Food makers can expect to see the price of hydrocolloids continue to move upwards as suppliers, knocked by squeezed commodity supplies coupled with higher energy and transport costs, pass rises onto the market.
ISP Food Ingredients that supplies texturant systems used in a range of food products from bakery fillings to salad dressings announced that prices for its food-grade alginates and other hydrocolloid-based systems will increase from 7 to 10 per cent.
"Although ISP has implemented aggressive cost containment measures as well as improved operating efficiencies, these actions have been insufficient to offset the substantial cost increases," the US firm said in a statement.
A range of hydrocolloid raw materials have undergone price increases in recent months. Locust bean has seen massive price rises on the back of a bad crop and supply chain problems. Guar gum is also going up, related to crops.
A tighter supply of seaweed, the key source of commercial alginates, has also impacted prices for ISPs products. Most alginates are derived from a variety of weed sources and the majority of commercial products are of the high M type, the best example being the alginate obtained from giant kelp, Macrocystis pyrifera, which ISP harvests off the California coast. Laminaria hyperborean, used by its alginate manufacturing plants in Scotland, provides a high G alginate.
"These increases apply to pricing worldwide and will take effect on December 1, 2004, or as contracts allow," said ISP, adding that 'energy, water, transportation and environmental compliance costs' also rose considerably in 2004.
Relief is not in sight. ISP warned that costs are forecasted to 'significantly increase again in 2005.'
Earlier this month the number one pectin and xanthan player CP Kelco announced increases for a range of hydrocolloids in its portfolio in a bid to soften rising costs - 6 per cent for pectin, 5 per cent for xanthan and xanthan blends, and rises ranging from 6 per cent to 10 per cent for selected carrageenan products.
Due to rising energy and processing materials costs 'we are facing double digit increases in what we spend' said Bruce Dructor, CP Kelco's vice president, operations and business management.