Natural Foods Merchandiser

Vitamin C prices rise sharply on product cutbacks, supply squeeze

Yet another thing to blame on the Chinese. Bulk prices of vitamin C have quadrupled since the first quarter of the year, mainly due to cutbacks in production by Chinese suppliers who control as much 70 percent to 90 percent of the market, according to industry manufacturers, suppliers and recent media reports.

A kilogram of bulk vitamin C has risen from about $4 in January to about $12 as of August.

"What they've done is squeeze production. They're holding back in their production," said Ed Kennan, vice president of marketing for FutureBiotics, a dietary supplements manufacturer based in Hauppauge, N.Y. "The whole industry is going to be hit by a severe shortage."

The Asian economic powerhouse isn't the only party to blame. Another factor driving prices is the siphoning of corn into the biofuel market. Corn is a primary source of vitamin C production. BusinessWeek reported in March that the push for renewable fuels led to an outburst of ethanol plant construction, with 113 ethanol distilleries now in operation and an additional 78 in the works. That has pushed up demand for corn to the point that last year ethanol accounted for about one-fifth of the United State's corn supply.

"We believe that there are many factors causing the upward price pressure in the market," said Todd Sitkowski, a spokesman for DSM Nutritional Products. "As previously report[ed], exports of vitamin C from China are limited. In addition, they are experiencing significant costs to improve their environmental, quality and safety performance. Moreover, all manufactures are experiencing costs pressures relative to energy and raw material increases."

Keenan predicted it could take up to 18 months before prices drop. He said vitamin B and other letter vitamins would probably also experience price hikes, as China is the biggest player in those markets as well. He said FutureBiotics, because of its distribution agreement, would have to wait until the first of the new year to raise prices to compensate for the rising costs. He said it would affect about a half-dozen of the company's multivitamin products.

Sitkowski said it is difficult to predict where markets are headed. However, he added, "We see fundamental and sustainable costs pressures in the vitamin C market, which we see continuing for the foreseeable future."

However, Sonja Tuitele, spokeswoman for Boulder, Colo.-based Wild Oats Market, said the company had not been notified of any shortages or price increases from its supply chain as of Aug. 8. Several other manufacturers contacted for this article either declined to comment or also said that they had not experienced any price volatility of bulk vitamin C.

Vitamin C is the largest piece of the letter vitamin sales category in the conventional channel, with more than $129 million in sales in 2006, according to The Natural Food Merchandiser's latest Market Overview.

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