Alltech is taking a giant step into the $1 billion global market for Asian food.
The Nicholasville biotechnology company, best known for animal nutrition products and for sponsoring the Alltech FEI World Equestrian Games, is partnering with two large Japanese companies — Mitsui and Asahi — to produce "a natural alternative" to monosodium glutamate, or MSG, and other artificial taste enhancers found in many Asian foods, Alltech founder Pearce Lyons said Tuesday.
The new additive, a yeast extract that has not been given a brand name, also could be used in non-Asian types of food.
The product is expected to lead to an expansion of Alltech's 40-member research staff in Nicholasville and possibly to construction of manufacturing plants in Kentucky and in Brazil that would be needed in about four years, Lyons said in a conference call with reporters.
The partnership with the Japanese companies also could lead to a Japanese pavilion at the World Equestrian Games at the Kentucky Horse Park in 2010, he said.
"The Games could offer a great opportunity for us to highlight the benefits of natural products like this at some sort of pavilion," Lyons said. "Asahi is interested in that, and so is Mitsui."
For the near future, the new additive will be made in Serbia in south-central Europe and will be available for purchase in the second half of 2009. The Serbian plant will reach its maximum production capacity in about four years.
Lyons said Alltech already is committed to a $10 million to $20 million expansion of its European operations to accommodate the new product.
The three-way partnership is "the first-ever joint venture of such an international scale" for Alltech, he said.
The deal, which took two years to put together, allows the Nicholasville company to move further into the human food-additives market at a relatively low cost in new facilities and additional employment, Lyons said.
The number of new jobs has not been determined.
Most of Alltech's products are food additives for animals, but the company also makes baker's yeast in Europe, and beer and bourbon in Lexington. Alltech also is a partner in the Dippin' Dots Global ice cream company.
The initial target market for the new yeast product includes "the huge growing middle-class population in Southeast Asia, India and China," who want healthier foods, but not at higher costs, Lyons said.
The new yeast extract will satisfy that need, he said, while complying with all food regulations set by the governments of the United States and Japan, and by the European Union.
While MSG is regarded by the U.S. Food and Drug Administration as safe, reports of adverse reactions to MSG have made its use controversial.
The new product was derived from four proprietary strains of yeast discovered by Asahi, Alltech said in a statement. Alltech scientists took the Asahi research and, "through an extensive developmental program," brought the yeast extract to market quality.
Genetic engineering was not involved in the process, he added.
Mitsui will be in charge of sales in American and European markets, while Asahi's Food and Health Care division will oversee sales in Asia.
Alltech, founded by Lyons, is a privately owned company, with nearly $500 million in annual sales. It has 1,900 employees in 113 countries.
The company's 22 production facilities include the world's largest yeast factory in Sao Pedro, Brazil.