Ajinomoto Uses Food Network for Push Into Shampoo, Skin Care

Ajinomoto Co. (2802), the 105-year-old Japanese maker of flavor enhancer monosodium glutamate, will use its global network of food-product factories to expand in ingredients for personal-care products.

The maker of seasonings, sweeteners, cereals and oils expanded into the personal-care market in 1972 and top management at the Tokyo-based group have approved an accelerated push into additives for soaps and later skin-care products in emerging markets, according to Shoichi Asada, head of specialty chemicals at Ajinomoto.

“Our top management agree this area has potential and we have a global network which gives us an advantage over some of our competitors,” Asada said in an interview at the in-cosmetics trade fair in Hamburg. “The key word is globalization: much more growth will come from emerging markets.”

Priorities include boosting operations in Brazil and elsewhere in Asia, where there is the potential for double-digit growth in sales, Asada said. Expansion into adjacent markets is part of Chief Executive Officer Masatoshi Ito’s goal of doubling specialty-chemical materials revenue by 2020. Japan now accounts for less than half of Ajinomoto’s sales of personal-care ingredients following expansion in Europe and the U.S., and emerging markets are the next frontier, Asada said.

Palm Oil

The company opened two production sites in Brazil and Indonesia last year to avoid shipping products prepared in Japan and to be closer to sources of raw materials such as palm oil. Additional sites are being evaluated, Asada said. Production lines for soap and shampoo ingredients can be latched on to food-production sites to reduce costs and garner savings in distribution, logistics and production.

“We have a plan to expand with new facilities, step by step,” Asada said.

Ajinomoto helped pioneer the use of amino acid-based derivatives, competing with Evonik Industries AG (EVK) and Kobo Products Inc. It could form an alliance with another company to combine technologies and strengthen its product offering, according to Asada. About 50 percent of Ajinomoto’s personal-care portfolio are surfactants, giving scope for the company to expand into adjacent areas of texturizers, active ingredients and moisturizers, the executive said.

R&D Hub

In Europe, the focus has been on ingredients for hair- and skin-care products toward the top-end of the market and Ajinomoto is looking at establishing a research and development center in the region to capture more of the local market, said Hideyuki Morisawa, a Louvain-la-Neuve, Belgium-based manager at the specialty chemicals division.

The introduction of more stringent controls and testing of chemicals used in goods under the European Union’s so-called Reach regulatory framework has increased the time and money needed to register new derivatives of amino acids, Asada said.

Further down the line, the company may consider the fragrance market, dominated by Symrise AG, Givaudan SA (GIVN), Firmenich International SA and International Flavors & Fragrances Inc. (IFF), though there are currently no plans for this move, Asada said.

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Kim McLaughlin, Robert Valpuesta

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