Tate & Lyle, P.L.C. plans to increase its emphasis on innovation and new products after finding success in its Promitor brand soluble fiber ingredients and stevia-based ingredients in recent years. A Food and Drug Administration ruling this year should open the way for more innovation in the company’s Dolcia Prima brand allulose, a rare sugar.
Tate & Lyle wants to work more closely with its customers earlier in project cycles and to build external relationships to benefit innovations, said Nick Hampton, chief executive of the London-based company, in a May 23 earnings call to discuss fiscal-year results.
“We are shifting the balance of our innovation portfolio towards projects with faster paybacks, helping to deliver a 24% increase in the value of the innovation pipeline this year,” he said. “We are also broadening our open innovation network. We have contacts with over 170 start-ups or research institutions during the year, resulting in five signed agreements to work on early-stage development in areas such as sweetener testing and new sources of fiber.”
Sugar and calorie reduction represent about one-third of the projects in Tate & Lyle’s customer pipeline, Mr. Hampton said.
“An increasing number of these projects are for customers using our soluble fibers because they not only allow the amount of sugar to be lowered but also provide nutritional benefits, such as digestive health, low-glycemic response and calcium absorption, all without impacting taste,” he said.
Tate & Lyle’s fiber ingredients over the past two years have experienced a 15% compound annual growth rate in volume, which includes a 30% C.A.G.R. in emerging markets, he said. The two-year C.A.G.R. in volume was 57% for Claria brand starches.
In stevia-based sweeteners, Tate & Lyle last year acquired a 15% shareholding in Sweet Green Fields, L.L.C., Bellingham, Wash., a stevia ingredients company. Tate & Lyle’s stevia volume increased 78% in the fiscal year.
The F.D.A. in the April 18 issue of the Federal Register said it will use enforcement discretion to allow allulose to be excluded from the total sugars declaration and added sugars declaration on the Nutrition Facts Label of products. Previously, allulose counted as total sugars and added sugars.
“This decision clears the way for U.S. customers to use allulose to deliver calorie and sugar reduction in their products,” Mr. Hampton said. “We have a number of customer projects which are now being reactivated, and we remain encouraged by the medium to long-term prospects for allulose.”
He said customers are starting to test formulations with Dolcia Prima allulose.
“It’s really too early to say how that’s going to play out,” Mr. Hampton said. “I’m wary of giving you a point of view on that until we see customer interest turning to real innovation projects and therefore sales.
“One of the things I think we’ve learned in the last five years with any new sort of world ingredient, it takes a little bit longer to scale than we thought. I mean Promitor is a good example. One of our Promitor variance dropped off our definition of new products this year because it kicked the seven-year mark, but it’s still growing very strongly …”
He said of allulose, “I think we need to think about the medium to long-term potential of it, not the kind of the next six months. It’s not the right way to think about it.”
Sales of new products, which comprise products launched within the last seven years, represented 11% of fiscal-year sales within Tate & Lyle’s Food & Beverage Solutions, said Imran Nawaz, chief financial officer, in the May 23 call.
Companywide, Tate & Lyle recorded profit of £309 million ($391 million) in the fiscal year ended March 31, which was up 4% from £296 million in in the previous fiscal year. Sales in the fiscal year were £2,755 million ($3,484 million), up 2% from £2,710 million.
Food & Beverage Solutions recorded adjusted operating profit of £143 million ($181 million), up 5% from £137 million in the previous fiscal year. Sales reached £889 million, a 5% increase from £850 million in the previous fiscal year. Volume in Food & Beverage Solutions increased 3% in North America and 15% in emerging markets. Volume dropped 2% in Europe, Middle East and Africa.
Within Food & Beverage Solutions, adjusted operating profit for sucralose was £61 million, up 10% from £55 million. Sales increased 12% to £164 million from £146 million. Sucralose volume rose 16% thanks to improved production efficiency at a facility in McIntosh, Ala., and optimization of inventory levels.
“Overall, on sucralose, while the market demand for sucralose continues to grow, we do expect the market prices to continue to moderate, reflecting the increase of the industry supply from Chinese manufacturers,” Mr. Nawaz said.
Primary Products had adjusted operating profit of £305 million, up 2% from £300 million in the previous fiscal year, and sales of £1,702 million, down 1% from £1,714 million. Within Primary Products, inflationary headwinds, partially offset by mix management and cost discipline, led to 5% lower profit in sweeteners and starches.