focus are

potato starches, which gives the company a unique position on the American market;

however, corn, rice and tapioca-derived starches are also available in PFI's product portfolio.

Over 40 commercialized ingredients from PFI's product line find use in such application

sectors as soups, sauces & gravies, tortillas, Asian noodles or French fries and serve for

example as texturizers, moisture control binders, fat replacers or clear coats.

PFI's annual revenue exceeds $50 Million; the company employs more than 100 people and

the headquarters is located in the state of Colorado, with domestic manufacturing facilities in

Idaho.


Contact Information

PFI Headquarters

7094 S. Revere Pkwy

Centennial, CO 80112

Phone: 303-649-1900

Fax: 303-649-1700

M a r k e t D y n a m i c s

Competitive Activities on the Market

The food starch ingredients market in the U.S. is perceived as mature and saturated. There

are few niches in which potential new entrants could find opportunities for development, and

entry costs are likely to be high, as a result of which not much activity is seen in the field of

new starch manufacturers on the American market. A much more reliable and effective way

of becoming a player in this market is going into an alliance with a company with a

well-established position in this business. In 2007 such alliance was announced by National

Starch Food Innovation and the AVEBE Group—two global leaders in starch-based food

ingredients. The alliance will result in National Starch being the sole, exclusive distributor of

AVEBE's potato-based starch ingredients in North America and a few other regions offering

growth opportunities. The deal is likely to bring mutual benefits and increase both partners'

competitiveness: For National Starch, it means broadening the product portfolio, hitherto

lacking in potato-derived food starches, and for AVEBE improving their market presence and

penetration.

Although for smaller (tier 2) companies consolidation may prove to be a key to most effective

development or simply to survival, not many activities are currently seen among the biggest

players, nor are they expected in the forecast period. Important mergers or acquisitions took

place several years ago, even before the period covered in this research service—like the take-

over of French company Cerestar by U.S. giant Cargill in 2002. What the market anticipates

now are the transactions involving single divisions or separate business units of bigger

companies rather than the entire firms. Further alliance—like the National Starch-AVEBE

one—are also probable, especially between companies of different sizes, with the bigger

partner wanting to add new niche products to their existing range and the smaller one

counting on using well-developed distribution channels or other kinds of support.


C h a l l e n g e s a n d R e c o m m e n d a t i o n s

Industry Challenges

Figure 2-1 outlines the impact of top industry challenges on the U.S. food starch market from

2008 to 2014.

Source: Frost & Sullivan

A m b i g u i t y o f O p p o r t u n i t y C o s t f o r C o m p a n i e s — B a l a n c e

b e t w e e n F o o d I n g r e d i e n t s a n d E t h a n o l P r o d u c t i o n

With the boom in the ethanol industry in the recent years, many manufacturers of starch and

starch based ingredients had to make a choice of great importance—how to allocate their

resources to achieve the highest profitability. Since the supply of raw materials—and, in

consequence, starch—is limited, the manufacturers must decide how they will balance the

production of starch for food and for industrial purposes, mainly biofuels. A group of key

players already differentiates their portfolio in this respect and their future moves are likely

to influence other participants of the U.S. starch industry. The challenge is anticipated to

have a high impact throughout the forecast period.

F i g u r e 2 - 1

Food Starch Market: Impact of Top Industry Challenges (U.S.), 2008-2014

Challenge 1-2 Years 3-4 Years 5-7 Years

Ambiguity of opportunity cost for companies—balance between food ingredients and ethanol production

High High High

Understanding the needs of the end users on the food and beverages market

High High Medium

Taking more proactive role in providing the public with information about health and nutritional values of starch

Medium Medium Medium

Growing investment in production capacities of wet milling industry renders production more expensive

Medium Medium Low


U n d e r s t a n d i n g t h e N e e d s o f t h e E n d U s e r s o n t h e F o o d

a n d B e v e r a g e s M a r k e t

The situation on starch ingredients market is strongly influenced by the trends among the end

users—consumers of food and beverages. In order to adapt to their needs and expectations

the food ingredients companies should no longer rely solely on "second-hand" information

from sources like newspapers or food manufacturers' suggestions, but develop their own

research program. Getting closer to the final consumers of starch-based ingredients and

understanding the factors behind their purchasing decisions will give the starch suppliers a

stronger position on the increasingly competitive market. The challenge is likely to have a

high impact in the short and medium terms and medium impact in the long term of the fore-

cast period.

T a k i n g m o r e P r o a c t i v e R o l e i n P r o v i d i n g t h e P u b l i c

w i t h I n f o r m a t i o n a b o u t H e a l t h a n d N u t r i t i o n a l V a l u e s

o f S t a r c h

Suppliers of starch-derived ingredients often communicate the health and functional benefits

of their products only to their direct clients—food manufacturers. In view of recent trends on

the food and beverages market (anti-HFCS campaign among them) it appears that this

approach should change—starch ingredients manufacturers need to communicate more

actively with the public, who is their real end-customer. It is a challenge for starch suppliers

to make themselves known to the individual consumers by delivering not only products, but

also first-hand information about their properties and role in certain areas, like fighting

obesity or improving gut health. The challenge is anticipated to have a high impact

throughout the forecast period.

G r o w i n g I n v e s t m e n t i n P r o d u c t i o n C a p a c i t i e s o f W e t

M i l l i n g I n d u s t r y R e n d e r s P r o d u c t i o n m o r e E x p e n s i v e

Until recently the production of starch the U.S. remained on a relatively stable level and there

was no need to invest heavily in increasing the production capacities of the industry, espe-

cially the more prevalent wet milling. With the advent of ethanol boom, however, demand for

starch increased so sharply that adding extra capacities to the existing production base

became critical. Due to massive investment taking place at the present time, costs of starch

production are temporarily increased. It is likely that within the next 3-4 years the invest-

ment will be one of the price increase drivers, and only in the long term will it start to bring

actual profits. The challenge is likely to have a medium impact in the short and medium

terms and low impact in the long term of the forecast period.


Strategic Recommendations

S t r a t e g i e s t o C o u n t e r W a n i n g P r o f i t M a r g i n s

The starch industry as a whole has been increasingly plagued by the rising cost of raw mate-

rials. The scenario holds true across the globe and manufacturers are affected by reducing

profit margins. On one side, the stupendous consolidation witnessed in the food and

beverage industry in U.S. has significantly increased their bargaining power over the ingre-

dient manufacturers. Though the situation is relatively better for starch as it is also a highly

consolidated industry, it still limits the pricing options of starch manufacturers to some

extent. On the other side, the price of raw materials has increased massively over the last

couple of years. Starch and its derived ingredient manufacturers are suffocated in between

with thinning profit margins. Some of the strategies that would help alleviate price pressure

include:

Efficient Sourcing Options

Manufacturers should aim towards a very high degree of backward integration. An ideal situ-

ation would be to become self-reliant on raw material supplies by having its own sourcing

grounds. In reality, acquiring one hundred per cent of the required raw materials from

private sourcing options could be almost impossible. Hence, manufacturers should have

effective contracts in place with the farmers to ensure a steady supply of raw materials at the

predetermined price. The longer the term of the contract, the better it is for the manufac-

turers as the raw material prices are showing no signs of going down. Manufacturers should

also adopt eminent hedging strategies by investing considerably in 'futures and options'

contracts to reduce the risk of adverse price fluctuations of raw materials.

Differential Pricing Strategy

Manufacturers should adopt variable pricing strategies for different product lines in order to

obtain the maximum return on investment. Pricing Strategy requires a comprehensive assess-

ment of the market forces and competitors strengths. Pricing necessarily needs to:

■ Reflect the value each company provides with respect to the competitors

■ Assess how much the consumers are willing to pay for different products

■ Enable the company in realizing its revenue and market share objectives

■ Maximize profits


Some of the strategies to be adopted for Pricing are listed below:

C r e a m - S k i m m i n g

The strategy involves the adoption of a significantly higher price with the intention of selling

to a smaller target market. All the value-added products catering to a niche audience can

benefit from this approach. For example, the Remy DR 7—111, a native starch which also

acts as a casein replacer is priced considerably above the normal native starches of Remy

Industries. Niche markets are mostly inelastic and the product functionality assumes a much

higher importance compared to its price. The strategy largely depends on the manufacturer's

ability to churn out innovative products that can do much more than merely acting as a

thickener or a binder.

P e n e t r a t i o n P r i c i n g S t r a t e g y

Penetration price is the intentional low price maintained over a period of time for the prod-

ucts to enhance the penetration among the target audience and also to check competition.

This strategy could be adopted for product lines that cater to the mass market which, essen-

tially translates into large volume. The high volumes would allow the fixed costs to be spread

over more products, thereby generating better economies of scale. This strategy revolves

around the ability of the manufacturer in increasing the operational efficiency by adopting

innovative cost cutting measures so that the margins are not affected by reducing the price.

However, the market demand should be elastic i.e. it should be a price sensitive market to

reap rewards with this approach.

Consumer—Centric Approach

The visibility of ingredient manufacturers among the end-consumers is currently very less.

This translates into reduced control among the ingredient manufacturers to influence the

‘purchase decision' of the end-consumers. When a consumer buys a food product, it is the

brand-equity of various food manufacturers and retailers that influence his purchase deci-

sion. This increases the bargaining power of food manufacturers, thereby limiting the role of

ingredient manufacturers as ‘price-takers' in the market. Apart from the pricing, the scenario

also restricts ingredient manufacturers from taking advantage of the fast changing consumer

attitude towards food products. In the past, a majority of the consumers were price focused

and purchased products that offered a better value for the money spent. The modern-day

consumers are increasingly characterized by high household incomes, time and pressure over-

load and a strong emphasis on health. Unlike the previous era, consumers are willing to pay

a premium for health, convenience and peace-of-mind.


Chart 2.1 illustrates the changing consumer preference in the U.S. market, 2007.

C h a r t 2 . 1

Food Starch Market: Changing Consumer Preference (U.S.), 2007


Also, intermediaries such as distributors or food manufacturers are more sophisticated

buyers, who are looking for specific attributes and know what to pay for it. Consumers are

less complicated in their purchase decisions and are likely to respond to the emotions of the

moment. They are less certain about the actual product assessment and it is much easier to

influence their value perception.

Hence manufacturers should focus on aggressive branding and marketing strategies aimed at

the end-consumers. The focus of such campaigns is to create a positive mind-share for the

ingredients in terms of quality among consumers, which can be leveraged to influence their

buying behavior. This would increase the brand equity of the ingredient and would facilitate

a premium-pricing for the ingredient.

Value for MoneyValue for HealthValue for Taste

Value for ConvenienceValue for Peace-of-Mind

Value for Time

Value for Money

Traditional Consumer Modern Consumer

Consumer Value Shift

Re-Defining Consumer Value


3U.S. Market for Native and Modified Food

Starches

M a r k e t O v e r v i e w a n d D e f i n i t i o n s

Introduction to the Market

Native Starches, the most natural form of starch, are raw unmodified starches produced from

various raw materials. The production procedure of native starches involves only physical

processes as it is aimed at extracting the already present starch from the different raw mate-

rial sources. In the U.S., the predominant raw material used for the manufacture of starch is

maize. Maize accounts for almost 93 per cent of the total starch produced in the U.S. The

other raw materials used are wheat, rice, potato, cassava, barley and oats.

The difference between starches from different sources (corn or wheat) arises due to the

starch polymers present in the grain or tuber and the way these polymers are packed into the

starch granule. Polymers are characterized as amylose (linear starch) or amylopectin

(branched starch). But there are many variations between one amylopectin starch (often

called waxy starches) and another. There are four types of corn starch, which are primarily

used in the U.S. Common corn starch has 25 per cent amylose, while waxy maize is almost

totally made up of amylopectin. The two remaining corn starches are high-amylose corn

starches. One has 50 to 55 per cent amylose, while the other comprises about 70 to

75 percent amylose.


Native Starches are comparatively easy to obtain, cheaper than modified starches and

natural, hence a consumer-friendly ingredient. However, native starches often lack the wider

functionality and processing capabilities, offered by modified specialty starches. Though it is

possible to modify the properties of starch, the basic functional difference among the various

types of starch arising due to the fundamental chemistry of the raw material would still be

retained. For example, a rice starch produces foods that are different in texture and other

attributes than a potato or a barley starch. Many starches have properties that aren't so easy

to duplicate by modification. This process becomes more feasible and cost effective by

choosing raw materials that are closely linked to the desired function.

Modification of starch is most often aimed at changing its gelling and thickening properties,

viscosity, texture and performance in extreme conditions. Modified starches are sophisticated

when compared to native starches and can meet more demanding manufacturing require-

ments. They can resist higher or lower temperatures and perform better in acidic or alkaline

environment. The main forms of chemically modified starches based on the reacting agents

are:

■ Acid-modified starch

■ Alkaline-modified starch

■ Bleached starch

■ Oxidized starch

■ Enzyme-treated starch

■ Acetylated starch

■ Acetylated oxidized starch

Pregelatinized starches are those that are pre-cooked for the purpose of thickening cold

foods. Otherwise starch is gelatinized by the application of heat. The temperature required

for this process varies from one starch to another.

R e s i s t a n t S t a r c h e s

Resistant starches are those that 'resist' digestion in the small intestine. In fact, resistant

starches can be defined as the summation of starch and the products of starch digestion,

which is not absorbed in the small intestine of healthy individuals. By definition, they pass

through the small intestine and provide no short-term energy but have a variety of physiolog-

ical effects in (and emanating from) the large intestine. Natural resistant starches are

fermented like some dietary fibers and provide long-term immunity. These are referred to as

non-glycemic carbohydrates. They also act as food for the favorable bacteria in the gut and

enhance the overall gut health of individuals.


Today's resistant starches are typically categorized into four classes:

■ RS1: Physically inaccessible or digestible resistant starch, such as that found in seeds,

legumes and unprocessed whole grains

■ RS2: Resistant starch that occurs in its natural granular form, such as uncooked potato,

green banana flour and high amylose corn (For example, Hi-maize® produced by

National Starch)

■ RS3: Resistant starch that is formed when starch-containing foods are cooked and cooled

such as in bread, cornflakes and cooked-and-chilled potatoes or retrograded high

amylose corn (For example Novelose® produced by National Starch)

■ RS4: Selected chemically-modified resistant starches, not found in nature

Resistant starches have gained biological importance more recently. In the past decade, foods

containing high level of resistant starch have been produced on commercial scale. The

increased consumer awareness on the benefits of resistant starch has in turn increased the

availability of these foods. Resistant starches are predominantly used as dietary fibre and

prebiotic in a wide range of foods and beverages.

Native and modified starches are used as thickeners, binders and stabilizers in the food and

beverage industry. They have become an indispensable ingredient in the global food and

beverage industry due to their functional properties. Some of their key functions include the

prevention of undesired hydration, rendering the desired texture and mouth feel, shelf life

extension and encapsulation of other ingredients. Native and modified starches together

account for 2.36 million tons in terms of volume and $1.63 billion of revenue.

F o r e c a s t s a n d T r e n d s

Market Drivers

Figure 3-1 presents the market drivers ranked in order of impact for the U.S. native and

modified starch market from 2008 to 2014.



R i s i n g D e m a n d f o r P r o c e s s e d a n d C o n v e n i e n c e F o o d s

C r e a t e N e w O p p o r t u n i t i e s f o r G r o w t h

It is expected that the demand for convenience and processed foods will continue to grow

fast within the next 5-6 years. Consumers are becoming increasingly busy and one of the

characteristics of their lifestyle is the lack of time for preparing traditional meals at home.

Thus, consumption of convenience foods is growing and so is the demand for starches used in

processing a variety of these products. The impact of the driver is anticipated to be high

throughout the forecast period.

G r o w i n g H e a l t h A w a r e n e s s o f C o n s u m e r s B o o s t G r o w t h

o f R e s i s t a n t S t a r c h M a r k e t

American consumers are increasingly concerned not only with maintaining proper body

weight, but also with health and well-being in general. More and more frequently they expect

that the food which they consume on regular basis will help them with certain health issues.

One of the most common concerns are the gut health and cardiovascular health, and one of

the factors contributing to it is enhancing the diet with fibre-rich food. Since resistant

starches possess the health-improving attributes of food fibre, the demand for this type of

ingredients is growing steadily. The driver is likely to have a high impact throughout the fore-

cast period.

F i g u r e 3 - 1

Native and Modified Starch Market: Market Drivers Ranked in Order of Impact (U.S.),

2008-2014

Rank Driver 1-2 Years 3-4 Years 5-7 Years

1 Rising demand for processed and convenience foods Create new opportunities for growth

High High High

2 Growing health awareness of consumers boost growth of resistant starch market

High High High

3 Emerging demand for clean label and wholesome food will boost the development of native starch


4 Growing need for more functional and sophisticated ingredients stimulates growth of specialty/modified starches


5 Microencapsulation as an incentive for starch innovation Medium Medium Medium


E m e r g i n g D e m a n d f o r C l e a n L a b e l a n d W h o l e s o m e F o o d

w i l l B o o s t t h e D e v e l o p m e n t o f N a t i v e S t a r c h

Along with the health and wellness trend, America also faces increasing demand for food that

is wholesome and natural. For food manufacturers it means that the importance of "clean

labeling" is growing. Those who wish to position themselves as promoting natural ingredi-

ents instead of artificial additives are turning to native starches (which can be described

simply as "starch" on the labels), thus, stimulating the development of this sector. The driver

is anticipated to have a medium impact throughout the forecast period.

G r o w i n g N e e d f o r m o r e F u n c t i o n a l a n d S o p h i s t i c a t e d

I n g r e d i e n t s S t i m u l a t e s G r o w t h o f S p e c i a l t y / M o d i f i e d

S t a r c h e s

Well-off consumers in the U.S. are looking for more and more sophisticated food products,

which offer them certain functionalities. Consequently, food manufacturers need to use more

functional and specialized food ingredients, including starches, thanks to which they can

create unique products and adapt better to the consumers' needs. The impact of the driver is

likely to be medium throughout the forecast period.

M i c r o e n c a p s u l a t i o n a s a n I n c e n t i v e f o r S t a r c h

I n n o v a t i o n

Micro-encapsulation is a process in which tiny particles or droplets are surrounded by a

coating in order to form small capsules. The encapsulated material is referred to as the core

or the internal phase and the surrounding wall is called a shell, coating, or membrane. There

are various reasons for microencapsulation such as the isolation of materials like vitamins

from surroundings to prevent the deteriorating effects of oxygen. Also for retarding evapora-

tion of volatile substances, improving the handling properties of a sticky material, or

isolating a reactive core from chemical attack. Microencapsulation is also done for control-

ling the rate of reaction or for masking the taste or odour of the core substance. Various

modified starches such as Starch-g-poly (vinyl alcohol) are being developed for the purpose

of encapsulation. The specialty-starch based encapsulation following the entrapment/matrix

model is quite common globally. This technology is used frequently in the food industry to

encapsulate flavors for drink and sauce mixes. Starch as a viable option for encapsulation is

likely to be more prevalent towards the later years of the forecast period. The driver is likely

to have a medium impact throughout the forecast period.


Market Restraints

Figure 3-2 presents the market restraints ranked in order of impact for the U.S. native and

modified starch market from 2008 to 2014.


S h a r p I n c r e a s e i n P r i c e s o f R a w M a t e r i a l s H a m p e r s G r o w t h

In 2006 prices of corn and other raw materials used in the production process of starch(wheat, cassava and potato) went up to a record stage, approximately by 70 per cent duringthe year. This increase resulted from a number of factors, among which the most importantone was the rapid development of ethanol industry and its dynamically growing demand forcorn and other materials. Among other factors are such issues as worldwide increase inenergy costs or more prevalent use of GM types of plants, which are yield higher crops, butare more expensive than non-GM varieties. As a result, starch ingredients manufacturers arefacing seriously increased costs of production which are likely to limit their possibilities ofgrowth in the nearest future. The restraint is expected to have a high impact throughout theforecast period.

N e e d t o D i f f e r e n t i a t e P r o d u c t L i n e s f o r E x p o r t s t o t h e E U I n c r e a s e s C o s t s

Contrary to the trends in the U.S., European consumers are in general very suspicious of GMfoods and ingredients. In many cases major food manufacturers must ensure that their prod-ucts do not contain any genetically modified additives. As a result, American suppliers ofstarch and starch-based ingredients who wish to export to Europe, must differentiate theirproduct lines for domestic and European market. This requirement contributes to theincrease in production costs and negatively affects market development. Cost effectivemethods of hydrolysis using GM enzymes are also not allowed to be used in Europe.However, the legislative scenario is changing at the moment and is expected to becomefriendlier towards GM foods in the near future. Sweden has taken the first initiative byallowing the production of GM raw materials based on claims that it would benefit bothfarmers and manufacturers. Hence the restraint is likely to have a high impact in the shortand medium terms and medium impact in the long term of the forecast period.

F i g u r e 3 - 2

Native and Modified Starch Market: Market Restraints Ranked in Order of Impact (U.S.),

2008-2014

Rank Restraint 1-2 Years 3-4 Years 5-7 Years

1 Sharp increase in prices of raw materials hampers growth High High High

2 Need to differentiate product lines for exports to the EU increases costs

High High Medium


Market Engineering Measurement Analysis

Chart 3.1 illustrates the Market Engineering measurements for the U.S. native and modified

starch market in 2007.

C h a r t 3 . 1

Native and Modified Starch Market: Market Engineering Measurements (U.S.), 2007

Market Engineering Drives Market

Strategy and Planning

MarketEngineer

ChallengeIdentification

MarketResearch

MarketEngineering

System

Implementation

MarketPlanning

MarketStrategy

Note: All figures are rounded. Source: Frost & Sullivan

Unit Shipment and Revenue Forecasts

Figure 3-3 and Chart 3.2 show the unit shipment and revenue forecasts for the U.S. native

and modified starch market from 2004 to 2014.

Measurement Name Measurement Trend

Units 2,362,579.9 MT Increasing

Revenues $1.63 billion Increasing

Base year market growth rate 16.1% Increasing

Potential revenues (maximum future market size) $2.57 billion Increasing

Compound annual growth rate 6.7% Increasing

Price range $0.69 per kilo Increasing

Competitors (active market competitors in base year) More than 25 Stable


Note: All figures are rounded; the base year is 2007. Source: Frost & Sullivan

C h a r t 3 . 2

Native and Modified Starch Market: Unit Shipment and Revenue Forecasts (U.S.),

2004-2014


F i g u r e 3 - 3

Total Native and Modified Starch Market: Unit Shipment and Revenue Forecasts (U.S.),

2004-2014

Unit Revenue

Units Growth Rate Revenues Growth Rate

Year (Metric Tons) (%) ($ Million) (%)

2004 2,319,134.2 --- 1,205.8 ---

2005 2,332,441.5 0.6 1,285.6 6.6

2006 2,346,659.3 0.6 1,406.1 9.4

2007 2,362,579.9 0.7 1,632.0 16.1

2008 2,379,212.2 0.7 1,759.2 7.8

2009 2,397,063.5 0.8 1,890.7 7.5

2010 2,414,460.1 0.7 2,022.8 7.0

2011 2,431,794.7 0.7 2,159.4 6.8

2012 2,448,958.1 0.7 2,299.9 6.5

2013 2,465,601.4 0.7 2,436.1 5.9

2014 2,481,816.6 0.7 2,575.9 5.7

Compound Annual Growth Rate (2007-2014): 0.7 6.7

0

500

1,000

1,500

2,000

2,500

3,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Rev

enue

s ($

Mill

ion)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000U

nits

(Met

ric

Ton

s)

Revenues ($ Million) Units (Metric Tons)


Figure 3-4 and Chart 3.3 show the unit shipment and revenue forecasts for the U.S. native

maize starch market from 2004 to 2014.


F i g u r e 3 - 4

Native Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014

Unit Revenue



2004 1,032,215.6 --- 466.0 ---

2005 1,037,789.6 0.5 497.2 6.7

2006 1,043,705.0 0.6 546.0 9.8

2007 1,050,697.8 0.7 643.7 17.9

2008 1,057,842.5 0.7 696.0 8.1

2009 1,065,564.8 0.7 749.8 7.7

2010 1,072,597.5 0.7 803.0 7.1

2011 1,079,462.1 0.6 857.5 6.8

2012 1,085,831.0 0.6 912.6 6.4

2013 1,091,803.0 0.6 965.3 5.8

2014 1,097,371.2 0.5 1,019.6 5.6



C h a r t 3 . 3

Native Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014


Figure 3-5 and Chart 3.4 show the unit shipment and revenue forecasts for the other native

starch market in the U.S. from 2004 to 2014.


F i g u r e 3 - 5

Other Native Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014

Unit Revenue



2004 75,734.6 --- 47.7 ---

2005 76,719.1 1.3 50.9 6.8

2006 77,777.9 1.4 54.3 6.8

2007 78,874.5 1.4 57.8 6.3

2008 80,018.2 1.5 61.4 6.3

2009 81,194.5 1.5 65.3 6.3

2010 82,420.5 1.5 69.4 6.2

2011 83,681.6 1.5 73.7 6.2

2012 84,987.0 1.6 78.3 6.2

2013 86,329.8 1.6 83.1 6.2

2014 87,719.7 1.6 88.2 6.2


0

200

400

600

800

1,000

1,200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Rev

enue

s ($

Mill

ion)

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Uni

ts (M

etri

c T

ons)



C h a r t 3 . 4

Other Native Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014


Figure 3-6 and Chart 3.5 show the unit shipment and revenue forecasts for the U.S. modified

maize starch market from 2004 to 2014.


F i g u r e 3 - 6

Modified Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014

Unit Revenue



2004 1,128,321.3 --- 636.2 ---

2005 1,134,075.7 0.5 678.0 6.6

2006 1,140,313.2 0.6 742.4 9.5

2007 1,147,041.0 0.6 863.3 16.3

2008 1,154,267.4 0.6 930.4 7.8

2009 1,162,001.0 0.7 999.8 7.5

2010 1,169,902.6 0.7 1,070.1 7.0

2011 1,177,857.9 0.7 1,143.0 6.8

2012 1,185,985.1 0.7 1,218.8 6.6

2013 1,193,931.2 0.7 1,292.0 6.0

2014 1,201,691.8 0.6 1,366.6 5.8

Compound Annual Growth Rate (2007-2014): 0.7% 6.8%

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C h a r t 3 . 5

Modified Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014


Figure 3-7 and Chart 3.6 show the unit shipment and revenue forecasts for the other modi-

fied starch market in the U.S. from 2004 to 2014.


F i g u r e 3 - 7

Other Modified Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014

Unit Revenue



2004 82,862.7 --- 55.9 ---

2005 83,857.1 1.2 59.6 6.6

2006 84,863.3 1.2 63.4 6.5

2007 85,966.6 1.3 67.3 6.1

2008 87,084.1 1.3 71.4 6.1

2009 88,303.3 1.4 75.7 6.1

2010 89,539.5 1.4 80.3 6.0

2011 90,793.1 1.4 85.1 6.0

2012 92,155.0 1.5 90.2 6.0

2013 93,537.3 1.5 95.7 6.0

2014 95,033.9 1.6 101.4 6.1

Compound Annual Growth Rate (2007-2014): 1.4% 6.0%

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C h a r t 3 . 6

Other Modified Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014


The revenue for the U.S. native and modified starch market in 2007 was $1.63 billion. The

market is likely to grow at a compound annual growth rate (CAGR) of 6.7 per cent and is

expected to reach $2.57 billion in 2014. Modified starch with a market capitalisation of

57.0 per cent in terms of revenue have contributed $930.5 million and modified starch has

accounted for the rest of the market revenues.

Technology Trends

The starch market in the U.S. depends on corn more than any other crop for starch produc-

tion. Consumers are conducive to modern developments unlike Europe and this has resulted

in significant advancements in the starch production process. Beginning with the raw mate-

rial, U.S. made enormous strides towards the production of GM corn. According to the

USDA, the percentage of GM corn produced was 25 per cent in 2000, 50 per cent in

2006 and a whopping 75 per cent in 2007. The usage of GM raw material has significantly

reduced the production costs as they are more disease resistant, requires less use of chemicals

like pesticides and also increases the yield considerably.

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The usage of GM enzymes in the manufacture of starch is another area where the customer

reception for GM foods has aided the manufacturers. Corn starch is manufactured tradition-

ally all over the world by the wet-milling process. In this process, the corn is steeped in water

and sulphur-di-oxide for about 24 to 36 hrs to initiate the separation of the innate starch and

proteins. Then the corn is followed with coarse grinding and consequently separated and

converted into various ingredients and ethanol. The usage of various modern protease

enzymes has significantly reduced the time and cost of production. These commercially avail-

able protease enzymes has provided a cost and time efficient alternative for separating starch

from the proteins in corn. In the new process, the corn is soaked in water only for about

6 hrs and approximately after 3 hrs of steeping in water, the protease enzymes are added.

Further to this, the grinding and separation of starch is carried out as usual. The new process

produces starch more quickly with better yields and also consumes less energy. It also reduces

the usage of sulphur-di-oxide significantly thereby eliminating harmful substances in the

milling process and the additional processing costs required to meet various emission

regulations.

Application Analysis

Figure 3-8 and Chart 3.7 show the market share by food and beverage application in the U.S.

native and modified starch market in 2007.


F i g u r e 3 - 8

Native and Modified Starch Market: Market Share by Food and Beverage Application (U.S.),

2007

Food and Beverage Application 2007 (%)

Confectioneries 47.5

Processed Foods 26.4

Dairy Products 13.6

Baked Foods 7.2

Beverages 5.3

TOTAL 100.0


C h a r t 3 . 7

Native and Modified Starch Market: Market Share by Food and Beverage Application


Confectioneries represent the largest market, with 47.5 percent of unit shipments in 2007.

Next in line comes the processed food with 26.4 percent. The processed foods sector has

witnessed the highest growth and the trend is likely to continue throughout the forecast

period. Though confectionery is the single largest market for native and modified starches

put together, the share of the confectionery market is anticipated to remain stable in the fore-

cast period.

C o n f e c t i o n e r i e s

The U.S. confectionery industry represents the largest end-user sector for the native and

modified starch market and accounts for 47.5 per cent of the market shares. Native and

modified starches are mainly used in confectionery products:

■ As gelling agents in jelly gum sweets

■ To encapsulate flavours

■ To prolong flavour release in chewing gums

■ For prevention of sugar-mass crystallization in hard-boiled sweets

Native starches are used to absorb the moisture from moulding during the formation of the

cast confectionery. Modified starches rapidly form a rigid gel on cooling and are hence used

in gelled confectionery such as jelly beans, jelly sweets and orange slices. They also help in

reducing the drying time.

Beverages5.3%

Confectioneries47.5%

Processed Foods26.4% Dairy Products

13.6%

Baked Foods7.2%


P r o c e s s e d F o o d s

Processed foods provide the second largest market for starch among food applications in the

US. It accounts for 26.4 per cent of the total native and modified starch used in the U.S. food

industry. In this research processed foods are defined by product types including soups,

sauces, snacks, ready meals, noodles, pasta, baby foods, meat products and fruit preparations

such as jams, marmalades, canned fruit and fruit fillings. Native and modified starches are

used to:

■ Thicken dry-mix sauces

■ Stabilise oil emulsions in salad dressings

■ Increase crispiness in noodles and snacks

■ Replace fat in low-fat products

■ Provide the desired mouth feel and texture

Native starches are used in canned processed meats to prevent shrinkage of the product

during heat treatment, thereby providing the required bulk. They are also used as binders in

emulsion meats like bologna and sausages. Modified starches are used in low-fat products to

enhance and maintain texture and in low-calorie dry-mix preparations to add bulk. Native

and modified starches are also used as pectin replacements in a range of fruit preparations.

The growth in the processed food sector can be attributed to the changing life-styles of

consumers. The increasingly stressful lives of consumers have increased the demand for

luxury and convenience products that can be prepared with minimal effort. Starches are used

in most of these ready-to-serve, chilled and frozen products and instant or dry-mix products

such as soups. Increasing health awareness has increased the demand for low-fat products

such as dressings, soups, meat and fish products that require more starch to maintain the

mouth feel and texture.

D a i r y P r o d u c t s

Dairy represents the next biggest application sector and accounts for 13.6 per cent of the

total native and modified starch consumed in the food industry in the U.S.. Starches are

employed by the dairy manufacturers for a variety of reasons. They are used to:

■ Improve the texture of ice creams

■ Thicken ready-to-serve desserts

■ Bind cheese products


Native starches are mainly used in traditional custards, puddings and white sauce prepara-

tions to improve and retain texture. Modified starches have a variety of uses and are used in

chilled and shelf-stable applications to improve texture and consistency. They are particu-

larly useful in products, which are processed and packaged under stringent or aseptic

conditions as they help to maintain product stability under harsh conditions. The U.S. dairy

market is quite stable. The current health trend has resulted in the advent of many

low-calorie ice creams and yoghurts. This has rendered a positive influence as starch is

required to maintain the mouth-feel of these products whilst keeping the calorific content to

a minimum.

B a k e d F o o d s

Bakery accounts for 7.2 per cent of the native and modified starch used in foods in terms of

volume. Starches are used in the bakery products to:

■ Enhance dough binding, machinability and texture

■ Control dough rheology

■ Control batter viscosity and correct batter pickup

■ Ensure bake stability, freeze thaw and chill stability

The bakery industry consists of bread products such as white, brown, whole-meal and whole-

wheat breads. The other products in the bakery sector include cakes, biscuits and pastries.

Native starches are used for its fat replacement and thickening properties and also as dusting

powder. Modified starches are used for their moisture retention and heat resistant properties.

Their main application sub-sectors are the cakes and biscuits. The growth areas in the bread

market are reduced-fat/low calorie breads, multigrain products and vitamin enriched breads.

Cakes, pastries and biscuits are usually perceived by consumers as indulgence products. The

growing trend towards snacking due to changing eating habits has increased their demand,

thereby indirectly increasing the demand for the starches consumed in these products.

B e v e r a g e P r o d u c t s

Beverages represent the smallest application sector for native and modified starches among

foods. Beverages consume about 5.3 per cent of starch in terms of volume. Starches are used

in beverages as a source of carbohydrate during fermentation in beers and wines, and as

stabilisers in soft drinks. The consumption of native starches is relatively lesser when

compared to modified starches. The key applications for native starch are the dry-mixes used

in vending machine drinks. Modified starches are used to increase brewing capacity. They

ensure quality during beer fermentation and also used to stabilise beverage emulsions and

concentrates.


Pricing Trends

Figure 3-9 and Chart 3.8 present the average unit price in the native and modified starch

market in U.S. from 2004 to 2014.


F i g u r e 3 - 9

Native and Modified Starch Market: Average Unit Price (U.S.), 2004-2014

Price

Average Unit Price Growth Rate

Year ($/Kg) (%)

2004 0.52 ---

2005 0.55 6.0

2006 0.60 8.7

2007 0.69 15.3

2008 0.74 7.0

2009 0.79 6.7

2010 0.84 6.2

2011 0.89 6.0

2012 0.94 5.8

2013 0.99 5.2

2014 1.04 5.0


C h a r t 3 . 8

Native and Modified Starch Market: Average Unit Price (U.S.), 2004-2014


The most pertinent aspect affecting the pricing of starch is the rising cost of raw materials.

The raw material prices have been influenced by the increasing demand from bio fuels

industry. The requirement of raw materials for bio-fuels is anticipated to increase further in

subsequent years due to the surging oil prices. Crop yields have also played a vital role in

increasing the raw material price. For example, the price of maize has increased by

70 per cent since the beginning of 2007. All these factors have cumulatively impacted the raw

material pricing, and indirectly the pricing of starch.

The type of raw material used also influences the pricing significantly. In the US, maize

continues to be the primary raw material used for the manufacture of starch. Potato starches

continue to be priced about 15-20 per cent higher due to the higher raw material costs. Rice

as a raw material is multiplied by a factor of two, in terms of its price as compared to maize.

Hence, rice starches are also priced two times as that of maize starch. However, unlike the

EU, the effect of different raw materials being priced differently gets negated to an extent in

the U.S. due to its extensive dependence on maize its starch needs.

Native maize starches were priced at $0.61 per kilo in 2007 and are forecasted to reach

$0.93 per kilo at the end of the forecast period. Modified maize starches were priced at

$0.75 per kilo in 2007 and predicted to reach $1.14 per kilo in 2014.

The other factors influencing the price of starch are increasing energy costs, supply demand

equilibrium, product customization and the supply chain expenditures. The surging energy

cost has had a twin effect by increasing the production costs as well as the transportation

costs.

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C o m p e t i t i v e A n a l y s i s

Competitive Structure

Figure 3-10 shows the competitive structure of the U.S. native and modified starch market in

2007.


The U.S. market for native and modified food starches comprises of about 30 to 35 compa-

nies, including manufacturers and distributors. The market is extremely competitive and

concentrated. The top three players—Cargill Incorporated, National Starch Food Innovation

and Tate & Lyle—control among themselves approximately 75 per cent of the market shares.

New entrants are rare, due to high initial costs and market saturation. Companies partici-

pating in this market focus on the trend of establishing themselves as manufacturers of health

and wellness ingredient. There are three tiers of competition within the industry.

Tier 1 includes global native and modified starch manufacturers, tier 2 includes smaller and

niche manufacturers and tier 3 includes distributors.

F i g u r e 3 - 1 0

Native and Modified Starch Market: Competitive Structure (U.S.), 2007

Market Age Mature stage

Number of Companies in the Market About 25 manufacturers

Types of Competitors Multi ingredient manufacturersRegional manufacturersNiche starch manufacturersDistributors

Notable Acquisitions, Mergers 2007—Syral SAS acquisition of Tate & Lyle PLC2007—Alliance between Avebe and National Starch and Chemicals Company

Key End-user Groups Food and beverage manufacturersPharmaceutical and industrial manufacturers

Competitive Factors PriceQuality and customizationCustomer service


Tier 1 includes manufacturers such as Cargill Inc., National Starch Food Innovation,

Tate & Lyle, Roquette America, and Corn Products International. These players supply

native and modified starches for use in several application segments of the food industry,

most crucial being confectionery, beverages, dairy, processed foods and snacks.

Tier 2 involves smaller or niche manufacturers, like Grain Processing Corporation, Farbest

Brands or Ciranda.

Tier 3 includes distributors—companies such as Atlantic Ingredients, Gillico Ingredients,

Alfachem and Essex Grain products.

The end users represent global food companies such as Kraft, Nestle, Unilever and Kellogs,

who utilize the various starch ingredients for the production of their processed food

products.

Price, availability and customer service forms the basis of competition in the U.S. starch

market. As the end users are multinationals, distribution efficiency and customer service play

a key role in customer retention.

T h r e a t o f N e w E n t r a n t s — L o w

The threat of new entrants is low in the U.S. Starch market due to the:

■ Highly consolidated nature of the market, where the top 3 participants account for

75 per cent of the market shares

■ Highly commoditized nature of the market resulting in low growth rates (less than

1 per cent) in volume terms

■ Increasing price of raw materials affecting the profit margins

Additionally, the market for starch is also extremely capital intensive and requires robust

sourcing and distribution network for survival. The existing degree of vertical integration is

higher than other ingredient markets making it difficult for a new player to establish himself.

The cumulative effect of these factors has made the market less attractive for new entrants.


T h r e a t o f S u b s t i t u t i o n — L o w

Starch has been used in foods as a thickener and stabilizer for more than a century. It has also

been used for its ability to influence the texture, moisture and for emulsification and fat

replacement properties. Till date, the trend in the starch industry has been internal substitu-

tion of one type of starch by another. It could be modified starch replacing native starch for

its functional properties, or native starch preferred for its clean label advantage or substitu-

tion of starch from a different raw material. The internal substitution has a very negligible

effect on the overall starch industry in terms of volume and revenue as it is still starch with a

difference. The one substitute outside the starch industry that can be considered is the guar

gum extracted from guar bean. Despite its chemical advantages such as higher thick-

ening-potency (8 times stronger than corn starch), resistance to pH and a better emulsifier

due to increased galactose branch points, the raw material availability is a concern for manu-

facturers as it is principally grown in the tropical regions of India and Pakistan. India is the

major exporter of guar beans to the United States and other countries. The other synthetic

substitutes such as gelatins and pectins do not cater to the healthy trend currently prevailing

in US, hence not preferred by manufacturers and consumers. Thus, the threat of substitution

for starch in the U.S. food industry can be considered low.

B a r g a i n i n g P o w e r o f S u p p l i e r — L o w t o M e d i u m

The suppliers in the case of the starch industry are the farmers growing various agricultural

crops. In the case of cereals, the price of wheat and maize has almost doubled since 2006.

The scenario is a direct consequent of the boom in the biofuels industry that hydrolyses

starch to produce ethanol. The volume of cereals getting into the biofuels industry is antici-

pated to increase exponentially in the near future due to various reasons such as the high

crude oil prices and the environment concerns at the political front. Also, several hedging

activities from ethanol manufacturers have created an artificial demand and further increased

the prices of cereals. Cheaper options from Asia are also not viable as the freight cost negates

the price benefit.

Starch manufacturers have addressed the current situation by implementing strategies to

enhance backward integration. All the leading manufacturers have their own sourcing

options or have contracts in place with the farmers ensuring a smooth supply of raw mate-

rials round the year.


B a r g a i n i n g P o w e r o f B u y e r — M e d i u m

The bargaining power of the food manufacturers is generally expected to be high in the U.S.

food industry. This is due to the increasing consolidation and globalization of food manufac-

turers. Numerous consolidations have taken place in the buyer end of the equilibrium since

2006. However, the starch industry is also highly consolidated and houses global players

such as Cargill Incorporated, National Starch and Tate & Lyle. Additionally, the lack of

viable alternatives for starch is also pushing the pendulum back in their favor. Hence, the

push-pull effects between the foods and the starch manufacturers have quite negated each

others' winning edge.

Action Plan to Increase the Bargaining Power of Starch Manufacturers

■ Marketing initiatives to enhance brand loyalty and mind share among end consumers

■ Move purchase decision towards price: Value ratio

■ Reduce intermediary channels and increase proximity with customers

R i v a l r y a m o n g s t E x i s t i n g C o m p a n i e s H i g h

The U.S. food starch market is mature and highly concentrated. Competition in this market is

largely based on price, product quality and customer service. Companies have to focus on

strategic alliances, new product development and innovative ideas in terms of marketing to

strengthen their position and increase their market shares.

Action Plan to Counter Competition

■ Product Differentiation: Developing newer products with higher functionality and also

by developing products that synergizes the benefits of different types of starch.

■ Strategic Alliances: Such alliances provide a synergy among the companies involved and

mutually benefits the participants. For example, the alliance between Avebe and National

Starch is likely to improve the market penetration for Avebe and enhance the product

portfolio for National Starch

■ Providing enhanced customer service


Market Share Analysis

Chart 3.9 shows the company market share by revenues in the U.S. native and modified

starch market in 2007.

C h a r t 3 . 9

Native and Modified Starch Market: Market Share by Participants (U.S.), 2007


The U.S. food starch market is highly consolidated with the top four manufacturers

accounting for more than 80 per cent of the market shares. The decreasing profit margins,

mainly due to the increasing price of raw materials, has made it less attractive for a new

entrant to venture into this market. The boom in the bio-fuels industry has also not augured

well for the starch market as it is limiting their sourcing options. However, Bunge has

recently entered the starch sweeteners market by acguiring Corn Products International in

June 2008. The agri-major is likely to enjoy a lot of operational advantages with the integra-

tion of both the companies' suppliers and distribution chain. With this acquisition, Bunge is

likely to give a stiff competition for its direct competitors Cargill and ADM.

Also, National Starch has been signalled out for a divestment from the time Akzo Nobel had

acquired ICI in January 2008, the parent company of National Starch Food Innovation.

Industry expectations are in line with the possibility of another starch company acquiring

National Starch as it would be quite difficult for a new entrant due to the intrinsic nature of

the starch market. Thus the divestment would be of significant importance to the U.S. starch

market as it is expected to increase the bargaining power of the starch manufacturers.

Cargill 26%

Tate & Lyle 20%

National Starch 19%

ADM 18%

Others 17%


4Database of Key Industry Participants

E x a m p l e s o f K e y I n d u s t r y P a r t i c i p a n t s

Key Industry Participants

C a r g i l l , I n c .

Address: 15407 McGinty Rd. West

Wayzata, MN 55391

Phone: 952-742-7575

Fax: 952-742-7393

Ta t e & Ly l e P L C

Lower Thames Street

London EC3R 6DQ

United Kingdom

Phone 1: (+44) (0)20 7626 6525

Fax 1: (+44) (0)20 7623 5213

N a t i o n a l S t a r c h a n d

C h e m i c a l C o m p a n y

Address: 10 Finderne Avenue

Bridgewater, NJ 08807

Telephone: +1-800-797-4992

Fax: +1-908-685-5005

A D M — A r c h e r Da n i e l s

M i d l a n d

4666 Faries Parkway

Decatur, IL 62525

Phone: 217-424-5200

Fax: 217-424-5447

G r a i n P r o c e s s i n g

C o r p o r a t i o n

1600 Oregon St.

Muscatine, IA 52761-1494

Phone: 563-264-4211

Fax: 563-264-4318

C o r n P r o d u c t s I n t e r n a t i o n a l

5 Westbrook Corporate Center

Westchester, IL 60154

Phone: 708-551-2600

Fax: 708-551-2700


P e n f o r d F o o d I n g r e d i e n t s

PFI Headquarters

7094 S. Revere Pkwy

Centennial, CO 80112

Phone: 303-649-1900

Fax: 303-649-1700

R o q u e t t e A m e r i c a

1417 Exchange St.

Keokuk, IA 52632

Phone: 319-524-5757

Fax: 319-526-2345


5Appendix

G l o s s a r y o f T e r m s

Amylopectin: The major component of starch, consisting of large, highly-branched

molecules.

Amylose: The linear polysaccharide, minor component of starch.

Chemically modified starch: A starch that has been treated with chemicals to alter some of

the groups present in the molecule.

Cyclodextrin: A molecule containing at least six starch molecule fragments (anhydroglucose

units) linked in a ring. The chemical groups in cyclodextrin molecules are arranged in such a

way so as to create a cavity in the centre of the ring. This cavity allows the cyclodextrin to

form inclusion complexes with other molecules.

Dextrins: Dextrins are a group of carbohydrates produced in the process of hydrolysis of

starch. There are three types of dextrins: white dextrins, yellow dextrins and British gums.

Dextrose: D-glucose molecules that have been obtained by the hydrolysis of starch. Dextrose

can be obtained as the anhydrous or monohydrate form. The monohydrate form contains one

molecule of water per molecule of D-glucose, whereas the anhydrous has no water molecules.

Enzymatic hydrolysis: The breakdown of a starch molecule using an amylase enzyme.

Gelatinisation: The destruction of molecular order and irreversible swelling of starch gran-

ules, under the influence of heat and/or chemicals in an aqueous medium, to give a starch

paste.


Glucose syrup: Known as corn syrup in the US. Glucose syrups are purified concentrated

aqueous solution of mixed sugars made from starch.

High amylose starch: A genetic variety of starches containing over 50 percent amylose.

Special techniques are required to achieve full gelatinisation of this type of starch.

Hydrolysis: The chemical reaction of a molecule with water to produce two or more smaller

molecules. Hydrolysis is the underlying reaction in the enzyme- or acid-catalysed conversion

of starch into maltodextrins and glucose syrups.

Maltodextrin: A starch hydrolysis product generally having a DE of between 1 and 20,

usually produced by the action of an enzyme on gelatinised starch.

Modified starch: Starch that has been treated physically or chemically so as to modify one or

more of its physical or chemical properties.

Native starch: Raw starch unmodified chemically (although it can be altered physically) used

as a food ingredient in its natural form.

Oxidised starch: Starch that has been modified by treatment with oxidising agents, usually

sodium hypochlorite.

Physically-modified starch: Starch that has been physically treated without the introduction

of new chemical groups

Pregelatinised/Instant starch: Starch that has been gelatinised and dried by the manufac-

turer before sale to the customer in powder form. The starch develops viscosity when

dispersed in cold or warm water without the need for further heating. Also known as

precooked starch, pregelled starch, instant starch, cold water soluble starch or cold water

swellable starch.

Starch derivative: Generic term for all products produced from native starch including

modified starch and starch hydrolysis products. In this report we use the term "starch deriv-

ative" to describe starch hydrolysis products, such as glucose syrups.

Viscosity: Term used to denote the resistance of liquids to shear, agitation or flow.

Waxy starch: Starch containing around 98-99 percent amylopectin.


u.s. starch market

Documents

market dynamics

market participants

beverages market

key market challenges

market drivers challenges

key market restraints

frost sullivan reportsare

industry overview