ADM launches flavour production facility in China to meet growing demand

© Reuters. FILE PHOTO: The Archer Daniels Midland Co. (ADM) logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2018. REUTERS/Brendan McDermid/File Photo

BEIJING (Reuters) - U.S. grain merchant Archer-Daniels-Midland Co said on Wednesday that it had launched a new flavour production facility in China to meet growing demand for beverages and healthy foods.

The new facility - ADM Food Technology (Pinghu) Co Ltd, located in the eastern province of Zhejiang and about one hour away from Shanghai - marks a further expansion by the global grains trader in the nutrition segment.

Nutrition is one of ADM's three main businesses and the company aims to increase the segment's contribution to overall net profits to more than a quarter in the next three to five years, from about 15% currently, Leo Liu, President, Nutrition, Asia-Pacific, ADM, told Reuters.

On the Pinghu plant, Liu said it would serve as ADM's new flavour supply hub for China and the wider Asia-Pacific region, Liu said, adding it will also be part of ADM's global flavours supply chain, serving clients based in Europe and Americas.

"The reason why we invested in flavours and food ingredients, especially high-end food ingredients, is because the sector is developing very fast. And the market demand and changes require us to have some investment and production bases in China, to better prepare for future development," Liu said.

The new plant will provide a wide range of flavour solutions for beverages, sweet goods, dairy and dairy alternatives, and health-related and functional foods, ADM said in a statement.

The launch comes after ADM opened its Plant-based Innovation Lab in Singapore in April to meet growing demand for plant-based proteins in the region.

ADM, a top global trading house that buys crops from farmers to process and export, reported a 52% leap in its quarterly profit in July, due to strong corn export sales to China and oilseed crushing.

Nutrition delivered 15% revenue growth and 27% higher year-over-year profits in the second quarter.

Chairman and CEO Juan Luciano said at the time that the company was raising its expectations of full-year profit growth for the nutrition segment to 20%.

ADM is also stepping up investment in the plant-based protein sector in China, including carrying out application experiments, developing products and building ingredients production bases, Liu said.

Investment in the nutrition sector, including health-related and functional ingredients, will be a key focus area for the company's development in the region, Liu added.