Science breakthrough: new corn-based fabric

Filed under: Retail |

After years of testing, research scientists in Illinois have created a new fabric from corn. Tate & Lyle, the food-ingredient company behind the breakthrough, is building a plant in Tennessee, and should have the fabric in commercial production this fall.

The corn-based fiber will be used by DuPont Co. to make Sorona, a supersoft, stain-resistant fabric that executives say “could be the next nylon.”

It’s just one example of how agricultural giants are using technology to expand beyond their corn and soybean roots.

But Iain G.T. Ferguson, chief executive of Tate & Lyle, made clear during a recent interview that the company’s future is with the world’s consumer product and food companies.

Since 2002, the company has boosted research and development spending by about 50 percent.

Founded in 1921 in London, Tate & Lyle earned more than $545 million on sales of $6.9 billion during fiscal 2006 by providing ingredients, ingredient solutions and services to food, beverage and industrial customers.

Tate & Lyle has operations on four continents and is one of the world’s largest sugar producers. It is also a leader in cereal sweeteners and starches, food and industrial ingredients and citric acid.

The company is most famous for Splenda, an artificial sweetener that was developed in a university lab in London.

With sales of more than $364 million in 2004, Splenda has been a wildly successful ingredient. But as the government imposes increasingly complicated rules, food manufacturers are being forced to search ever harder for a breakthrough idea.

That’s because food and beverage manufacturers are caught in the blame game associated with the massive rise in obesity that has swept the United States since 1985.

More often than not, the supplier not only is developing an idea about how to use an ingredient, but also the finished product to the specifications of a customer.

Tate & Lyle says it is close to perfecting a powdered egg that could be a boon to military organizations worldwide. In texture and taste, it easily surpasses the powdered eggs served to generations of U.S. servicemen. Called Alleggra, Tate & Lyle sees it primarily being used as a food ingredient in bakery products and other foods, rather than as a direct substitute.

U.S. SBA receives new administrator

The Senate has confirmed ServiceMaster Co. Executive Vice President Steven C. Preston to be administrator of the Small Business Administration, according to the Congressional Record.

“Steve Preston knows the crucial role that franchised small businesses play in the global economy,” said International Franchise Association President Matthew Shay. “To have someone with this close-up view of free enterprise and entrepreneurship leading the Small Business Administration will be extremely beneficial to the growth and development of small firms.”

There are more than 760,000 franchised small businesses operating in the United States, according to a PricewaterhouseCoopers study conducted for IFA in 2004. Those franchises provide jobs for more than 18 million Americans and generate a private-sector boost to the economy that exceeds $1.5 trillion.

Preston serves as executive vice president of ServiceMaster Co., a franchise system of residential and commercial services, which includes a dozen widely-recognized business brands in industries ranging from disaster restoration to cleaning services to home inspection and furniture repair.

ServiceMaster is a charter member of IFA’s MinorityFran program, a recruitment initiative designed to increase minority ownership of franchised small businesses.

New deal in place for Michaels Stores

Crafts retailer Michaels Stores has been purchased for about $6 billion, with the expectation of the deal closing by the end of this year.

Bain Capital and The Blackstone Group will share ownership of the Irving, Texas-based chain. Bain has invested in such retail chains as Burlington Coat Factory, Staples and Toys R Us.

Michaels put itself up for sale in March. It operates 900 Michaels stores, 165 Aaron Brothers stores, 11 Recollections stores and four Star Wholesale operations in the United States and Canada.

The chain reported a 3 percent drop in net sales and a 1.4 percent gain in same-store sales during the first quarter of 2006.

The retailer could be a good turn-around opportunity because pricing, service and merchandising improvements could bring the chain up to par with competitors A.C. Moore, Hobby Lobby and Jo-Ann Stores, reported analyst Gary Balter.

U.S. chain store sales June report

In June, U.S. chain store sales grew 2.6 percent on a year-over-year basis, according to International Council of Shopping Center’s index. Cool, wet weather and tough comparisons against banner June sales last year slowed sales during the five-week period, said Michael P. Niemira, ICSC’s chief economist and director of research.

Drug stores reported the highest gains, growing an average of 7.6 percent growth in June compared to the previous year. Furniture stores reported the biggest drop with average sales down 11 percent for the month compared to June 2005.

For July, U.S. chain store sales are expected to increase between 3 and 3.5 percent, Niemira said.

Joan Johnson covers retail for the Colorado Springs Business Journal.