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COVID-19 Impact on Sorbitol Market in Food and Beverage Industry
ANALYSIS ON IMPACT OF COVID-19 PANDEMIC IN THE GLOBAL SORBITOL MARKET
Sorbitol is made naturally from corn, fruits, berries, and seaweed. Commercially, sorbitol is used to add sweetness and texture to the product. Besides taste, sorbitol is also used as a preservative agent to preserve moisture. Sorbitol is widely used in the pharmaceutical industry as it supports oral and digestive health. Due to its sweet taste, consumers highly prefer sorbitol as a sugar alternative. Moreover, the sudden outbreak of COVID-19 has led to a decrease in the demand for sugar worldwide and has impacted the sugar industry which is driving the demand for sorbitol. The COVID-19 has disrupted the entire supply chain, affecting the manufacturers' consumption pattern and investment plans by forcing companies to adopt different and new operations policies with an eye on health and well-being problems for manufacturers in the production line.
The outbreak of COVID-19 is directly affecting the production and supply chain of sorbitol. So, the manufacturers of sorbitol are working on their business strategy to stabilize the market. During the second and third waves of COVID-19, which again hit many of the countries, the manufacturers cannot stabilize the market. The manufacturers ensure safety in the manufacturing process by following the government's norms for the prevailing situations.
AFTERMATH OF COVID-19 AND GOVERNMENT INITIATIVE TO BOOST THE MARKET
After the outbreak of COVID-19, the consumers have become more conscious about their health and looking for food products that offer them health benefits. Also, the awareness regarding the harmful effect of sugar on health is increasing among consumers, and therefore, people are more inclined towards low-calorie and low-sugar food products which will drive the market. Initially, with the restriction on movement, de-globalization, loss of income, restriction on import and export of products, restriction in the supply of raw materials, all these factors have impacted the sorbitol market growth negatively. Also, the restriction on import, export, and the movement made it hard for the global manufacturers to supply their products for instance sorbitol across the countries. But after the COVID-19, the demand for sorbitol will increase among consumers and in various industries due to rising health concerns and more inclination of consumers towards healthy products to lead a healthy lifestyle. The players with the high capital structure of the sorbitol market have not faced a great loss during the pandemic. Whereas, the small and medium scale manufacturers who are serving locally are facing a critical and challenging situation during the COVID-19 period. The SMEs Small and medium-sized enterprises face a lack of initial investment with the buildup cost of the already manufactured sorbitol products. But it has also been observed that COVID-19 boosted the demand for sorbitol products, creating an aftermath of a good market opportunity for the market players at a global level. To help small and medium-sized enterprises, the Government of Romania (GOR) seeks to help these sectors through policy initiatives. The crisis of COVID-19 is creating a new trend, strong demand for zero sugar and low caloric food products. This will help to develop the sorbitol market by balancing the demand and supply gap of the industry. The manufacturers of sorbitol are following the norms set by the world health organization (WHO) with the safety of the employees along with the steps to manage the demand and supply of sorbitol products.
STRATEGIC DECISIONS FOR MANUFACTURERS AFTER COVID-19 TO GAIN COMPETITIVE MARKET SHARE
Sorbitol plays an essential role in the food & beverage industry. COVID-19 has affected the entire sorbitol industry. The sorbitol market is going to witness a rise with the impact of change in the buying behavior of consumers in a different segment. The requirement for low-calorie food products has seen growth during the COVID-19. Thus, to maintain the demand and supply, various strategic decisions are taken for the manufacturers. The pandemic has impacted all end-use industry which is demanding the product from the sorbitol manufacturers. The manufacturers are focusing on providing sorbitol with more security assurance for the production of food, beverage, cosmetics, and pharmaceutical products. Several steps have been taken and adopted by both the manufacturers and the users of sorbitol to ensure proper safety. This will help to gain a competitive market share in the situation that persists because of COVID-19. For the direct supply of sorbitol, the manufacturers must take a multi-point strategy by following the principles and regulations of the COVID-19 set by the governments. Thus, various established players are now working considering all the World Health Organization (WHO) and country government principles to remove the gap between demand and supply of goods with a reestablished supply chain.
IMPACT ON SUPPLY CHAIN
The sorbitol market is witnessing a shortage of raw materials to fulfill the demand generated, especially from the food & beverage and pharmaceutical segment. This is due to the change in regulation in the governments' supply chain process due to pandemic situations. The government has restricted the movement of goods across the countries and the entire supply chain was distorted. Due to the disrupted supply chain, the transportation of raw materials such as starch, corn, fruits, seaweeds, and other materials was interrupted and the production of the sorbitol has been halted. In addition, the manufactured products aren’t able to reach the end-user of customers due to lack of resources for transportation. Thus, the manufacturers failed to meet the demand for sorbitol among the customers. As a result, the COVID-19 pandemic has negatively affected the growth of sorbitol in the market.
The supply of goods in changed regulations, the transportation cost has increased with fewer supplier’s willingness to work with the fear of penalties and COVID-19 infection. Thus, the manufacturers face a raw material shortage, creating a gap in the amount of material demanded and supplied by the raw material manufacturers.
The change in regulations of the supply chain process has created more challenges for the manufacturers and the suppliers. This situation has created an economic loss for the manufacturers and suppliers and the worker who cannot generate their livelihood. Manufacturers must assess many regulations, such as operational risk, extensive inventory handling, and the search for alternative procurement strategies. Some of the critical areas required to be looked upon by the manufacturers to reduce the gap between the demand and supply of products.
IMPACT ON DEMAND
The demand for the global sorbitol market fluctuates due to the undulation in the food industry's sectors, creating a mismatch in the demand and supply. The direction of sorbitol has witnessed a rise in demand worldwide due to the increase in demand in the food & beverage industry and health sector. Sorbitol has seen growth because the consumption of low-calorie food products is increasing among consumers.
The pandemic of COVID-19 has both short-term and long-term impacts on demands. The sudden rise in demand for sorbitol due to the increasing need for healthy food products will cause panic for the manufacturers and suppliers to produce more products with a constraint to work with half the number of workers or restrictions on transportation.
Moreover, the increasing prevalence of diabetes and the rising number of health-conscious people is increasing the demand for sorbitol in the food industry as it offers low calorie and low-sugar content.
For instance,
• According to the U.S. Department of Health & Human Services, approximately 34.2 million people in the U.S. are suffering from diabetes which makes it about 10.5% of the population.
• According to International Diabetes Federation, 436 million people are suffering from diabetes out of which 88 million people belong to the South East Asia region
Also, manufacturers are taking initiatives and expanding their sorbitol business to fulfill the growing demand for sorbitol among health-conscious consumers and diabetic patients.
For instance,
• In April 2018, According to LexisNexis Risk Solutions Group, Kasyap has expanded their sorbitol unit in Gujrat to increase the production up to 25,000 tons/year.
Therefore, an increase in the prevalence of diabetes worldwide and a rise in the expansion by manufacturers to fulfill the growing demand for sorbitol will boost the growth of the global sorbitol market.
CONCLUSION
Sorbitol is mainly used in the food and beverage industry, personal care, medical, and others. The sorbitol market faces fluctuation in the demand of products due to the change in direction in industries with disrupted supply chain and shutdown of the industry.
With the rise in the demand of the food industry, the food industry market uses sorbitol to produce low caloric food products, which is raising the sorbitol demand in the market. The panic buying of products and disruption in the supply chain reduces the availability of a product in the market. So, the government is taking initiatives to reduce COVID-19 impact on small and medium enterprises by changing the regulations to make the prevailing market condition better. The increased usage of sorbitol products has raised the demand for raw materials creating the market more competitive for raw material suppliers and manufacturers. Thus, COVID-19 has impacted the market of global sorbitol market in both positive and negative ways for the manufacturers and the suppliers.
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