Dive Brief:
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Demand for xanthan gum is expected to cause global sales volume to double, from $651.5 million at the end of 2015 to $1.25 billion by 2024, according to a new market report from Transparency Market Research.
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Because it's virtually irreplaceable as an emulsifier or thickener, as the world's population grows, demand for this product is likely to skyrocket.
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Also pushing demand is the growth in popularity, particularly in developing countries, of processed and convenient foods — both of which use lots of xanthan gum.
Dive Insight:
Xanthan gum, made from fermented sugars and bacteria, is used in many products ranging from salad dressing to egg substitutes to gluten-free baked goods. To meet expanding demand for xanthan gum, foreign producers — mainly in Austria and China — began mass producing a large amount of the ingredient and pushing it onto the U.S. market at extremely low prices. As that issue was dealt with through federal and trade policy, another arose: Consolidation within the production industry. With a smaller number of producers dominating the market, the risk of price manipulation increases.
Particularly in a time of rapidly rising demand, as is predicted for the 2016-2024 period, it could be tempting at some point for producers to push prices up at a rate higher than that rate of inflation. Adding to that temptation is the fact that the manufacturers of guar gum — a popular plant-based emulsifier — could have difficulty meeting demand due because of the seasonality of guar seeds.
Compounding this problem is the fact that xanthan gum isn't only demand from makers of bakery and confectionery items, dairy and ice cream products, meat and fish processors, beverage makers, and producers of sauces and dressings. It is also used by other diverse industries including oil and gas drillers, pharmaceutical companies, and manufacturers in the personal care sector. A larger, wealthier population is sure to push demand in those areas, just as much as for processed foods.