Something to chew on: B.C. firm turns waste into sweetener

Multinational gives Vancouver’s S2G Biochemicals something to chew

Xylitol gum

A couple of years from now, when you pop a piece of Dentyne or Trident chewing gum in your mouth, you may well be tasting a product made from wood and agricultural waste using a technology developed by North Vancouver’s S2G Biochemicals Inc.

Initially, the company was focused primarily on a refining process that turns wood and agricultural waste into bio-glycols – an alternative to the glycols derived from oil and gas for making plastics, polyester and plastic water bottles. But the North Vancouver company is now entering what could be an even more valuable market: making sweeteners for chewing gum.

S2G Biochem recently inked what it says is a major partnership deal with Mondelez International (Nasdaq:MDLZ), the multinational food, beverage and confectionery company that owns brands such as Nabisco, Cadbury, Toblerone and Oreo. Mondelez also owns the chewing gum brands Dentyne, Trident, Chiclets and Stride.

Under a licensing deal with Mondelez, S2G and Penn A Kem LLC – an American chemical company – will build a new US$105 million plant in Memphis, Tennessee, to produce both bio-glycols and xylitol.

Xylitol is one of a handful of sugar alcohols, including sorbitol, used as an alternative to sugar in chewing gum and mints.

Typically extracted from hardwoods or corncobs, xylitol has one-third the calories of regular sugar and prevents tooth decay – two reasons why companies like Mondelez prefer to use it over other sweeteners, like sorbitol.

The problem is that it’s expensive to make.

“[Xylitol’s] got a whole bunch of effects that they would like to use more of but it’s cost-prohibitive,” said Jeff Plato, S2G Biochem’s director of corporate and business development.

S2G has developed a process for making xylitol more cost-effectively.

Xylitol is not a product that S2G even considered making until Mondelez approached the company. Until then, S2G had been focused strictly on making bio-glycols to produce an alternative to petroleum products.

“We had not been looking at this market,” said S2G Biochem CEO Mark Kirby. “We had looked at that market and said it’s a pretty small market. We never attributed much weight to it. We were focused on glycols.

“It wasn’t until they [Mondelez] came to us and said, ‘We have a problem.’ And there’s nothing like having a customer that has a problem to help pull new technology forward.”

The market for glycols is huge – about $30 billion annually, although bio-glycol makers like S2G are competing with Big Oil in that space. Xylitol is a smaller market – US$600 million to US$700 million annually – but there is less competition.

“In the xylitol space, we will have a significant impact,” Kirby said.

Working with Mondelez, S2G tweaked its technology in order to co-produce xylitol as part of its glycol production.

They came up with a process that is more efficient because it can extract more xylitol from a given feedstock, which can include wood waste from hardwood trees, wheat straw and bagasse (the husk left over from sugar cane after it’s been squeezed).

“Whatever we don’t turn into xylitol, we then turn into glycols, instead of throwing it away,” Kirby said. “So that combination gives you – per tonne of input feedstock – a lot more value of your end products.”

Mondelez owns the licensing for the xylitol technology S2G developed, but S2G has the exclusive rights to build the plants that will produce it.

“They have granted us a worldwide exclusive licence to the technology, and our job now is to go out and turn it into commercial plants,” Kirby said.

Earlier this year, S2G produced its first commercial batch of bio-glycol at a chemical plant in Tennessee owned by Penn A Kem.

Since much of the processing is already in place at Penn A Kem’s facility in Memphis, the first plant dedicated to producing xylitol and gycol will be built there.

Penn A Kem will underwrite the construction of the new plant, and S2G will handle the engineering, and acquiring feedstock and off-take agreements. For the xylitol, it has a built-in customer in Mondelez.