China's vitamin industry scale/demand outlook

1. Evolution of the global vitamin industry production pattern

Origin of Roche: As early as 3000 BC, the ancient Egyptians had discovered a substance that can treat night blindness, which is now vitamin A. The real industrial production of vitamins began in 1934, Switzerland Roche, thus creating a modern vitamin fast Development era. Roche once occupied 40% of the world's vitamin market and was once the world's largest vitamin manufacturer. In the 1990s, vitamin international giants such as Roche in Switzerland and BASF in Germany formed the "Vitamin Cartel Alliance", relying on technological advantages and capital strength to gradually monopolize the international market and earn huge profits.

A long time must be divided, and a long time must be combined. In May 1999, the U.S. Department of Justice announced that the two main conspirators of the Vitamin Cartel had reached a plea agreement with the Department of Justice and announced the end of the cartel alliance, which involved 21 companies, more than 200 individuals, and 16 vitamin products (including Carotenoids and multivitamins), generating sales of more than 30 billion U.S. dollars; fines for these companies or individuals total more than 5 billion U.S. dollars. Entering the 21st century, international giants have continued to integrate mergers and acquisitions. In 2001, BASF acquired Japan’s Takeda. In 2003, DSM acquired Roche’s vitamin business for 1.75 billion yuan. Ronald Planck transferred the vitamin business to Aventis. It was acquired by Adisseo. In 2006, China's central state-owned enterprise Bluestar Group spent 400 million euros to acquire Adisseo, and achieved a domestic A-share backdoor listing in 2015. At the same time, in view of the continuous strict supervision of environmental protection in major developed countries and the crackdown on monopoly price manipulation, some manufacturers withdrew or shut down related vitamin production, such as Eastman Chemical, Degussa, Merck, and Eisai Pharmaceuticals. Manufacturers withdrew from the vitamin market; Dutch DSM, German BASF and Lonza shut down their vitamin C and vitamin E production facilities in the United States. In 2008, Adisseo of France withdrew from the vitamin E market due to cost disadvantages.

China, BASF and DSM have formed a three-pole structure. Since the beginning of the 21st century, taking advantage of the adjustment of the production layout of international giants, my country has successively broken through the production technology blockade of related vitamin varieties. In 2006, my country's total vitamin output was 150,000 tons, accounting for 46% of the global share; by 2015, China's total vitamin output 260,000 tons, accounting for 70% of the global share. The competitive landscape of the world vitamin industry has formed a relatively strong degree of concentration after years of mergers and acquisitions and integration of enterprises, adjustment of production enterprises, and international transfer of industries. At present, the global vitamin industry production pattern has basically formed a three-pole production pattern with my country as the production center, and overseas BASF in Germany and DSM in the Netherlands.

2. Access conditions for China's vitamin industry

In 2018, the "Vitamin Industry Access Conditions" led by the Ministry of Industry and Information Technology is expected to be published after the new version of the "Industrial Structure Adjustment Guidance Catalog" is announced. In January 2018, the National Development and Reform Commission has launched an investigation into the vitamin industry in conjunction with the Ministry of Manual and Information Technology and classified it into the ranks of excess industry. At that time, the National Development and Reform Commission stated in a high profile that it would study and formulate five measures to limit the production of vitamin C. From this, it can be clear that the goal of the "Vitamin Industry Access Conditions" is to eliminate the industry, increase concentration, and stabilize product prices. The biggest winners are undoubtedly the top five domestic industry leaders.

"Vitamin Industry Access Conditions" will regulate the vitamin industry in terms of yield, energy consumption, technical level, environmental protection, and safety. Analysts pointed out that the access conditions must be stricter than before. A group of small and medium-sized enterprises that lack competitiveness and fail to meet environmental protection standards will be eliminated and will accelerate the integration of the vitamin industry.

The vitamin industry policy and environment pointed out that entering 2019, the Chinese government will fully implement the rectification of the vitamin production industry, and new relevant policies and regulations will also appear one after another.

Vitamins are a kind of trace organic substances that humans and animals must obtain from food in order to maintain normal physiological functions. They play an important role in the growth, metabolism and development of the human body. Vitamins neither participate in the formation of human cells nor provide energy for the human body.

Vitamins are a class of organic compounds necessary to maintain good health. This kind of substance can neither be the raw material of body tissue nor the source of energy in the body, but a kind of regulating substance, which plays an important role in material metabolism.

At present, the global vitamin production capacity is mainly concentrated in China's "5 big families" and the rising star Shandong Luwei Pharmaceutical. These five companies account for more than 90% of the global market share, with an output of more than 100,000 tons, and the global vitamin prices are basically controlled by the five domestic companies. However, over the past few years, the price has been running wild, and the "five big families" have struggled to control the situation. The above is all the content of the vitamin industry policy and environmental analysis.

3. Market scale of China's vitamin industry

1. Market size

China's vitamin production in 2019 was 349,000 tons, a year-on-year increase of 4.4%, accounting for 77.0% of global production; the market price dropped from a high level, and the market value shrank to 3.67 billion US dollars; China's vitamin export volume in 2019 was about 269,000 tons, an increase of 6.7 year-on-year %, the export value was 2.83 billion US dollars, down 16.3% year-on-year.

2. The expansion of production capacity makes the structure different, and the adjustment of the value chain structure enhances market competitiveness

From 2016 to 2018, the price of vitamins in the market rose sharply, attracting attention from the capital market. Industrial capital and financial capital have become more active. Leading companies have adjusted their resource structure to improve efficiency, achieve strategic adjustments, and enhance market competitiveness. New production capacity, existing idle production capacity or expanded production capacity previously invested in construction will be gradually released in 2019, such as CALCIUM pantothenate, vitamin D3, vitamin B6, vitamin B2, Folic Acid, vitamin B12, vitamin C and other products.

It remains to be seen whether these projects can be successfully implemented and put into production. However, the new production capacity of vitamins since 2018, especially the new entrants, has had a greater impact on the market, which has also made the competitive landscape of some vitamin products tend to be dispersed. There is a gap between the technology, cost, marketing and other aspects of the original enterprise. The market competitiveness is not strong, and low-level repeated construction is still the main task. For leading companies, although new entrants join the market competition, leading companies optimize the value chain from various aspects such as raw material supply, production technology, business model, and sales channels to seek sustainable profitability. In the future, the competition chain of the vitamin market will continue to extend upward and downward. In addition to the advancement of production technology and product quality assurance, the integration of upstream key intermediates and the control of downstream channels will become core competitiveness.

4. Demand prospects of main varieties of vitamin industry

1. Vitamin E:

Despite the rapid development of vitamin E in my country in recent years, the per capita consumption of vitamin E in my country is far below the world average, and the domestic potential market is huge. As a human health care product, the per capita consumption of VE in the United States is 10-15 grams/person-year, and Japan’s 6.5 grams/person-year. If calculated at 1/10 of the United States, the demand for VE is also very large. The actual amount is much smaller than this. As a food additive, China has formulated hygiene standards, that is, 100-180 mg/kg for sesame oil, margarine, and salad oil dairy products; 40-70 mg/kg for infant food; and 10-70 mg/kg for milk beverages. 20 mg/kg; fortified beverages 20-40 mg/kg. Therefore, the demand for natural vitamin E in my country's health care, medicine, food, cosmetics, and feed industries will increase steadily.

2. Vitamin A:

Vitamin A is widely used in over-the-counter drugs, nutritional supplements, feed additives and food processing industries. With the improvement of our people's living standards, the demand for vitamin A will further increase. In the overall concept of food fortification of the National Public Nutrition Project Group of China, vitamin A, vitamin B1, vitamin B2, folic acid, niacin, iron, Iodine, zinc and calcium are identified as the main types of nutrition fortification in my country. It is foreseeable that with the full implementation of food nutrition fortification in my country, the market demand for vitamin A will greatly increase.

3. Vitamin C:

In Asian countries dominated by China, there is a serious imbalance between the production and consumption of vitamin C. Most of my country's vitamin C depends on exports, and domestic consumption is seriously insufficient, which is far below the per capita annual consumption of developed countries in Europe and America. Therefore, the domestic vitamin C market has huge potential. If calculated by 1/5 of the per capita annual consumption of developed countries in Europe and America, there is room for 100% growth in domestic demand.