(Yicai Global) Feb. 10 -- Chinese makers of erythritol, a sugar substitute, expect their net profits to have fallen last year because of changes in supply and demand, Covid-19, and competition.

Shandong Sanyuan Biotechnology recently said that net profit likely fell 66 percent to 71 percent to between CNY158 million and CNY182 million (USD23.2 million and USD26.8 million) in the 12 months ended Dec. 31 from the year before.

Consumers’ health concerns following the start of Covid in 2020 drove the sugar-free drinking market, with erythritol prices doubling to CNY30,000 (USD4,412) a ton in 2021. But last year, erythritol slumped by CNY14,000 to CNY16,000 a ton in April and May, and the price was CNY14,000 last month.

China’s beverage sector languished last year, as Covid controls hindered consumption, Zhu Danpeng, deputy director of the Guangdong Food Safety Guarantee Promotion Association, told Yicai Global. As a result, big erythritol users, including Genki Forest, saw a big slowdown in sales, Zhe added.

The requirements to make erythritol are also very low, so many producers blindly expanded their capacity and many competitors entered the market, further intensifying market competition and the disparity in supply and demand.

Dongxiao Biotechnology and Yufeng Industrial Group priced erythritol at as low as CNY11,500 and CNY9,500 (USD1,400) a ton, respectively, on Feb. 8, Yicai Global found.

Meanwhile, Chinese producers of other types of sugar substitutes, including mogroside, stevioside, acesulfame potassium, and sucralose, have predicted big 2022 profit leaps.

Editors: Shi Yi, Futura Costaglione