Ethanol Producer Expands Specialty-Alcohol Production, Announces Plans to Rebrand

Source: By Todd Neeley, DTN Staff Reporter • Posted: Monday, October 26, 2020

California-based ethanol producer Pacific Ethanol Inc., will continue to shrink its fuel-ethanol business and expects to rename its company as it refocuses its business, the company said in a news release on Monday.

Pacific Ethanol said it plans to realign its business to focus on specialty alcohols and “essential ingredients.” In addition, the company said it will be selling or repurposing three ethanol plants, two in Stockton and Madera, California, and one in Columbia, Oregon. The California plants are idled and the Oregon plant continues to operate.

During the past nine months Pacific Ethanol said it expanded production of specialty alcohols used in consumer products and reduced fuel-ethanol production. The company said in a news release it shifted from 85% ethanol and 15% specialty alcohol production, to a 50-50 mix by the end of September 2020.

“Specialty alcohols used in consumer products sell at a premium to fuel-grade ethanol and require systems, processes and certifications to produce them that are not required for fuel-grade ethanol,” the news release said.

The company will expand production of specialty alcohols used in mouthwash, cosmetics, pharmaceuticals, hand sanitizer, disinfectants and cleaners, grain-neutral spirits used in alcoholic beverages and vinegar as well as corn germ used for corn oils, yeast, corn gluten and distillers grains used in commercial animal feed and pet foods.

Pacific Ethanol bought Illinois Corn Processing, LLC, in 2017, to expand into specialty-alcohol production.Mike Kandris, the company’s chief executive officer, said in a news release the company recently received certification for Pacific Ethanol’s largest specialty alcohols production plant.”Our company was founded to supply low carbon renewable fuel for the transportation market,” he said.

“While we will continue to participate in that market, transportation fuels are no longer our primary focus. We believe focusing on products for these markets aligns us with strong secular growth trends that will enable us to deliver greater and more consistent profitability for our shareholders.”

In connection with the strategic realignment to focus on specialty alcohols and essential ingredients, the company plans to change its corporate name and introduce a new brand identity.

Pacific Ethanol also continues to operate two fuel-ethanol plants in Illinois, two in Nebraska and one in Idaho.

“The decision to rename our company is part of our transition from a transportation fuels-focused business to a consumer products and ingredients-focused business and reflects the fact that specialty alcohols used in consumer products are now the largest contributor to our revenues,” Kandris said.

In the third quarter of 2020, Pacific Ethanol reported a decrease in net sales of $161 million. In addition, the company said it had reduced debt by about 15% from June 30 to Sept. 30.

Todd Neeley can be reached at todd.neeley@dtn.com

 

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