Buyers driving down hydrocolloid prices
considerations has driven hydrocolloid prices downwards for the
last 20 years, according to an industry expert.
San Diego-based Dennis Seisun believes that as a result, the texturisers market has become a much tougher environment in which to work.
For example, xanthan gum prices have sunk significantly. Seisun says that 20 years ago prices would have been around $12 to $14 dollars a kilo; today, the same amount of product would cost around a third of this, without taking into account inflation.
"A lot of buyers have commoditised the business," he said. "They are saying to suppliers: 'just give me the best price'... This is true for most products in the hydrocolloid sector."
Seisun believes there is a conflict within many big food manufacturers. For while buyers want low prices, product developers want innovation. For now however, buyers are winning the battle.
However, Seisun believes that prices have now sunk so low that the only way for the industry is up. Of course, it remains to be seen whether buyers will be prepared to absorb increased costs. Nonetheless, many ingredient companies operating in the sector have announced price rises as of early next year.
"The trend has been downward in general, though it is also cyclic," he said. "Products such as gum arabic are tied to agricultural trends; whether there has been a drought or things like that."
Seisun has been in the hydrocolloid sector for over 25 years. Now a freelance consultant, he produces a quarterly product price track and also organises a highly targeted hydrocolloid conference every year.
"This year it was in Budapest, and next year it will be in San Diego," he told FoodNavigator at the FiE show today. "These events are small but they are high level.
"Maybe a hundred specialists from sectors such as marketing strategic planning. It's not a scientific conference; its very industry driven."
