Galactic announces lactic acid price increases

By Anthony Fletcher

- Last updated on GMT

Related tags: Lactic acid, Acid

Lactic acid giant Galactic is the latest ingredients firm to
announced substantial price increases on the back of rocketing
energy costs.

The company said that the increases, which will come into effect in January 2006, would vary from five to 15 per cent, depending on the product concerned.

It claimed that it had tried to contain these increases as long as possible in order not to affect the agreements signed with its customers during 2005.

Lactic acid is used extensively by the food industry as a flavour agent, preservative, and acidity adjuster in foods. Sodium lactate, a humectant, is used in cakes to produce a tender crumb and to reduce staling.

This non-meat ingredient is also absorbed into meat formulations for specific flavour, shelf-life and safety applications.

However, the high cost of energy has led to substantial increases in overheads. 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. Galactic is just one of several firms that have recently been forced to hike up ingredients prices.

Tate & Lyle's European food and industrial ingredients division for example recently proposed increase of 10 to 15 per cent on new contracts for certain cereal sweetener and starch products, while Purac said that it would also raise the cost of its range of lactic acids. Swiss-based Jungbunzlauer has also 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 ISP has done the same for its alginate range.

Galactic said that it would continue to work on the optimisation of its manufacturing process in order to guarantee in the future a limited impact of the energy costs on its production costs.

Belgium-based Galactic belongs to Finasucre, one of the top ten sugar producers. The company now boasts a lactic acid and lactates production capacity of more than 18,000 tons.

A few years ago the Galactic signed a joint venture agreement with the BBCA Biochemical Company for the erection of a lactic acid and derivatives manufacturing unit in China. The joint venture will operate under the name of B&G.

Related topics: Ingredients

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