Bad weather and overharvesting are putting a crimp on the world's supply of licorice root extract, also known as glycyrrhizin.
Beijing Gingko Group, a Chinese manufacturer of licorice extracts, reported that prices for fresh roots collected in Western China jumped this winter, at one point going from 3.8 Chinese yuan per kilogram (or $0.58) to 5.1 Chinese yuan per kilogram (or $0.78).
This is a 34 percent increase.
Fortunately, these supply problems issues have not been a problem for the United States' largest supplier, Mafco Worldwide Corp based in Camden, N.J. The company sells the Magnasweet ingredient line of licorice root extracts.
"Mafco keeps a three- to four-year inventory of licorice root on hand, so we don't have the supply problems as some of our other competitors," said Frank Adao, director of the Magnasweet line.
Mafco is the world's leader of licorice extract and derivative products approaching 60-65 percent market share worldwide. Magnasweet is sold to 600 customers in 51 countries.
Mafco has been spared the supply problems mostly because it doesn't source its licorice root from China. It also has long-standing relationships with its wild harvesters.
"Our primary harvesters are in Afghanistan, Azerbaijan and regions of the former Russian republic," Adao said. "We have collection people that we represent or joint ventures with people. We've had relationships with them for generations."
Beijing Gingko, which claims to be the world's third-largest supplier, producing a range of 30 different licorice extracts, has said that replanting is urgently needed in Western China.
In early 2011, Japanese firm Mitsubishi Plastics announced plans to begin cultivating the sweet plant in Japan to reduce the country's dependency on Chinese-sourced glycyrrhizin. The extracts are found in nearly three-quarters of all herbal medicines in Japan. But what impact the earthquakes might have on these plans is not yet clear.
How this affects stevia
Traditionally, demand for licorice extract has come from the tobacco and confectionary industries. The concentrated and purified extract of the licorice roots, Glycyrrhiza, functions as a flavoring agent and enhancer, as well as a debittering agent.
Its active compound, glycyrrhizin, is a very sweet glycoside occurring in the roots of the plant. It is increasingly being used in food and beverage products as a modifier to eliminate the bitter note of stevia.
How these price hikes will affect manufacturers looking to use the all-natural, no-calorie sweetener, stevia, remains unclear. Stevia pioneer Jim May, founder of Wisdom Natural Brands and its flagship ingredient, SweetLeaf brand whole stevia extract, asserts that it could affect only those using the Reb-A glycoside and not those who use the whole leaf.
"People think stevia has a bad aftertaste, but actually the bad taste comes from all the alcohols and chemicals used in the standard extraction process, not the leaves," said May.