The heightened pressure by the Chinese government on polluting companies is now also affecting the sweetener industry. In the city of Shijiazhuang factories are (temporarily) being closed down to prevent smog and emissions which are harmful to public health in the major cities. These factories include a large number of processors of raw materials for the production of sweeteners.
Chinese factories forced to close for four months
Shijiazhuang is not the only location confronted with far-reaching government measures. Temporary closures are also planned in the province of Shandong. There, a number of different factories are being forced to close in November for a period of at least four months. For the time being it would appear that this is not a one-off measure and that temporary or permanent closures like this can be expected more frequently in the coming years.
Almost impossible to prevent shortages
In view of the fact that China produces approximately 80 to 90 percent of sweetener ingredients (a growing market which is estimated to be worth 111 billion dollars by 2020), the closures are affecting consumer markets and food producers worldwide. Although alternative production locations do exist, it is almost impossible to prevent this situation leading to huge shortages.
Production capacity outside of China almost full
The European company, HYET Sweet, is the only sweetener manufacturer with significant production capacity in Europe and an extremely dense network of raw material suppliers outside of Asia. As CEO Ad Timmermans explains, "The measures by the Chinese government are having an enormous impact. In a short period of time we have received many telephone enquiries from worried companies that want to secure supplies of their sweeteners. The question is not, however, whether global shortages will occur, but when. At the moment there is still capacity at other product locations around the world, but these plants will soon be full. Our large network is able to cope for the time being, partly due to the capacity we have created as a precaution. As soon as the closures take effect, the consequences of the Chinese government measures will be visible on the shelves in every supermarket in the world within a couple of weeks or months. Certain products will simply be impossible to make."