SUBSCRIBE

Breaking News on Food & Beverage Development - EuropeUS edition | Asian edition

News > Science

Read more breaking news

 

 

Supply restrictions send licorice prices soaring

By Dominique Patton , 28-Jan-2011
Last updated on 03-Feb-2011 at 13:12 GMT

Licorice prices are surging as a combination of factors restrict supply from China, the world’s largest producer.

Extracts from the licorice root are used to flavour and sweeten food and beverages. But prices have been climbing in recent years as excess harvesting of the wild root puts pressure on supply.

Prices for fresh roots collected from Western China this winter hit RMB5.1 per kg, jumping from RMB3.8 per kg last year, according to Beijing Gingko Group, a Chinese manufacturer of licorice extracts.

“The root price is the most significant component in the finished product price. If this goes up, it will drive extract prices,” said Paul Reyntjens, corporate strategy officer at the Beijing-based company.

A harsher than usual winter this year has hampered collection of the wild roots while competition from the increasingly profitable cotton crop in the same region has pushed up local labour costs. But in addition, China has moved to restrict licorice harvesting by issuing fewer licences for collection, said Reyntjens. It is controlling exports of the finished extracts too.

It is thought that the government is increasingly concerned about protecting the environment. Desertification is already a major problem in many parts of Western China.

Demand for high quality licorice extract comes mainly from the tobacco and confectionery industries and has been stable for some time. However licorice is increasingly being used as a source of the natural sweetener Mono Ammonium Glycyrrhizinate (MAG) in beverages, often mixed with stevia. It is also finding new demand in natural cosmetics.

Beijing Gingko claims to be the world’s third biggest supplier of licorice extracts with a 12 per cent market share.

Reyntjens believes re-planting is urgently needed to stabilize prices and stop desertification of regions such as Xinjiang in Western China where the wild root is collected. He is also investigating possibilities to launch a new cultivation programme.

“This only gets profitable when extract prices reach $1,000 per ton. We’re now around that level.”

Japan’s Mitshubishi Plastics is also planning to start cultivating the plant, according to a report in the Yomiuri Shimbin newspaper last month. Licorice is an ingredient in almost three quarters of herbal medicines and Japan is keen to reduce its dependency on China for supplies of the raw material, said the paper.

The plant takes four years before roots can be harvested however, and in the meantime, supplies look set to decline across the globe. Licorice also grows in Central Asia but political instability and corruption in this region makes sourcing the root difficult. It has also become scarce in Iran after over-harvesting.

“The best quality, best flavour roots used to be found in Iran but during the war period collection was done with machines, instead of by hand, and now the country is almost empty.”

Beijing Gingko produces a range of 30 different licorice extracts. US company Mafco controls the majority share of the global market but Beijing Gingko is expecting to increase its market share this year through new contracts.

Live Supplier Webinars

Rethinking Fat Forum
William Reed Business Media

On demand Supplier Webinars

Your future starts at Cargill's T for Trends
Cargill Cocoa & Chocolate
Food testing — let automation take the strain
Qiagen
ETENIA™: Recognize True Milk Value
AVEBE
The FoodNavigator Salt Reduction Forum
William Reed Business Media
All supplier webinars