Issue Date: July 2, 2007
Forging into food
SAFC, the fine chemicals business of Sigma-Aldrich, has a knack for finding new uses for existing capabilities. Last week, the company launched a food-grade product line, adding a fresh component to its customized raw materials business, SAFC Supply Solutions.
Since its launch in 2004, SAFC has followed a strategy of focusing on markets that could benefit from its parent company's decades of experience in supplying research chemicals. The creation of Supply Solutions itself followed this initiative, and later moves into diagnostic kits and electronic chemicals were also in line with the strategy.
Although SAFC has dabbled in food products for two decades, offering ingredients such as essential oils, aroma chemicals, and kosher-certified products, the company reached a point in the past year when it was time to decide whether it wanted to be a real player or not, says SAFC President Frank Wicks, who is also a member of C&EN's advisory board.
After a thorough internal review, the company decided that the demands of a food-grade portfolio tie in neatly with the core strengths of its Supply Solutions unit: analytical capabilities, quality assurance, regulatory compliance, customization, and the logistical capabilities to provide a wide range of products in small quantities.
At the same time, the company recognized that safety requirements in the food industry are becoming increasingly stringent. In 2004, Europe toughened its standards for manufacturers supplying the food industry, and SAFC's customers are still trying to understand those new guidelines, notes Edward O. Roullard, vice president of sales and marketing for Supply Solutions.
Meanwhile, recent threats to the U.S. food supply—the cases of Escherichia coli in spinach and the pet food recall, to name just two—have put pressure on manufacturers to provide new assurances about the safety of their products. For example, food companies are looking for guarantees that the products they purchase are free of allergens and genetically modified organisms.
"Overall, in our history, whenever we see things get harder to do, they present opportunities for us," Wicks says.
However, formalizing that business, which will complement an existing flavors and fragrances line, meant bringing manufacturing operations up to snuff. "We simply weren't equipped to respond to customer needs rapidly," Roullard says. "When you're offering 1,700 products at 1-kg-type quantities and selling 20 of those to a customer in a given month—that's a lot of responses to put in place."
In the past year, SAFC has worked with hundreds of suppliers to gather analytical information, such as heavy-metal content, on its products. The company has upgraded its facilities to comply with the standards of the American Institute of Baking, an organization dedicated to maintaining food-supply-chain safety. After a modest investment of close to $2 million, the company is ready to take on the food market.
IN LAUNCHING its new food-grade product line, SAFC is not looking to compete with the handful of large suppliers that offer a few dozen bulk products. Rather, SAFC will be up against the many niche companies that sell hundreds of products at the "under 25 kg" scale, Wicks notes.
Going forward, Wicks expects SAFC's food business to grow at or more quickly than the rate of its overall Supply Solutions unit. And though it is still early days for the business, Roullard claims that customers have already shown a keen interest.
"There are several different possibilities of where we can go from here," Roullard says, noting that potential routes would be to produce larger volumes or to expand the range of food-grade products offered. He notes, however, "This was a pretty big move for us, and we need to see where we are in six months or a year."
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