IBISWorld anticipates sweetener prices to grow over three years to 2016 due to rising steadily rising input cost.
Los Angeles, CA (PRWEB) November 07, 2013
Over three years to 2013, prices for sweeteners have risen at an annualized rate of 1.2%. This relatively low growth rate hides price high volatility during the period, with prices falling dramatically before beginning to recover in 2012. In addition, per capita consumption of sugar and sweeteners has been slowly declining in recent years. In this highly competitive market, cheaper, lower-quality alternatives are available. According to IBISWorld analyst Jonathan Noury-Elliard, as more consumers opt for these less expensive products, suppliers of higher-quality sweeteners tend to lower their prices in an attempt to win back market share. However, because of high volatility in demand drivers and input costs, which are eating into vendors' profit margins, suppliers have not been able to lower prices.
Rising concerns regarding artificial sweeteners, particularly the controversy over aspartame and its potential side effects, has led to higher demand for natural and organic sweeteners, continues Noury-Elliard. Regardless, the Food and Drug Administration considers aspartame to be a safe sweetener and is found in such as Sweet'n Low. Nevertheless, with the public becoming more health conscious, suppliers are reacting to aspartame controversy and the reduction in sweetener sales by allocating more money to researching and developing in healthier and more natural options. During this period of decreased sales and mild price growth, buyer power has been mostly unaffected. Because the demand has shifted from artificial to natural and organic sweeteners, buyers needing artificial sweeteners have increased negotiating power because demand is low. At the same time, buyers have decreased power to negotiate prices for natural and organic sweeteners because demand for these products is rising.
The price of sweeteners varies greatly depends on the type of sweetener used. For example, an ounce of honey is more expensive than an ounce of agave nectar, which is more expensive than an ounce of artificial sweetener. Consequently, the sweetener prices vary widely. The range in individual commodity prices, such as agave nectar, is based on demand for that product, the ease in acquiring inputs and the price of those inputs. Organic sweeteners tend to be more expensive than manufactured sweeteners. Because of the volatility and risk associated with collecting bee honey, organic honey will be more expensive than manufactured honey or honey flavoring. Prices for artificial honey depend on the availability of manufactured chemical compounds and their associated price. Once sweeteners are appropriately priced based on input costs, weights are used to calculate the final price. The quantity of sweetener plays a critical part in pricing, and buyers are able to increase buyer power by purchasing large quantities. For more information, visit IBISWorld’s Sweeteners procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to aid buyers of sweeteners. These products include sugar, sugar substitutes, syrups and honey. These products are readily available for human consumption and can be purchased at supermarkets and through wholesalers. This report excludes other additives for consumption, such as salt, pepper and preservatives.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.