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Xanthan gum is formed by Xanthomonas campestris during the process of fermentation. When the bacteria is introduced to a nutritive solution containing carbohydrates (from corn, wheat, dairy, or soy), fermentation begins and the polysaccharide xantham gum is produced as a byproduct. The xanthan gum is then precipitated from the solution using isopropyl alcohol, dried, and milled into a powder so that it can be added to food and other products.

Xanthan gum was discovered by the United States Department of Agriculture through research conducted by Allene Rosalind Jeanes. Xanthan gum was approved for use as a food additive in the United States in 1968 and is now a common food additive throughout the world.

Xanthan gum is usually made from grains and other plants because they contain glucose an sucrose, two sugars that X. campestris can naturally ferment. A special strain of the X. campestris bacteria was developed that can ferment lactose, a major component of whey.Whey, a byproduct of the cheese process, is now used as an inexpensive source of carbohydrate for xanthan gum production.

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