Frost: Production Cost Cutting Needed in Competitive Market

LONDON—European suppliers of nutraceutical ingredients may need to cut production costs in order to remain competitive with Asian competitors, according to a new market analysis report from Frost & Sullivan (www.food.frost.com). The study, “European Vitamin A, C and E Markets”, found revenue in this market totaled $394.3 million in 2004, and could grow to $534.1 million by 2011. However, Asian suppliers’ access to less expensive labor, lower overhead costs and government subsidies appear to be driving down prices in these vitamin markets. Frost analysts suggested developing new production technologies to lower costs, sourcing less expensive raw materials and improving supply chain efficiency may help maximize cost efficiency in production.

While the animal feed market is currently the largest segment for vitamins A, C and E in Europe (approximately 57 percent), Frost expects this percentage to decline as opportunities open in the food, beverage, supplement and cosmetic markets. “While increasing health awareness and expanding application segments have contributed to continued growth, European vitamin companies may have to understand that hardhitting and increasingly competitive times have arrived in many markets,” said Vivek Upreti, research analyst with Frost. “This essentially calls for a proactive approach, wherein they have to take immediate action to keep pace with the times, or wait and watch their profits fall.”