CBI Product Factsheet: Gum Arabic in Europe

Practical market insights for your product European food and beverage manufacturers appreciate the versatility of gum Arabic. However, they are concerned about the reliability of supplies. More sources of gum Arabic would reduce their dependency on the traditional suppliers although European trade is highly concentrated.
Product definition
Gum Arabic is also known as acacia gum and is a natural exuded gum from two species of the acacia tree; Acacia senegal and Acacia seyal are the two most commercially important although there are other closely related species of Acacia gums. These trees grow in the gum belt of Africa, which stretches from Senegal in the West to Somalia in the East. After the bark of the tree is cut, gum exudes naturally in 3-8 weeks. The collection of the gum from the dispersed trees is labour intensive and mainly undertaken by pastoralists. Gum arabic from A A. senegal is a pale to orange-brown coloured solid, which breaks with a glassy fracture. For this reason it is also known as hard gum whereas A. Seyal is known as flaky gum. The gum consists of a mixture of arabinogalactan oligosaccharides, polysaccharides and glycoproteins and is widely used in the food industry, it has E number E414. The gum is very soluble in water and forms solutions over a wide range of concentrations without becoming highly viscous. Gum Arabic is also used in technical industries. Codes for gum Arabic: Harmonised System (HS): 130120 E-number: E414 Chemical Administration Service (CAS): 9000-01-5

Product specification Quality

General specifications for food additives including thickeners are defined by the European Commission in Regulation 231/2012: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:083:0001:029 5:EN:PDF Gum Arabic Senegalese consists of galactose (44%), arabinose (27%), glycuronic acid (14.5%),rhamnose (13%) and nitrogen (0.36%) Gum Arabic Seyal consists of arabinose (46%), galactose (38%), glycuronic acid (6.5%), rhamnose (4%) and nitrogen (0.15%) Prevent contamination by sand and bark by training collectors in proper cutting, keeping facilities and equipment clean and cleaning the gum if necessary Buyers generally prefer a light colour and minimum odour. Minimise variance in quality within a batch by following strict grading standards.
Photo example

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CBI Product Factsheet: Gum Arabic in Europe

Senegal grade is primarily used as a stabiliser/emulsifier in beverages and Seyal grade is commonly used for coating confectionary and as a soluble dietary fibre. Seyal grade is generally considered as inferior quality. Spray-drying offers an interesting value addition opportunity. Most food manufacturers and especially beverage manufacturers require a high solubility. You can further improve solubility by using a smaller mesh size for pulverisation.

Labelling Enable traceability of individual batches Use the English language and EU measures (e.g. kilograms) for labelling unless your buyer has indicated otherwise Labels must include the following: o Product name o Batch code o If the product is destined for use in food products o Name and address of exporter o Best before date o Net weight o Recommended storage conditions Photo example Organic, Kosher and Halal markings are optional

Packaging
Thickeners are hygroscopic and should therefore be packaged in waterproof material, such as paper bags with a plastic (e.g. polyethylene) lining. Enable re-use or recycling of packaging materials by using bags made of recyclable material (e.g. paper)

Legislative requirements
Considerations for action: Familiarise yourself with the concerns of the end-users of your products by checking EU legislation on Additives, enzymes and flavourings in food

Additives, enzymes and flavourings in food: The EU has set a list of permitted additives and enzymes and a number of requirements for flavourings and their use in foodstuffs intended for human consumption.

Hygiene of foodstuffs: Food business operators shall put in place, implement and maintain a permanent procedure, or procedures, based on Hazard Analysis Critical Control Points (HACCP) principles. This also applies to the import of food to the EU and export from the EU. Contaminants in food: The EU has laid down maximum levels of contaminants and criteria for microbiological contamination of food.

Ensure compliance with EU legislation on Hygiene of foodstuffs (HACCP)

Inform collectors on good practices and clean the gums to comply with requirements regarding Contaminants in food Ensure that you comply with the maximum levels and criteria for Microbiological contamination of food Due to these strict regulations, it is no longer possible to simply crush gum Arabic to make a powder for export. Export the gum in its original form instead

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CBI Product Factsheet: Gum Arabic in Europe

Non-legislative requirements
Good Manufacturing Practices: GMPs are not obligatory for producers of food ingredients, but compliance is a major buyer requirement. Regulation (EC) 834/2007 on organic agriculture: The EU has established requirements on the production and labelling requirements with which an organic product of agricultural origin must comply in order to be marketed in the EU as organic. Food safety management: Buyers commonly require their suppliers to have a quality/food safety management system in place. These systems require companies to demonstrate their ability to control food safety hazards in order to ensure that food is safe at the time of human consumption. Considerations for action:

If you choose to obtain a certificate for organic production, find out more about Organic production and labelling

Documentation: Buyers need well-structured product and company documentation. Suppliers must have detailed technical data sheets available upon request, including an analysis of the product, which confirms the absence of contaminants. Representative samples: Supplier integrity is a major issue in this market. Your sampling method should result in lot samples that represent what you can deliver in the quantities, quality and lead time as specified by the buyer. Delivery terms: Pay attention to strict compliance with delivery terms as agreed upon with your buyer. Website: European buyers look for credible suppliers. You can improve the perceived credibility of your company by developing your website accordingly.

Suppliers can apply a basic HACCP system. However, if they aim to supply food manufacturers more directly, it is necessary to have a certified food safety management system recognised by the Global Food Safety Initiative, such as ISO22000, BRC or IFS: Food Safety Management Systems Visit the website of the Global Food Safety Initiative for more information Prepare Technical and Safety Data Sheets in compliance with EU Regulation N0 453/2010

Familiarise yourself with international delivery terms

The website of Sayed Elobied provides a good example of a website that enhances the credibility of a company

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CBI Product Factsheet: Gum Arabic in Europe

Trade and Macro-Economic Statistics

Figure 1: European imports of gum Arabic, in million Figure 2: Destinations of European re-exports of gum Arabic, in million
140 120 100 Other Germany 80 Germany UK France 60 40 20 0 2008 2010 2012 UK Ireland China US

80

70
60 50 40 30 20 10 0 2008 2010 2012 2008 2010 2012 Developing countries Other supplying countries

Other EU and EFTA countries Italy

Sweden

Source: Eurostat, 2013

Source: Eurostat, 2013

Trade in gum Arabic is highly concentrated European traders play a major role in global gum Arabic trade. An estimated 80% of global production is destined for Europe. Nexira (http://www.nexira.com), a French company, is a very strong player in global gum Arabic trade (see fig 1). European demand for gum Arabic is increasing slowly. In the past 5 years, demand increased by an estimated 0-5% annually. Major drivers behind the growth include new product development and substitution of synthetic thickeners. As gum Arabic is not produced in Europe, demand has to be met by imports. The value of European gum Arabic imports decreased by 5.6% in 2008-2010, as a result of lower prices. In this period, average import prices decreased from 1.62/kg to 1.48/kg. Between 2010 and 2012, prices for gum Arabic increased again to 1.86/kg. Consequently, import values also increased. Sudan dominates global gum Arabic supplies, as their gum is of the preferred Senegalese variety and gum collection is widespread and cheap. Nonetheless, other countries in the gum belt, which stretches from Senegal to Somalia, are also potential suppliers. European importers welcome new origins of gum Arabic. Currently, they are strongly dependent on Sudan, which presents a high risk. Sudan is a politically unstable country, which affects gum Arabic supplies. As the European food industry is expected to continue increasing its demand for natural thickeners, demand for gum Arabic is expected to grow slowly. Please refer to CBI Tradewatch for natural

Considerations for action: Buyers in the United Kingdom and Sweden are interesting alternatives to traditional buyers in France and Germany, as the former considerably increased their imports in the period 2008-2012

Please refer to the section Market trends for more information

If you are based outside Sudan, stress that you offer an alternative source of gum Arabic in your promotion

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CBI Product Factsheet: Gum Arabic in Europe

colours, flavours and thickeners for more trade statistics.

Market trends
Considerations for action: Dietary fibre: Gum Arabic has potential as a Be careful with health claims in your dietary fibre. European consumers, who are promotion, but keep track of possibilities to increasingly looking for healthy products, are make health claims related to dietary fibre interested in dietary fibres. However, the and polysaccharides European Food Safety Authority (EFSA) has Please refer to CBI Trendmapping for more not yet approved any health claims related to market trends. gum Arabic nor dietary fibres. Moreover, the claim source of dietary fibre may only be made if a product contains more than 3 g of fibre / 100 g. As gum Arabic is generally used in concentrations below 1%, it is unlikely that the addition of gum Arabic alone will enable use of this claim.

Market Channels and Segments

Market channels
Developing Country European market Segments

Agent

Distributor Flavourings

Collector

Exporter

Importer

Beverages

Confectionery Blender Dairy

Large importers protect their market in Europe A lot of gum Arabic is only cleaned and graded before export to Europe. Most value addition by processing is carried out in Europe by a small group of importers. These processors have complex industrial production systems for dissolving, mixing, multiple filtering, pasteurising and atomising. European trade in gum Arabic is not very transparent, as the large importers are protective of their market, especially in France.

Considerations for action: Joint ventures with European companies can provide access to capital and the knowledge needed for processing activities, such as spray drying Please refer to CBI Market channels and Segments for a visualisation of market channels and more information

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CBI Product Factsheet: Gum Arabic in Europe

Market segments
Table 1: Major segments and applications for gum Arabic Segment Confectionary Application Chocolate, sugar and chewing gum Particularities Gum arabic (Seyal) can be used as a thickener, a glazing agent and to prevent sugar crystallisation Gum arabic (Senegal) can stabilise emulsions of oil and water Functions as a carrier to prevent flavour loss Frozen dairy desserts, mousses etc. Alimentary fibre Stabilising agent Gum arabic (Senegal) consists of 85% of soluble dietary fibre

Beverages

Beverage emulsions

Flavourings Dairy Nutrition

Large price differences exist between different types of gum Arabic Most European food manufacturers prefer the Senegal species of gum Arabic. The Seyal species fetches lower prices. Higher grades of gum Arabic fetch significantly higher prices. In general, interest in organic thickeners remains small. European food manufacturers can label their products as organic using non-organic gum Arabic due to an exception rule in EU legislation. EU legislators allow the use of small amounts of non-organic ingredients if an organic equivalent is not widely available. Nonetheless, interest in organic gum Arabic is increasing. Prices Prices are stable again after turbulent period Sudan dictates global prices for gum Arabic. In the past decade, prices for gum Arabic fluctuated strongly due to political unrest in Sudan. The lowest prices for cleaned and spray dried gum Arabic Senegalese amounted to $ 2,500/ton. The highest prices amounted to $ 8,000/ton. Recently, prices came down slightly to around $ 3,000/ton FOB for unprocessed gum Arabic Senegalese. Since the annual harvest in March/April, enough material has been available to satisfy demand. Therefore, prices are expected to remain at this level for some time. The following price breakdown shows which mark-ups are applied by some of the intermediaries.

Considerations for action: Find out what type of acacia trees grow in your region and price your products accordingly Train collectors to maximise collection of high grades and cut the gum properly Apply strict grading standards to benefit from high price premiums for high grades

Considerations for action: Monitor harvests in Sudan to anticipate price developments The following website provides frequent market reports: http://www.agrigum.com Ensure that your prices reflect the quality of your product. If you supply the Seyal variety, you cannot compare your price with that of Senegalese Producers can add value by cleaning the gum

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CBI Product Factsheet: Gum Arabic in Europe

Figure 1: Price breakdown for gum Arabic, mark-ups in %

Source: Meschede and ProFound, 2013

If agents are involved, they typically receive a commission of a few percent (3-4%). However, their actual profit margin strongly depends on volumes sold and gross margin. Blenders add up to a few hundred percent depending on their activities, such as spray drying, R&D and blending. Distributors add up to 60% to the value of the product if orders are very small (<50kg).

Considerations for action: You can use the sales network of agents to find a suitable buyer

If you have successfully implemented a strict food safety management system, you can consider spray-drying to add value to your product Blending of different ingredients, including gum Arabic, requires a great deal of R&D and intensive cooperation with the European food industry

Market competitiveness
The power is in the hands of the major importers Gum Arabic is difficult to replace, as it is a highly versatile product. Nonetheless, texturising systems containing certain combinations of ingredients have the potential to replace gum Arabic. Unreliable supplies of gum Arabic force food manufacturers to look for substitutes. They cannot cope very well with shortages. Although collection of gum Arabic is very accessible, processing requires significant investments. Nigerian supplies of gum Arabic have a bad reputation with respect to quality consistency. Supplies often contain different gum varieties and gum qualities. Sudan supplies primarily Senegalese grade, while Nigeria and Chad supply a lot of Seyal grade. Their share in global trade is growing. Nonetheless, the high quality gum Arabic from the Kordofan region in Sudan remains the first choice for most European buyers. European trade in gum Arabic is very concentrated. A few buyers (i.e. processors) control most of the market. Their negotiating power is very strong. European importers are looking for new sources of gum Arabic outside of Sudan so their production can become less dependent on production in Sudan, where supply is influenced by the political situation. Considerations for action:

Traders of gum Arabic must keep large stocks to ensure stable supplies Collectors of gum Arabic can cooperate to purchase and operate processing equipment. Strict sorting and grading is of major importance, as value decreases sharply when standards are not met

If you supply high quality gum Arabic, you will have to compete mainly with Sudanese suppliers. If you supply low quality gum, you will also have to compete with Chad and Nigeria

If you can produce gum Arabic outside of Sudan, you can promote this as a Unique Selling Point. Please refer to CBI Market Competitiveness for more information

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CBI Product Factsheet: Gum Arabic in Europe

Useful sources
Trade fairs Visiting or even participating in trade fairs is highly recommended as one of the most efficient methods of testing market receptivity, obtaining market information and finding prospective business partners. The most relevant trade fairs for exporters of gum Arabic are: SIAL (http://www.sialparis.com/) Food Ingredients Europe (http://fieurope.ingredientsnetwork.com/) Anuga (http://www.anuga.com) Alimentaria (http://www.alimentaria-bcn.com)

This survey was compiled for CBI by ProFound Advisers In Development in collaboration with Sector Expert Andrew Jones Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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