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Symrise increases prices on cost pressures

By Simon Pitman , 08-Jul-2008

Until now it has been raw material and chemical providers that have been increasing their prices, but Germany-based active ingredients player Symrise now joins the growing list.

The company announced today that its Scent and Care division is increasing prices with immediate effect because of the rising cost of energy, transportation and raw materials. It said that in selected areas of its ingredients portfolio, 'prices will increase by up to 10 per cent and more'. Price increase are product specific "We have a diversified portfolio and the price increases are not across the board," Achim Daud, global president Scent and Care told CosmeticsDesign-Europe. "We have been carefully considering specific issues relevant to key areas of the business and our fragrance products are likely to be hit the hardest by the price increases," he added. Daud went on to explain that the industry is emerging from a ten year period of stable or falling commodity prices but that current market speculation has now turned the situation on its head. "On top of that production costs are under pressure from all areas, with even the implementation of the EU REACH legislations making a significant impact," Daud added. Further increases inevitable And with the current global economic pressures showing no signs of letting up in the short- to medium-term, Daud believes that further price increases are inevitable. Company CEO Gerold Linzbach said that the move to increase prices would not prove popular with its clients but added that it was 'unavoidable' given the current market conditions. "We have been able to compensate some of it through efficiency improvements, and the dollar rate helped to a certain extent. But as the trajectory shows no sign of changing, we now have to pass some of the increases on to the market," Linzbach said. Active ingredient players follow suit Until now it has been the big chemical and raw ingredients suppliers such as Dow, BASF and Sun Chemicals that have been linked to price increases that exceed the 10 per cent barrier. However, now those price increases are being passed further down the chain to refined and active ingredients players like Symrise, which makes it likely that other players in this category will follow suit in the near future. A key factor to all manufacturers is the price of oil, which is currently hovering at record levels of around $145 a barrel. With many financial experts predicting that prices could hit $200 a barrel by the end of the year, the outlook is likely to remain extremely challenging for all concerned.

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