Palo Alto, Calif., March 14 - The growing demand for sugar-free, low-calorie, and low-glycemic index (GI) foods is driving the growth of the polyols markets. Despite the growth forecast for this market, the major challenge facing manufacturers is that of high production costs and increasing raw material costs. Research and development is likely to be instrumental in reducing production costs, while economies of scope are likely to offer cost advantages to manufacturers in the future.
New analysis from Frost & Sullivan, Strategic Analysis of the U.S. Polyols Markets, reveals that the market earned revenues of $516.7 million in 2005 and estimates to reach $822.1 million in 2012.
"The key factor driving the growth of polyols in the U.S. is their obvious health benefits," says Frost & Sullivan Research Analyst Ashwin Sukumaran. "The low caloric content of polyols, combined with its non-cariogenic and low-GI properties, is instrumental in increasing its popularity as consumers become more concerned about their health and are more aware of the health risks in excess consumption of high-sugar foods."
The growing rate of diabetes and obesity in the United States has resulted in increased consumption of low-calorie and low-GI foods. Sugar-free products are now highly in demand in application areas such as chewing gum, desserts, baked goods, and confectionery. Polyols are ideally placed to capitalize on these trends as they offer manufacturers sweetness comparable to that of sugar along with the ability to label their products as being sugar-free or reduced calorie.
Despite the multiple benefits derived from the use of polyols, the major challenge that manufacturers are required to face is that of high costs. Polyols are extracted and synthesized from fruit and vegetable matter, which leads to high costs of production. This combined with the specter of increasing raw material and energy costs means that polyol manufacturers are likely to face increasingly tighter margins.
"Techniques for fermenting and extracting polyols are traditionally more expensive than chemical synthesis, through which artificial sweeteners are made," explains Sukumaran. "Moreover, strong capacity utilization in the corn wet milling industry has pushed up prices for corn syrups, which are used to produce polyols thus narrowing the profit margins."
The key to managing high production costs will be research and development in terms of production processes. Recent research using modified strains of bacteria look promising in terms of offering a cheaper method of manufacture of polyols. Another important source of potential competitive advantage for polyol manufacturers will be economies of scope. With these in place, manufacturers are likely to sustain their businesses in a healthy marketplace.