Energy increases force Tate & Lyle price rise

By Anthony Fletcher

- Last updated on GMT

Related tags: Cost, Price, Sucralose, Tate

Tate & Lyle's European food and industrial ingredients division
proposed increase of 10 to 15 per cent on new contracts for certain
products highlights again the impact of rocketing energy prices on
the ingredients market.

Indeed the announcement from the world's number one industrial starches manufacturer, which follows a number of other recent ingredient price increases, puts the decision squarely down to rocketing energy costs and inevitable knock-on effects.

The announcement relates to cereal sweetener and starch pricing. Tate & Lyle is also the sole manufacturer of Splenda Sucralose, which is currently protected by 32 different patents.

Cost increases however could encourage the development of cheaper imitations. Indeed, despite the array of patents, Tate & Lyle could start to face competition from Chinese manufacturers, leading to lower costs for food and beverage makers.

Any increases however would depend on the type of product, the company said.

Prices for crude oil, both a key raw material and energy supplier for the food industry, recently topped a record $70 a barrel. The knock-on effect has been felt in transportation, refining, production and storage.

The consequent effect on the ingredients industry has been noticeable. Tate & Lyle's set of increases for its European food and industrial ingredients division follows Purac's announcement that it would raise the cost of its range of lactic acids while Swiss-based Jungbunzlauer recently increased the price of its citric acid products.

Swiss chemicals group Lonza also announced that it would increase the prices of its niacin and niacinamide by between 10 12 per cent as of January 2006, while in the US, Solae has pushed up soy lecithin prices.

ISP has done the same for its alginate range, while FMC has lifted gum prices - all on the back of spiralling energy costs. National Starch plans to increase the cost of its European starches by up to ten per cent as of 14 November 2005.

Follwing its announcement, Tate & Lyle Food & Industrial Ingredients Europe said that it would continue to work on improving efficiencies to limit the impact of any future increase in costs by as much as possible.

But it is fear over ever-increasing energy prices that continues to dominate industry concerns. While the International Energy Agency forecast earlier this month that global oil consumption is expected to increase by 1.75 million barrels a day next year to total 85.2m barrels a day, the long-term effects of current energy pricing remains unclear.

Related topics: Ingredients

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