DuPont Sees Niche in Curing China’s Indigestion with state-of-the-art probiotics

DuPont Sees Niche in Curing China’s Indigestion

By Christina Larson on July 24, 2013

Just reading recent headlines about food-safety scandals in China might be enough to give a polite person indigestion. This week CCTV reported that ice cubes found in some KFC (YUM) and McDonald’s (MCD) Beijing branches contained more bacteria than toilet water. Other recent media investigations have exposed gutter oil “recycled” as cooking oil; rat meatsold as “lamb”; and growth-chemical-laced exploding watermelons. But where there’s a problem, there’s often a business opportunity: Companies selling digestive aids, dietary supplements, are nutrition products are now finding a hungry market in China.Last week DuPont (DFT) opened a new state-of-the-art probiotics blending and packaging facility in Beijing. Previously the company operated a small pilot plant to test the Chinese market. Probiotics are the “good” bacteria—such as live cultures found in yogurts—that can help maintain a healthy digestive and immune system. DuPont’s new facility will work with both dietary-supplement and dairy companies in China.

According to industry estimates cited by DuPont, the global probiotics market is valued at $32 billion and projected to grow to $45 billion by 2018. Asia is seen as a prime growth region, says Fabienne Saadane-Oaks, vice president for health and protection at DuPont Nutrition & Health, adding that the Beijing facility will cater to “specific Chinese needs for flavors, formats, and textures.” (Beijing grocers often carry blueberry-taro root yogurt, for instance.)

According to DuPont’s research, the market for health supplements in China is growing at a fast 15 percent a year. Supplements to enhance digestive health are especially popular. According to Saadane-Oaks, half of all diseases caused by microorganisms in China are due to contamination in the food supply. Word up: Gutter oil is tough on the tummy.

Mintel, a global market research firm, surveyed 3,000 shoppers in 10 large and midsize Chinese cities last year. Among the clear trends that the September 2012 study identified was a growing consumer preference for international food brands, which are presumed to be “safer.” This was true across multiple product categories, including frozen foods and cooking oils. It has certainly been the case with baby formula.

China also has a nascent organic foods industry. For instance, Green Yard, a small “organic” dairy farm on the outskirts of Beijing, where cows are fed only organic fodder, is becoming popular among expats and capital foodies. (Still unconfirmed is whether the cows breathe rarefied air, apart from Beijing’s toxic smog.)

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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