Tate & Lyle raise price of corn-based ingredients by up to 20%
The price rise will be effective from 1st October and will apply to its range of corn-based starch, sweetener and fibre ingredients in Europe, the Middle East and Africa (EMEA).
Vice president of speciality food ingredients and sales EMEA, Pierre Boulanger, said: “The decision to increase ingredient prices is never taken lightly.
“However, the recent extreme heat conditions across the European corn belt have led to lower yields, impacting the availability and cost of European corn, a key raw material for our ingredients.”
Vice president of investor and media relations, Chris Marsh told FoodNavigator that he expected Tate & Lyle’s customers had been following corn prices and so had probably expected the price rise to come.
For its US market, Tate & Lyle manages fluctuating corn prices by hedging corn costs – entering into a futures contract at the CME whenever it orders from a customer which allows them to set raw material values for periods of up to two years.
For Europe however, it says that there is no liquid corn futures market, which means hedging the full corn price cost is not possible.
Corn is not the only commodity to be hit by price hikes. In March this year, Tate & Lyle raised the price of its sucralose by 20%, citing deteriorating market conditions after competition from Chinese producers drove prices downward.
Tate & Lyle recorded sales of £2.7 billion in the year ending 31 March 2015 but issued its third profit warning in a year this February, which triggered a steep fall in the company’s share price.