ADM takes 50% stake in Russian group Aston’s sweetener business

US agri-giant Archer Daniels Midland has announced it has reached an agreement with one of Russia’s largest food and beverage producers Aston to secure 50% of the company’s starch and sweeteners business, a statement from the company said Thursday.

For ADM, recently linked with a possible acquisition of rival Bunge, the move into Russia’s sweetener and starch business is another outlet for corn and comes as the company is anticipating substantial growth in the sector, both in Russia and globally.

The move comes on the back of acquisitions of corn facilities in Europe, Turkey and Morocco as well as investing in a sweetener facility in Tianjin, China, along with investments in animal feed facilities in the country.

“Taken together with this expansion into Russia, these global additions represent a substantial transformation for our corn business as we continue our geographical growth and diversification,” president of ADM’s Corn Processing business Chris Cuddy said in the statement.

ADM Europe, Middle East and Africa president Pierre Duprat described Aston as a “key player” in the growing Russian food and beverage industry and if approved, ADM will become 50% owners of two wet corn mills in Ibred and Novlyanka, approximately 180 miles south east and east of Moscow respectively.

Wet corn milling is a more intensive, involved process than dry corn milling, which typically focuses on producing ethanol and animal feed.

With wet corn milling, the corn can be processed into a wider range of components, such as starches, sweeteners, gluten meal, proteins and corn oil as well as alcohols such as ethanol.

ADM has seen revenues from its sweeteners and starches operations soar in recent years, from around $300 million in 2011, to almost $800 million in 2017, according to ADM's financial data.

The company anticipates demand for high fructose corn syrup to increase by 6% between 2017 and 2020, with glucose and dextrose growing 9.1% - growing at “a greater pace than GDP” the company noted in its ADM Investor Overview presentation for February/March 2018.

Development in the sweetener and starches business has played a large part in propelling operating profits at ADM, which has seen its corn processing operations surpass those of its oilseeds processing operations in recent years.