Ascorbic acid: tougher competition for EU

- Last updated on GMT

Related tags: Citric acid, Acid

Food preservation is a key issue for every food processor today. As
such, demand for isoascorbic acid, ascorbic acid and citric acid is
expected to reach €1.7bn by 2007. But with the market entry of
Chinese producers offering these products at well below market
prices, western companies are feeling the pressure.

Since the early 1990's, food and feed ingredient markets have been characterised by a dynamic development unseen before, claims a report from Business Communications Company released this week.

Due to population growth and an increasing standard of living in many countries of the world, attitudes towards food quality are changing and the requirements for food processing are increasing, writes the BCC​. In addition, busier lifestyles of men and women has increased the demand for pre-packed, preserved and processed food products.

'While food preservation was of little importance from a global perspective ten years ago, it is now one of the key issues for every food processor,'​ states the report. 'Ascorbic acid, isoascorbic acid and citric acid are enjoying great popularity,'​ the report adds.

According to the BCC, the global market for isoascorbic acid, ascorbic acid and citric acid is expected to reach $1.7 billion (€1.7bn) in 2007, out of which food applications account for $1.08 billion, feed applications for $90 million, pharmaceutical and OTC applications for $267 million and technical applications for $260 million.

BCC claims that the most important acid reviewed in this report is citric acid, with current sales of $1.2 billion, followed by ascorbic acid with $402 million. Since the main applications of these acids are sophisticated food formulas and detergents, Europe and the US are the principal outlets for them. The European market accounts for a total of 37 per cent of sales and the US market for 28 per cent of sales.

All three products still enjoy a high demand in the market, but at the same time are faced with strong price pressure. Prices of citric acid and of ascorbic acid are very close, or even below estimated production costs. This is a result of a downward spiral started with the market entry of Chinese producers offering these products at well below market prices. Chinese producers currently have a market share of 37 per cent in isoascorbic acid, 65 per cent in ascorbic acid and 34 per cent in citric acid. Traditional producers, such as Roche, dramatically lost market shares.

For all of the three products, volume demand in 2007 is estimated to be much higher than today, while prices should decline further, which will result in market values for these products very close to those in 2001. This market development will make it very difficult for Western companies to survive and to maintain their Western production sites, cites the report.

Several of them have already concluded joint ventures with Chinese companies. Such joint ventures are not only seen as capacity additions, but also as future substitutes for the Western sites, which might be closed if the production economy continues to worsen, the report concludes.

Related topics: Market Trends

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