The Chinese company opened a new facility with annual capacity of 2,500 metric tons in April this year, allowing Taiyo to significantly improve competitive advantage by leveraging the new plant's lower production costs.
The merged businesses, now operating under the name of Taiyo Green Power, will become the world's largest green tea extract manufacturer and the only one to use a pharmaceutical cGMP-certified facility to produce extracts for the food, supplement and pharmaceutical industries.
Taiyo will also keep its manufacturing operations in Japan.
"The green tea extracts market is extremely competitive with a huge supply of raw material and numerous suppliers," said Scott Smith, vice president of Taiyo International, the firm responsible for marketing the Taiyo products in the US.
"We were the first company to introduce green tea extracts for fortification of foods but we fell behind in sales because of the cost competitiveness of products coming out of China - the material has almost become a commodity," he told NutraIngredients.com.
"But this acquisition allows us to combine a large volume with the low cost of production in China, giving us cost competitiveness in addition to the leading technology."
Taiyo pioneered the development of green tea catechin extracts and the production of isomerically pure L-theanine (Suntheanine). The new business will also maintain the exclusive Chinese license to technology developed by Procter & Gamble, originally granted to Wuxi Green Power. It is said to produce extracts with superior sensory characteristics while maintaining a high concentration of polyphenol antioxidants.
"The intellectual capital and tea knowledge assets that result from this merger are robust," said Dr Lekh Juneja, chairman of Taiyo Green Power and executive vice president of Taiyo Kagaku.
"We intend to fully exploit this and accelerate our green tea innovations while providing an array of ultra high quality cGMP tea bioactives."
Beverages remain the biggest application area for green tea extracts. In Europe, tea makers have seen a shift in sales in recent years as consumers increasingly opt for flavoursome or healthy alternatives, such as fruit and herbal teas, consumption of which increased by almost 50 per cent between 1997 and 2002, according to market analysts Datamonitor. Green tea consumption in 2002 was more than 20 times the 1997 figure.
The research demonstrating the tea's health benefits is also driving sales to nutritional products. In the US green tea catechins are booming in weight loss products as the removal of ephedra from the market leaves a gap for thermogenic products. "Sales have more than quadrupled in the last two years," said Smith.
Taiyo will do the marketing for the new manufacturing business in Europe while New York-based Marco Hi-Tech has been appointed exclusive sales and distribution agent to the US dietary supplement market.
Amax NutraSource continues to distribute the P&G product within the North American market.