Mario Tama
Tate & Lyle is reopening a mothballed U.S. sucralose plant, saying a growing trend for obesity in emerging markets was prompting food manufacturers to use more of the no-calorie sweetener.
The starches and sweeteners group announced Friday it was reversing the decision to suspend production at the plant in McIntosh, Ala., as it reported a swing back into full-year profitability and a resumption of annual dividend growth.
Tate & Lyle's Splenda brand has a 90 per cent share of the global market for sucralose, which it invented in the 1970s. In 2009, Tate & Lyle said improvements in manufacturing meant it could satisfy demand from just one plant in Singapore.
On Friday, it said Splenda's growth justified reopening the shuttered factory in 2012, saying demand had been boosted by weight worries in emerging markets as well as the more established obesity and diabetes trend in the U.S. and Europe.
"Demand is driven by factors that are long term trends and here to stay," said Javed Ahmed, Tate & Lyle chief executive, further suggesting that sucralose's stability in hot conditions made it attractive to food manufacturers operating in emerging markets.
The company said sucralose demand had also been boosted by customers seeking a cheaper alternative to "volatile and high priced sugar".
Generic competition to Splenda had been contained by a strategy of encouraging customers to sign long term contracts with volume incentives, Mr. Ahmed added.