FMC announces across-the-board price increases
The Philadelphia-based hydrocolloids firm already implemented a price increase of 7 per cent on its carrageenan products earlier this year.
Today’s news, which comes on top of that, is effective as of November 1 or as contracts allow. It covers its entire range of microcrystalline cellulose, carrageenan, alginates and PGA (propylene glycol alginate) product lines.
One of the reasons for the increase is said to be the higher costs of important raw materials; indeed, the hydrocolloids world is currently in the grip of a seaweed shortage that has come about due partly to increased world demand, and partly to the impact of disease and adverse weather like typhoons in the main producing regions of Indonesia and the Philippines.
Other factors are processing chemicals and transportation costs; although FMC has a cost-saving program in place, Jerry Whelan, global director of sale & marketing, said it is not able to completely cover the increases that the firm has been exposed to.
The 15 per cent addition will only cover the excess excluded by the program. A company spokesperson was not immediately available, and it is not clear whether FMC will look to reduce these costs should the costs of inputs ease in the future.
On-going cost story
The rising costs of ingredients have had a ripple-on effect throughout the food supply chain, across food and beverage categories – as well as in personal care and pharmaceutical products.
In some cases food manufacturers have tweaked the formulation of ingredients to reduce reliance on ingredients that now add too much to their bottom line, but this can take considerable work to ensure that the sensory products are not impacted.
However FMC has also made moves to increase its competitiveness this year, with the acquisition of International Specialty Products (ISP) announced in May.
The deal includes ISP's alginates and food blends business, apart from its Brazil-based Germinal blending business, and has been said to strengthen global cost competitiveness by increasing capabilities to source raw materials, drive production efficiencies and deliver improved supply chain economics
It also allows it to offer customers a broader range of alginates and functional system blends.
Dennis Seisun, from hydrocolloid consulting company IMR International, called ISP the current the leader in alginate production, and FMC is second, so it is a substantial move.
He said: "This is yet another indication of consolidation in our business, as companies continue to gobble up each other."
Last October, ISP announced price increases for all of its propylene glycol alginates, of between 10 and 15 percent, after feeling the pinch of higher raw materials and energy costs.
Eric Beatty, marketing director for FMC biopolymer division said at that time: "Our alginate pricing will not change as a result of this transaction, but we will continue to evaluate all our pricing as changes occur in the economy."
