CP Kelco raises prices for gums and cellulose

The firm yesterday announced that price hikes would be "significant",​ entering the double-digit range for some products. The increases will be effective as of November 1, or as contracts are renewed. Ingredients affected include pectin, carrageenan, carboxymethyl cellulose, cellulose gum, gellan gum, xanthan gum and welan gum. "Despite aggressive and successful productivity improvement programs, CP Kelco could only partially offset multiple years of unprecedented cost inflation,"​ said CP Kelco in a statement. Higher raw material costs are one of the reasons for the squeeze, with prices for pulp and seaweed reaching near record high levels. Energy costs have also placed pressure on companies across the board, with oil prices currently standing at around $80 per barrel. Competitor hydrocolloid supplier FMC Biopolymer also this month announced price hikes across its product range. It said its Avicel line, together with related brands of its food and pharmaceutical grade microcrystalline cellulose and cellulose gel will see price rises of four to eight percent. Prices for FMC's carrageenan products will increase four to six percent. CP Kelco did not specify by how much it will be raising prices for different products, but said it expects to work with customers during the coming weeks to implement the rises. However, the implementation of price increases is not without its challenges. Like all sectors, ingredients firms find themselves squeezed between rising costs they can no longer sustain, and customers unwilling to pay more for their products. Food and beverage manufacturers, often unwilling or unable to absorb the extra cost due to challenges of their own, may turn to alternative products for their formulation needs, as seen in the move by some companies towards dairy alternative ingredients after dairy prices shot up this year. Another scenario, and one that ingredients makers are wary of, is that companies will look to cheaper Chinese production. Possibly the most striking example of this in recent years has been in the case of citric acid, where higher costs and Chinese competition has squeezed a number of Western citric acid firms right out of the picture, and has prevented re-investment in the industry. In its announcement yesterday, CP Kelco said that it has invested significant capital in its Chinese and Brazilian operations. It said it will "sustain the commitment to further invest in hydrocolloids to deliver superior quality, product safety assurance, technical support and innovative hydrocolloid solutions".​