Novozymes: food enzymes rise above industry pace for Q1

Food enzymes contribute a quarter of sales revenue to the overall enzyme business in the first quarter, says Danish firm Novozymes, marking a one per cent rise in contribution on the previous year, writes Lindsey Partos.

The number one enzyme player pulled in enzyme sales of DKK 1.4 billion (€188m) for the 2005 quarter, with food enzymes contributing DKK 356 million (€47m) in revenue.

According to the Bagsvaerd-based firm, a boost from the baking industry helped sales of food enzymes rise by 9 per cent from DKK 328 million the year before.

"Although this is partly due to stock building on the part of some distributors," said the 3500-strong firm.

Sales to the brewing industry fell in 2005 compared to 2004, as demand for low-carbohydrate beers dropped off in parallel to the declining trend for low-carb food and drink products. But sales of other enzymes within the food segment "are showing healthy growth", said Novozymes.

Novozymes dominates the enzyme market with about a 50 to 60 per cent share. US biotech firm Genencor, that now belongs to Danisco after acquisition clearance went through this month, falls into second place with an approximate 30 per cent slice.

While the volumes of pure enzyme protein produced are very small, their value reached over $2 billion (€1.53bn) in 2004. A recent report from Business Communications Company estimates that by 2009 the market will reach €1.83 billion.

Lacklustre growth for enzymes is coming in at about 2 to 3 per cent year on year. But there are signs - reflected in Novozymes results - that the bakery enzyme market, that currently constitutes about a third of the overall food enzyme market, could actually bring the strongest gains.

Recent research from market analysts Frost and Sullivan pinpoints these enzymes as the fastest growing segment with a compound annual growth rate of about 7.2 per cent.

The market for bakery enzymes came in at €32.1 million in 2003 and is expected to climb to €52.3 million by 2010.

With €47.4 million in value and 43.7 per cent of the total revenues, starch and sugar processing enzymes are the largest market but with a slow growth rate hit by industry consolidation, says the Frost & Sullivan report, tipping the CAGR at a low 2.3 per cent between 2003 and 2010.

Novozymes and competitor Genencor (now Danisco Genencor) represent the top two players in starch and sugar processing enzymes controlling 97 per cent of the market between them. In the US their major customers in the industry include agribusiness Cargill, starch firm AVEBE, and UK sugar and sweeteners group Tate & Lyle.

Net profit at Novozymes for the first quarter of 2005 rose by just over 6 per cent to DKK 192 million (€25.7m), up from DKK 180 million for the previous year.