Market Report_Feb2015

FEBRUARY 2015

!

!

MARKET REPORT FEBRUARY 2015

!

[email protected] www.ultranl.com © Ultra International@2015 Pg.1

!

FEBRUARY SPECIAL

We are pleased to bring you this special edition as an interim report to our usual market reports every second month as we have some interesting information to share.

We have a short ‘special’ on the vanilla market, in addition to more information about Ultra’s 10 years in Europe, our group history, recent expansion in the Indian market and our next installment of Elementary Essential Oils.

ULTRA NEWS Indian Agency We are pleased to announce that we have appointed Karnataka Aromas as our exclusive distributor for our essential oils portfolio in the Indian market. Karnataka Aromas owns a 45,000 square feet warehousing facility, located centrally within the Bangalore city limits. This not only makes local dispatches easy, but also ensures quick access to all out-station bookings and prompt dispatch of orders. Karnataka Aromas distributes more than 2,500 tons of aroma chemicals and essential oils each year and represents the likes of BASF, Borregaard, Takasago, and our sister company PT Van Aroma.

FAFAI 2015 Jaipur The Ultra International, New Delhi Team along with the Ultra International B.V. and P.T. Van Aroma Teams were recently in Jaipur attending the XXII Seminar 2015. During the Seminar Karnataka Aromas were appointed Ultra International B.V.’s Indian Distributor for Essential Oils. 1,200 delegates attended the FAFAI seminar, with the majority being from the local markets.

HPCI Mumbai Exhibition & Conference The Ultra International’s, New Delhi team will once again be exhibiting at this year’s HPCI Exhibition and Conference which is being held in the Indian city of Mumbai March 4th-5th. We will be pleased if you can visit our team on stand 310. “Did you know Ultra’s history dates back 86 years!! That’s a lot of industry experience!! “ Ultra Past, Present & Future Ultra has a proud history and today is operating daily with the Sanganeria family’s 2nd and 3rd generations at the helm. Our group network covers Ultra International Ltd (New Delhi, India), Ultra International B.V. (La Spikenisse, Holland), P.T. Van Aroma (Jakarta, Indonesia) and Ultra International Far East Pte. Ltd (Singapore). On the next page you will see a time line marking key moments in our history, creating today’s Ultra Group of 2015. In our March edition we will share more about our work in the community through the ‘Sanganeria Foundation’, which was established in 2003 to help children and elderly people in many Indian communities.

!!

!!

!

!


!


!

86 YEARS OF PROUD HISTORY !!!!

Mr Jonpaul Howarth joins Ultra International B.V. as Vice President as part of the company’s growth strategy

in Europe

Implemented SAP across the business

Ultra in a partnership establish P.T. VAN AROMA in Padang, Indonesia for the processing of local Essential Oils. Today Van Aroma is one of the largest exporters of Patchouli Oil, Clove Oil and derivatives

The SANGANERIA FOUNDATION FOR HEALTH & EDUCATION was established as a non-profit organization focusing on improving the lives of millions of children and elderly citizens in India

ULTRA INTERNATIONAL LTD was established by Sant & Asha Sanganeria in Sahibabad to manufacture essential oils, aroma chemicals, fragrances and flavours at a purpose-built factory

Mr Sanganeria was a founder member of IFEAT. His son, Ravi Sanganeria now sits on the IFEAT Executive Committee and plays a lead role with the annual conferences and study tours

Mr Colin Ringleib joins Ultra B.V. as Vice President for the Americas

Ultra’s roots date back to 1929, when Mr. Prahalad Roy Sanganeria started perfumery compounding, and selling raw materials as LAKSHMI BOTTLE STORES Associates were:- W.J. BUSH & CO (UK); POLAK’s FRUTAL WORKS (HOLLAND); NARDEN (HOLLAND); SCHIMMEL & CO. (USA); CHUIT & NAEF (SWITZERLAND)

Ultra opens a new production facility in New Delhi with automatic dispensing for the compounding of flavours and fragrances. Arguably one of the best and most modern facilities across India and Asia

Ultra open a new 35,000 sq feet Creative Centre for the development

of flavours and fragrances in India and Asia

Two years after Ultra India established a trading office in Holland, ULTRA

INTERNATIONAL B.V. was established to distribute essential oils to the European and North American markets. This year marks 10 years in

Europe!

Ms Bhuvana Nageshwaran and Mr Prasenjit Mazumdar join Ultra

International. Two leading figures who still play an instrumental part in

day to day business

Mr Ravi Sanganeria joins the business as Director for International Business

Development. Today Ravi is Managing Director of Ultra Intl’ B.V. &

Ultra Intl’ Far East Pte Ltd

1929

1969

1977 1985

1987

2000

2003 2004

2005 2007

2009 2010

2011

2014 Ultra establish ULTRA INTERNATIONAL FAR EAST PTE LTD in Singapore as part of the group’s expansion into SE Asia

2013

Mr Sant Sanganeria established RADHA SALES CORPORATION,

importing and trading essential oils and aroma chemicals

1992

1989

Mr. Sant Sanganeria became the Chairman of IFEAT at the Vienna ICEOFF’92 Congress

Instrumental in organizing the 11th ICEOFF (’89) Congress in New Delhi

with a record 1200 delegates attending the event

Mrs Priya Sanganeria joins as Executive Director across the Ultra

Group of Companies

2013

Ms Bhuvana Nageshwaran and Mr Prasenjit Mazumdar join Ultra

International. Two leading figures who still play an instrumental part of

everyday business

Ultra open a new 35,000 sq feet Creative Centre for the development

of flavours and fragrances across India and Asia

Two years after Ultra India established

a trading office in Holland, ULTRA INTERNATIONAL B.V. was established

to distribute essential oils to the European and North American

markets.

!

!


!


!

VANILLA

Vanilla is produced in Madagascar, Indonesia and various South Pacific islands and it is a vital ingredient in many flavours and fragrances, particularly in the beverage industry. Although overshadowed in volume by synthetic alternatives it still remains an important ingredient in today’s markets. Madagascar and Indonesia account for about 70% of today’s global production of vanilla although India and PNG also offer their own varieties, which have found niche markets. Madagascar is the industry benchmark and a premium product. Referencing the last collected data from known sources you can rank the biggest producing countries as shown in the Table, with Indonesia significantly increasing output over the past decade. [UN Food & Agriculture Organization] The production of vanilla has a long history dating back to Aztecs using vanilla grown in central America to flavour their cocoa long before it was discovered in today’s world. The French and the Dutch took particular liking to vanilla as a flavouring and many plantations started in French and Dutch colonies around the world, giving places like Madagascar its 200-year heritage to this popular plant. In more recent times, the plight of Madagascan communities has been well documented due to the lack of demand from the market, resulting in the fall in price for natural vanilla. Thankfully with more ‘Fair Trade’ projects and greater awareness by end-users and more tendencies towards ‘sustainable’ products many communities have recovered and are returning to less desperate times. Here is a basic overview of the 2014 conditions as we look towards this year’s major harvest around June

Madagascar Harvest Period Jun - July Vanilla planifolia 2014 started with a shortage, as there was no carryover from the previous year’s harvest. That coupled with other producing areas also underachieving in recent years meant a difficult start to the year. However, things improved notably with Madagascar returning to much higher production levels not seen since 2010 by the end of the June/July season. It was estimated almost 2,000 tons of good quality vanilla beans were made available for export markets. The supply and demand balance has remained stable and comfortable for all involved during 2014. Growing export markets have kept prices high and with good vanillin levels in last year’s crop, many end-users covered for 2 years rather than the traditional 1 year. That could prove a shrewd move by some as early analysis suggests some difficulties ahead in 2015. Referencing a number of farmers who coves a variety of growing areas it appears the early flower buds seem to be much fewer than usual, some saying as little as 20% flowering compared to the previous year. Furthermore some farmers are now turning their attention to other products after too many years of suffering from flowers not being fertilized. These factors could lead to a reduction in good quality; exportable vanilla beans this year, ensuring prices remain firm. It is hoped that these cycles do not inflict longer-term damage to the recovering vanilla communities.

Rank Country Production (MT) 1 Madagascar 3,500 2 Indonesia 3,400 3 China 1,350 4 Papua New Guinea 400 5 Mexico 390 6 Turkey 290 7 Tonga 202 8 Uganda 170 9 French Polynesia 60

10 Comoros 42

2009 2010 2011 2012 Official Production (tons) 3341 2600 3500 3400

!

!


!


!

Uganda Harvest Period Jan-Feb | Jun-July Vanilla planifolia Today, vanilla is grown in the western, eastern and central regions of Uganda and the industry structure is composed of over 17,000 family based growers, who on average cultivate 0.1 ha of vanilla (only 5% of growers cultivate more than 0.8 ha), and produce 60 - 70 kg of green beans each (This is equal to 12 - 15 kg of cured beans). It is thought there are over 5,000 green bean collectors involved in the local market with approximately 10 processors and exporters. Uganda has two main crops, the first crop being now (January to February) which last year yielded around 120MT of vanilla beans, whilst the second smaller crop in June and July resulted in a production of 50MT. These figures can be a little distorted as around 40MT is thought to derive from neighbouring Tanzania. Separating the two countries output can be difficult as many of the same processors and exporters are involved and the two countries produce the same species with very similar organoleptic properties. Signs for this season’s crop remain positive and there is no real signs of any problems to this year’s supplies. Indonesia Harvest Period June Vanilla planifolia Exports remain flat as farmers wait for better market conditions to re-enter this market. Whether it will ever come no one knows but it’s estimated that Indonesia’s 2014 exports were still significant, but verifying the exact numbers is difficult. Exports were believed to be under 100 MT. There are also significant stocks in Indonesia being held for better market prices thought to be in excess of another 100 MT. Indonesian qualities are considered poor in the global market.

Papua New Guinea (PNG) Harvest Period May-June Vanilla tahitensis The PNG quality has a different flavour profile from the plantifolia variety, giving it more limitations for applications across the food and beverage markets. Recent production has been consistent and it is thought that 2015 will yield similar volumes “Vanilla is the second most expensive spice traded in the global market after saffron”

This table shows other interesting historical production volumes for vanilla around the world. With Madagascar now more settled and the world aware of the delicate balance of market prices ensuring future supplies we can move forward with confidence that this wonderful flavouring will be with us for many more years.



Production (tons) 2009 2010 2011 2012 China 1658 1300 1385 1350

Comoros 49 66 42 42 Mexico 524 395 362 390

PNG 400 425 385 400 Tonga 263 202 202 202 Turkey 244 270 287 290

!

!


!


!

LAVENDER | LAVANDIN

I’m confused as to why when I ask for lavender oil I get so many possible options? Everyone tells me it’s pure and natural but they have different names, different botanicals and of course hugely different prices, but why? We know all too well that with any essential oil the market is awash with ‘extended oils’, ‘blended oils’, ‘reconstituted oils’ and then there’s ‘natural’ and ‘nature identical’ and many many more creative names to consider. As with so many oils you can buy a lavender for as little as $20 / kilo or pay $200 /kilo and more for the premium grade material. To narrow it down to the two main pure oils we see the most in our markets, they are lavender and lavandin, the more common of which are lavender (lavandula angustifolia) and lavandin grosso (lavandula intermedia). There are a number of growing areas in the world, from the traditional English lavender, the modern day French and Bulgarian and the often referred to ‘special’ Australia & New Zealand material. However, commercially we tend to focus today on France, Bulgaria, China and some parts of Eastern Europe and Russia for our regular supplies. So what’s the difference? PLANTS, CULTIVATION & HARVESTING Lavender The life of a lavender plantation is up to 15 years, but this is highly variable depending on the growing conditions, the quality of the soil, the health condition of the lavender plants etc. This is the hardiest and most accommodating species and can survive winter temperatures of – 15°C or even more, but still requires a sunny position and free draining soil. Lavender does best in a low humidity environment and at higher altitudes. Lavender grown in areas of high humidity is far more prone to fungal diseases. If grown in a more humid environment, plant spacing should be increased, and the plants should be placed in an area with good air movement However the wider the spacing the more time and difficulties to harvest, as well as taking up more land space. Lavender grows best in soils that are well-drained, with a pH of between 6 and 8. Much of the world’s lavender is grown on stony, calcareous soils with a pH range of 7.5 to 8.5. Research has shown that plant health, longevity, and quality are better in somewhat poorer soils than in soils that are considered to be typically ideal for many other plants. The first crop is harvested during the second year of cultivation, while maximum productivity is reached in the 3rd or 4th year. Under optimum conditions, the yield will not decrease until the 8th year. Harvesting takes place sometime in July across Europe, depending on local conditions and plant health.

!

!


!


!

Lavender should never be harvested when wet as this may lead to discolouration and chemical changes within the oil, which can reduce the overall quality. Timing the lavender harvest is critical to oil yields and quality. During usual summer harvesting conditions, lavender is ready for processing when the flowers start to wilt and the flowering heads and around 6-10cm of the stalk are cut for processing. Once the flowers are fully blossoming it’s important not to expose the plant to any more sun as the heat can dry the oil within the flowers, thus reducing oil yields. The average annual production of lavender oil is 40 kg/ha. Lavandin Lavandin itself has a history of different species all with different compositions. The three most common being ‘Grosso’, ‘Abrialis’ and ‘Super’. In the past the most common was Abrialis but this has evolved over time with ‘Grosso’ now being the dominant type with over 1,000 MT being produced in France alone each year. The lavandin plant is a more robust hybrid and grows well at lower altitudes meaning larger plantations on a more commercial scale can be managed successfully. Some of the larger plantations in France are amongst the largest commercial plantations of any essential oils in Europe. Lavandin is mechanically harvested and distilled in much larger volumes than its lavender counterpart. Taking France as an example when we are comparing the economies of harvesting and distilling it’s the difference between 1,000 MT of lavandin versus 50 MT of lavender, 50 times larger! These economies bring a more cost effective product. Many of the same harvesting principles apply to lavandin; as the flowers start to wilt and never harvested when wet. The resulting lavandin oil has a strong herbaceous note and a fresher camphene-cineol like top note, which is likely due to the well-known constituents of 1,8-cineol, camphor and borneol. PRICES | MARKETS | APPLICATIONS Lavender Oil Within our markets the French quality commands a premium, often the higher altitude of the oil the higher the price. Elsewhere Bulgaria has taken the global lead in production with figures in 2013 around 120MT and in 2014 still 80MT despite a bad crop. It’s expected the Bulgarian crop will return to 2013 levels in 2015. France produces around 45-50MT, China 40MT and elsewhere in England, Australia and New Zealand a combined 6-7MT. Today good lavender oil is used for fine fragrances and aromatherapy only as it’s not commercially viable for other more commercial applications. There will always be a place in the market for ‘True Lavender’ as it has to be one of the most traditional, most distinguished and still the most popular odours in the world of fragrance today. Lavender (Lavandin angustifolia) Sustainable (5★ very sustainable) ★★★ Price / Value (5★ good value) ★★★ Good time to buy (5★ buy now) ★★★

!

!


!


!

Lavandin Oil For many when they smell lavender in products what they actually smell is lavandin. With around 1,400MT produced globally each year (France & Spain the dominant production areas) you are almost guaranteed when you read ‘contains lavender’ in your application, what you really smell is lavandin. Prices in the second half of 2014 were around 35% of that of lavender oil (if not less), which gives you a clear understanding why it is more popular and commercially open to more applications. Laundry, personal care and household products use lavandin in multiple of tons. The economies of mass production ensure the stability each year of supply and most importantly (for these applications) price. Lavandin Grosso (Lavandula intermedia) Sustainable (5★ very sustainable) ★★★★★ Price / Value (5★ good value) ★★★★★ Good time to buy (5★ buy now) ★★ WHAT ARE YOU BUYING? Interesting question for the uninformed. There are many industry standards suggesting you’re buying something ‘real’ but the labels like ‘38/40’ or even ‘ISO’ are meaningless. Frankly speaking, ask anyone who has researched lavender you could drive a bus through the ISO specification these days. Unfortunately these standards don’t keep up with today’s technology, natural evolutions and experts ‘creativity’. You can’t even hide behind the massive investment you have in the lab which says ‘we have a GC-MS’ so we know what we’re buying! You need to be able to interpret the results and most importantly look for what shouldn’t be there rather than what should be there – a common misunderstanding with many in our markets. Lavender is the most commonly adulterated essential oil in the market today. Many producers have been pulling the wool over the eyes of the market for years, if not decades but don’t worry if you’re a victim – most people would have been over the years. Chiral testing and verifying the botanic species are just some of the tips we can suggest to ensure you know what you’re buying and try to follow the markets. If after the summer harvests in 2014 you were still buying your real lavender for $40 /kilo (and that’s the price it’s always been!) then let that be a clear sign something isn’t right. Since 2008 lavender prices have fluctuated dramatically from $60 /kilo to $130 /kilo. As with all naturals some movements are expected but lavender has had more than its fair share. Lavandin is far more consistent in price given the plant’s more consistent yields and commercial production. 2014 market prices did vary from €25 early season to €30+ /kilo closed season but this is typical of a product that more and more companies rely on for their lavender notes. Adulteration in such a priced material is far less widespread as the commercial advantages aren’t there. Our tips are, know your supplier, know the market and ensure you have an independent or your own GC analysis, FAME (fatty acid, methyl ester) and chiral tests done on every batch.

!Ultra’s lavandin grosso comes from a large-scale plantation in France

!

!


!


!

Ultra would like to wish all our Chinese partners and friends a heartfelt Happy New Year.

Have a wonderful New Year and Festive Holiday and

we’ll see you back and refreshed in March!!

Documents

Market Report_Feb2015