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Jungbunzlauer ups citric acid, xanthan gum prices

By Jess Halliday , 18-Sep-2007

Jungbunzlauer has announced price increases affecting citric acid, sodium citrate, gluconates and xanthan gum as it offsets its own costs, an adjustment seen as aiding economic stability in the marketplace.

The company has said that citric acid, sodium citrate, gluconates and related products will increase by a double-digit percentage. Xanthan gum prices will also go up, depending on customers and markets.

 

 

 

Jungbunzlauer is not alone in announcing price increases for food ingredients. This is a major theme in the market as firms grapple with the effects of raw material, energy and transportation costs on their margins. Indeed, the Swiss-based last upped its tag last November.

 

 

 

However the citric acid market is a somewhat special case, since the need to cover costs is countered by price pressure from cheaper citric acid hailing from China.

 

 

 

The European Commission this month opened an enquiry into allegations of dumping by Chinese companies, and the effect this is having on the European citric acid industry.

 

 

 

But as more Western companies follow the example of Tate & Lyle in the UK and ADM, there are very real fears of a shortage of Western-made citric acid.

 

 

 

Jungbunzlauer owns facilities in Austria and Canada.

 

 

 

As for xanthan gum, that too is facing pressure from Chinese suppliers. Until now it has managed to avoid price increases experienced by other hydrocolloids in recent years, with market conditions actually forcing prices down.

 

 

 

Currently, the global price for xanthan gum hovers around the US$2.50/lb mark, said hydrocolloid consulting company IMR International. According to the group's Dennis Seisun, there is very little premium for non Chinese material.

 

 

 

Achim Hergel, VP product management for Jungbunzlauer, told FoodNavigator.com that economic sustainability is linked to ingredient prices since sustainable pricing is fair pricing - neither too high nor too low.

 

 

"Only if a market can avoid these extremes will it have sustainable market conditions."

 

 

Moreover, the company is recognising how unsafe products can crease a crisis at end-user level - not to mention damage the reputation and performance of companies at all levels of the supply chain. A recent example of this is the concern that has raged this year over unsafe ingredients originating from China.

 

 

 

"To avoid these crises is an important task of risk management, and shows the need for a reliable supply partner," said Hergel.

 

 

 

Hergel added that he believes environmental and social practices will become even more important in the future.

 

 

 

"Companies will not only incorporate environmental and social responsibility into their missions but also will look for business partners which are in line with this strategy," he said.

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