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U.S.

Starch Market
N107-88

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Table of Contents
Chapter 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

Chapter 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

ADMArcher 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 CompaniesBalance 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

Chapter 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 EntrantsLow

3-21

Threat of SubstitutionLow

3-22

Bargaining Power of SupplierLow to Medium

3-22

Bargaining Power of BuyerMedium

3-23

Rivalry amongst Existing Companies High

3-23

Market Share Analysis

3-24

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Chapter 4
Database of Key Industry Participants
Examples of Key Industry Participants

4-1

Key Industry Participants

4-1

Chapter 5
Appendix
Glossary of Terms

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List of Figures
Chapter 2
Introduction to the Industry
2-1

Food Starch Market:


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

2-10

Chapter 3
U.S. Market for Native and Modified Food Starches
3-1

Native and Modified Starch Market:


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

3-2

Native and Modified Starch Market:


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

3-3

3-8

Native Maize Starch Market:


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

3-5

3-6

Total Native and Modified Starch Market:


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

3-4

3-4

3-9

Other Native Starch Market:


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

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3-6

Modified Maize Starch Market:


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

3-7

Other Modified Starch Market:


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

3-8

3-12

Native and Modified Starch Market:


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

3-9

3-11

3-14

Native and Modified Starch Market:


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

3-18

3-10 Native and Modified Starch Market:


Competitive Structure (U.S.), 2007

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List of Charts
Introduction to the Industry
2.1

Food Starch Market:


Changing Consumer Preference (U.S.), 2007

2-14

Chapter 3
U.S. Market for Native and Modified Food Starches
3.1

Native and Modified Starch Market:


Market Engineering Measurements (U.S.), 2007

3.2

Native and Modified Starch Market:


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

3.3

3-15

Native and Modified Starch Market:


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

3.9

3-13

Native and Modified Starch Market:


Market Share by Food and Beverage Application

3.8

3-12

Other Modified Starch Market:


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

3.7

3-11

Modified Maize Starch Market:


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

3.6

3-10

Other Native Starch Market:


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

3.5

3-8

Native Maize Starch Market:


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

3.4

3-7

3-19

Native and Modified Starch Market:


Market Share by Participants (U.S.), 2007

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ix

1
Executive Summary
Market

Overview

Introduction
The key role of starch in practically all sectors of food and beverages industry is unquestionable. 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 ingredients. 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 plantsthose which contain chlorophyllas 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
foodfor 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 undesired 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 cornover 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 government-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 playersNational 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 profitable 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 starchesboth native and modified-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.

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Summary

of

Major

Findings

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. Confectionery 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 especially 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 manufacturing 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.

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Market Drivers Challenges and Restraints


Key Industry Drivers
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 segmentingredients 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 themselves. This results in the growing interest in convenience foodslike frozen or ready-to-eat
mealsas well as searching for more functional or sophisticated products. This trend is
driving the growth of modified (or specialty) starches segmentas the food itself is expected
to become increasingly refined, so are the ingredients that shape its qualities.
Key Market Restraints
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

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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 cornmain crop
from which American starch is producedzoomed 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 varieties which could yield higher cropsand 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
dependentand generally approvingof 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 differentiating the product lines and ensuring that products shipped overseas are GM-free.
Key Market Challenges
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 consumerbuyers of food
products

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

Alternative costs and profitsfinding 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 costsuntil 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 particular proportions of product portfolio and deciding which profile better suits their strategic
objectives.

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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 customersoffering 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 clientsfinal
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 companies, including manufacturers and distributors. The market is extremely competitive and
concentrated. The top three players Cargill Incorporated, National Starch Food Innovation
and Tate & Lylecontrol among themselves approximately 75 per cent of the market shares.
New entrants are rare, due to high initial costs and market saturation. Companies participating 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 distributorscompanies 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.

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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.

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2
Introduction to the Industry
Market

Overview

and

Definitions

Industry Overview
Starch is a polysaccharidea carbohydrate polymercomposed 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 chlorophylland 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
varyfor 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 properties and can be used in numerous applications.

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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 maltodextrin, 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.

Industry

Structure

Profiles of Top 3 Market Participants


CARGILL, Inc.
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

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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
TAT E & LY 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 headquarters, 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.

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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 Ingredients 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 ingredients. 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.

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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 AT I O N A L S TA RC H A N D C H E M I CA L C O M PA 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 Bridgewater, 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 concentrated 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

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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 rc h e r Da 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

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Roquette America
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 dressings, 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
Grain Processing Corporation
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

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Corn Products International


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, pharmaceutical, 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
Penford Food Ingredients
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.

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Contact Information
PFI Headquarters
7094 S. Revere Pkwy
Centennial, CO 80112
Phone: 303-649-1900
Fax: 303-649-1700

Market

Dynamics

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 Grouptwo 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 servicelike the takeover 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 alliancelike the National Starch-AVEBE
oneare 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.

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Challenges

and

Recommendations

Industry Challenges
Figure 2-1 outlines the impact of top industry challenges on the U.S. food starch market from
2008 to 2014.
Figure 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 companiesbalance 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

Source: Frost & Sullivan

Ambiguity of Opportunity Cost for CompaniesBalance


between Food Ingredients and Ethanol Production
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 importancehow to allocate their
resources to achieve the highest profitability. Since the supply of raw materialsand, in
consequence, starchis 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.

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Understanding the Needs of the End Users on the Food


and Beverages Market
The situation on starch ingredients market is strongly influenced by the trends among the end
usersconsumers 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 forecast period.
Ta 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 Va l u e s
of Starch
Suppliers of starch-derived ingredients often communicate the health and functional benefits
of their products only to their direct clientsfood manufacturers. In view of recent trends on
the food and beverages market (anti-HFCS campaign among them) it appears that this
approach should changestarch 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 row i n g I n v e s t m e n t i n P ro du c t i o n Ca pac i t i e s o f We t
Milling Industry Renders Production more Expensive
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, especially 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 investment 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.

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Strategic Recommendations
S t r a t e g i e s t o C o u n t e r Wa n i n g P ro 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 materials. 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 ingredient 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 situation 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 manufacturers 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 assessment 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

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


Cream- Ski mmi ng

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 7111, 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.
Penetrati on

Pri ci ng

Strate gy

Penetration price is the intentional low price maintained over a period of time for the products 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, essentially 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.
ConsumerCentric 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 decision. 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 overload and a strong emphasis on health. Unlike the previous era, consumers are willing to pay
a premium for health, convenience and peace-of-mind.

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Chart 2.1 illustrates the changing consumer preference in the U.S. market, 2007.
Chart 2.1
Food Starch Market: Changing Consumer Preference (U.S.), 2007

Re-Defining Consumer Value


Traditional Consumer

Value for Money

Modern Consumer
Value for Money
Value for Health
Value for Taste
Value for Convenience
Value for Peace-of-Mind
Value for Time

Consumer Value Shift

Source: Frost & Sullivan

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.

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3
U.S. Market for Native and Modified Food
Starches
Market

Overview

and

Definitions

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 material 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.

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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 requirements. 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.
Resistant Starches
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 physiological 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.

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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.

Forecasts

and

Tr 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.

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Figure 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

Rising demand for processed and convenience foods Create new


opportunities for growth

High

High

High

Growing health awareness of consumers boost growth of resistant High


starch market

High

High

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

Medium

Medium

Medium

Growing need for more functional and sophisticated ingredients


stimulates growth of specialty/modified starches

Medium

Medium

Medium

Microencapsulation as an incentive for starch innovation

Medium

Medium

Medium

Source: Frost & Sullivan

Rising Demand for Processed and Convenience Foods


Create New Opportunities for Growth
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 row i n g H e a lt h Awa r e n e s s o f C o n s u m e rs B o o s t G row t h
of Resistant Starch Market
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 forecast period.

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Emerging Demand for Clean Label and Wholesome Food


will Boost the Development of Native Starch
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 ingredients 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.
Growing Need for more Functional and Sophisticated
Ingredients Stimulates Growth of Specialty/Modified
Starches
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.
Microencapsulation as an Incentive for Starch
Innovation
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 evaporation of volatile substances, improving the handling properties of a sticky material, or
isolating a reactive core from chemical attack. Microencapsulation is also done for controlling 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.

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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.
Figure 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

Sharp increase in prices of raw materials hampers growth

High

High

High

Need to differentiate product lines for exports to the EU increases High


costs

High

Medium

Source: Frost & Sullivan

Sharp Increase in Prices of Raw Materials Hampers


Growth
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 during
the year. This increase resulted from a number of factors, among which the most important
one was the rapid development of ethanol industry and its dynamically growing demand for
corn and other materials. Among other factors are such issues as worldwide increase in
energy costs or more prevalent use of GM types of plants, which are yield higher crops, but
are more expensive than non-GM varieties. As a result, starch ingredients manufacturers are
facing seriously increased costs of production which are likely to limit their possibilities of
growth in the nearest future. The restraint is expected to have a high impact throughout the
forecast period.
Need to Differentiate Product Lines for Exports to the
EU Increases Costs
Contrary to the trends in the U.S., European consumers are in general very suspicious of GM
foods and ingredients. In many cases major food manufacturers must ensure that their products do not contain any genetically modified additives. As a result, American suppliers of
starch and starch-based ingredients who wish to export to Europe, must differentiate their
product lines for domestic and European market. This requirement contributes to the
increase in production costs and negatively affects market development. Cost effective
methods 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 become
friendlier towards GM foods in the near future. Sweden has taken the first initiative by
allowing the production of GM raw materials based on claims that it would benefit both
farmers and manufacturers. Hence the restraint is likely to have a high impact in the short
and medium terms and medium impact in the long term of the forecast period.

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Market Engineering Measurement Analysis


Chart 3.1 illustrates the Market Engineering measurements for the U.S. native and modified
starch market in 2007.
Chart 3.1
Native and Modified Starch Market: Market Engineering Measurements (U.S.), 2007

Challenge
Identification

Market Engineering Drives Market

Market
Engineering
System

Market
Research

Market
Engineer

Strategy and Planning

Market
Strategy

Implementation

Market
Planning

Measurement Name

Measurement

Trend

2,362,579.9 MT

Increasing

$1.63 billion

Increasing

16.1%

Increasing

$2.57 billion

Increasing

6.7%

Increasing

Price range

$0.69 per kilo

Increasing

Competitors (active market competitors in base year)

More than 25

Stable

Units
Revenues
Base year market growth rate
Potential revenues (maximum future market size)
Compound annual growth rate

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.

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Figure 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

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

Chart 3.2
Native and Modified Starch Market: Unit Shipment and Revenue Forecasts (U.S.),
2004-2014

Units (Metric Tons)

3,000

3,000,000

2,500

2,500,000

2,000

2,000,000

1,500

1,500,000

1,000

1,000,000

500

Units (Metric Tons)

Revenues ($ Million)

Revenues ($ Million)

500,000

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

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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.
Figure 3-4
Native Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014
Unit

Revenue

Units

Growth Rate

Revenues

Growth Rate

Year

(Metric Tons)

(%)

($ Million)

(%)

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

Compound Annual Growth Rate (2007-2014):

0.6

6.8

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

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Chart 3.3
Native Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014
Units (Metric Tons)
1,200,000

1,000

1,000,000

Revenues ($ Million)

1,200

800

800,000

600

600,000

400

400,000

200

200,000

Units (Metric Tons)

Revenues ($ Million)

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

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.
Figure 3-5
Other Native Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014
Unit

Revenue

Units

Growth Rate

Revenues

Growth Rate

Year

(Metric Tons)

(%)

($ Million)

(%)

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

Compound Annual Growth Rate (2007-2014):

1.5

6.2

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

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Chart 3.4
Other Native Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014
Units (Metric Tons)

100

100,000

90

90,000

80

80,000

70

70,000

60

60,000

50

50,000

40

40,000

30

30,000

20

20,000

10

10,000

Units (Metric Tons)

Revenues ($ Million)

Revenues ($ Million)

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

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.
Figure 3-6
Modified Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014
Unit

Revenue

Units

Growth Rate

Revenues

Growth Rate

Year

(Metric Tons)

(%)

($ Million)

(%)

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%

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

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Chart 3.5
Modified Maize Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014

Units (Metric Tons)

1,600

1,400,000

1,400

1,200,000

1,200

1,000,000

1,000

800,000

800
600,000

600

400,000

400

Units (Metric Tons)

Revenues ($ Million)

Revenues ($ Million)

200,000

200
0

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

Figure 3-7 and Chart 3.6 show the unit shipment and revenue forecasts for the other modified starch market in the U.S. from 2004 to 2014.
Figure 3-7
Other 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

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%

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

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Chart 3.6
Other Modified Starch Market: Unit Shipment and Revenue Forecasts (U.S.), 2004-2014

Revenues ($ Million)

Units (Metric Tons)

120

100,000
90,000
80,000
70,000

80

60,000
60

50,000
40,000

40

30,000

Units (Metric Tons)

Revenues ($ Million)

100

20,000

20

10,000
0

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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

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 production. Consumers are conducive to modern developments unlike Europe and this has resulted
in significant advancements in the starch production process. Beginning with the raw material, 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 traditionally 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 available 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.
Figure 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
Note: All figures are rounded; the base year is 2007. Source: Frost & Sullivan

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Chart 3.7
Native and Modified Starch Market: Market Share by Food and Beverage Application

Processed Foods
26.4%

Dairy Products
13.6%

Baked Foods
7.2%

Beverages
5.3%
Confectioneries
47.5%

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

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 forecast period.
Confectioneries
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.

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Processed Foods
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.
Da i ry 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

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Native starches are mainly used in traditional custards, puddings and white sauce preparations 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 particularly 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.
Baked Foods
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 wholewheat 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.
Beverage Products
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.

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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.
Figure 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

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

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Chart 3.8
Native and Modified Starch Market: Average Unit Price (U.S.), 2004-2014

1.20
1.00

Price ($)

0.80
0.60
0.40
0.20
0.00
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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

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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Competitive

Analysis

Competitive Structure
Figure 3-10 shows the competitive structure of the U.S. native and modified starch market in
2007.
Figure 3-10
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 manufacturers


Regional manufacturers
Niche starch manufacturers
Distributors

Notable Acquisitions, Mergers

2007Syral SAS acquisition of Tate & Lyle PLC


2007Alliance between Avebe and National Starch and Chemicals
Company

Key End-user Groups

Food and beverage manufacturers


Pharmaceutical and industrial manufacturers

Competitive Factors

Price
Quality and customization
Customer service
Source: Frost & Sullivan

The U.S. market for native and modified food starches comprises of about 30 to 35 companies, including manufacturers and distributors. The market is extremely competitive and
concentrated. The top three playersCargill Incorporated, National Starch Food Innovation
and Tate & Lylecontrol among themselves approximately 75 per cent of the market shares.
New entrants are rare, due to high initial costs and market saturation. Companies participating 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.

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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 distributorscompanies 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.
Th r e a t o f N e w E n t r a n t s L ow
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.

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Th r e a t o f S u b s t i t u t i o n L ow
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 substitution 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 substitution 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 thickening-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 manufacturers 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.
Bargaining Power of SupplierLow to Medium
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 anticipated 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 materials round the year.

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Bargaining Power of BuyerMedium


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 manufacturers. 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

Rivalry amongst Existing Companies High


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

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Market Share Analysis


Chart 3.9 shows the company market share by revenues in the U.S. native and modified
starch market in 2007.
Chart 3.9
Native and Modified Starch Market: Market Share by Participants (U.S.), 2007

Others
17%

Cargill
26%

ADM
18%

Tate & Lyle


20%
National Starch
19%

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

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 integration 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.

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4
Database of Key Industry Participants
Examples

of

Key

Industry

Pa rti c i pa n t s

Key Industry Participants


A D M A r c h e r Da n i e l s

Cargill, Inc.
Address: 15407 McGinty Rd. West

Midland

Wayzata, MN 55391

4666 Faries Parkway

Phone: 952-742-7575

Decatur, IL 62525

Fax: 952-742-7393

Phone: 217-424-5200
Fax: 217-424-5447

Ta t e & Ly l e P L C
Grain Processing

Lower Thames Street

Corporation

London EC3R 6DQ


United Kingdom

1600 Oregon St.

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

Muscatine, IA 52761-1494

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

Phone: 563-264-4211
Fax: 563-264-4318

National Starch and


Chemical Company

Corn Products International

Address: 10 Finderne Avenue

5 Westbrook Corporate Center

Bridgewater, NJ 08807

Westchester, IL 60154

Telephone: +1-800-797-4992

Phone: 708-551-2600

Fax: +1-908-685-5005

Fax: 708-551-2700

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Penford Food Ingredients


PFI Headquarters
7094 S. Revere Pkwy
Centennial, CO 80112
Phone: 303-649-1900
Fax: 303-649-1700
Ro 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

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5
Appendix
Glossary

of

Te 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 granules, under the influence of heat and/or chemicals in an aqueous medium, to give a starch
paste.

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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 manufacturer 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 derivative" 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.

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