Growing Energy
LONDON-Americans' dietary disconnect is often evident. Sure, 72 percent of consumers understand the health benefits of a balanced diet. But only 33 percent practice healthful eating. Still, about 80 percent say they want food companies to develop healthier foods-so long as they taste good, that is. "Marketing is always solving a paradox," says Iain Ferguson, CEO of Britain's Tate & Lyle, a leading food manufacturer. "The paradox we're helping to solve is, 'I want to enjoy eating it, but I don't want it to show around my waistline.'"
Actually, Tate & Lyle is something of a paradox itself. It has long been a maker of sugars and starches. But in a low-carb world, Tate & Lyle has sped up its transformation from a commodities supplier to a leading producer of value-added food and industrial ingredients, all created from renewable resources (particularly corn and sugar cane). What's more, it's betting that future growth lies with "functional foods"-processed foods that not only are nutritious but make people healthier or help fend off diseases.
Value-added ingredients offer Tate & Lyle new ways to generate growth in a stable commodities environment, says Julian Hardwick, an analyst at ABN AMRO. "It's been making very good progress in terms of delivering on that strategy." Indeed, it boasted a 9 percent jump in sales, to $3.8 billion, in its results for the first half of its fiscal year, announced last month. Operating profits leapt 26 percent to $357 million.
In Britain, Tate & Lyle is best known as a consumer brand, a purveyor of sugars and Lyle's Golden Syrup, which comes in a distinctive can that first appeared in 1885. Nevertheless, North America accounts for 70 percent of the company's operating profits. Yet Americans could be forgiven if they've never heard of Tate & Lyle-in the States, its clients are other brands. One product U.S. consumers will recognize is the popular artificial sweetener Splenda, made from sucralose, which was developed by Tate & Lyle. Sucralose is derived from sugar but calorie free.
Tate & Lyle's U.S. ambitions have led to rapid expansion. It has doubled capacity at its McIntosh, Ala., sucralose plant; it's building a corn mill in Fort Dodge, Iowa, to provide raw materials for specialty starches and ethanol; it's expanding a starch plant in Sagamore, Ind.; and in Loudon, Tenn., with partner DuPont, it just opened a plant to produce Bio-PDO, a glucose-based, high-end substance that can be used in products ranging from carpets to cosmetics to de-icers. Tate & Lyle estimates the potential market for Bio-PDO at $3.5 billion. It's also enthusiastic about the future of polylactic acid, a biodegradable plastic made from sugars.
Plant to plastic. Tom Welton, a chemist at London's Imperial College, predicts that eventually all chemical compounds will be derived from plants, not petroleum. Critics may question using corn to make plastics when millions of people go hungry, he says. "But world hunger isn't caused by a lack of food but by a lack of distribution." Still, if biofuels and biomaterials take off in a big way, growing enough crops in a sustainable way to meet demand could prove difficult.
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