A wave of cheap products from Asia is threatening the future of the European phytonutrients market, according to new research by market analysts Frost & Sullivan.
Increased competition and improved extraction techniques in the phytonutrients market mean that prices have been in steady decline for some time, and Frost's report suggests that many Asian producers are prepared to sell their products as loss leaders - i.e. below cost price - in order to gain European market share.
The study looks at the five most common phytonutrients - vitamin E, carotenoids, flavonoids, isoflavones and phytosterols - and forecasts that the total market, worth $585 million (€669m) today, will grow at a compound annual growth rate of 4.2 per cent to reach $780 million by 2008. However, some of the individual segments are forecast to have much higher growth rates.
But, over the same period, most phytonutrient prices are expected to be in constant decline. Price erosion is forecast to be the strongest restraint on revenue growth in the phytonutrient market despite higher sales volumes, Frost said.Anna Ibbotson, food programme manager with Frost & Sullivan, explained: "In the phytonutrients market, competition has risen and extraction techniques have improved. As a result, phytonutrient prices have started falling. This trend is expected to remain effective throughout the 2001 to 2008 period, and manufacturers must develop cost reduction strategies in order to maintain margins and competitiveness."
The report recommends that phytonutrient manufacturers must improve production costs and raw material supply and realise savings through economies of scale when the volumes allow, or by further improving production techniques.