Market Brief for Tara Gum. An introduction to the European market for Peruvian exporters. sippo.ch

2 | Market Brief for Tara Gum

Title Market Brief for Tara Gum – An introduction to the European market for Peruvian exporters.

Language

English

Report Content

Within the scope of the project Perubiodiverso, an initiative supported by the State Secretariat for Economic Affairs

(SECO) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (german cooperation), in con-

vention with the Ministry of Foreign Trade and Tourism (MINCETUR), the Peru Export and Tourism Promotion Board

(Promperu) and the Ministry of the Environment (MINAM), SIPPO is mandated to support Peruvian companies in

accessing the European market.

In this context, for the following three products Market Briefs were produced with the aim to introduce the European

market to Peruvian biotrade companies:

Tara gum

Sacha Inchi

Dehydrated organic and fair trade certified Physalis

Authors

ProFound – Advisers in Development

Lange Smeestraat 55

3511 PV Utrecht

The Netherlands

www.ThisIsProFound.com

Coordinated by Osec Zurich - Business Network Switzerland the implementing organization of SIPPO (Swiss Import Promotion

Programm)

Market Brief for Tara Gum | 3

1. Product description ...................................4 1.1 International registration.......................................... 5 1.2 Import tariffs ............................................................ 5

2. European market environment .................6 2.1 Market trends .......................................................... 6 2.2 Market segments .................................................... 7

3. Price ........................................................10 3.1 Price factors and pricing........................................ 10 3.2 Price structure ....................................................... 10

4. Competitor analysis ................................ 11 4.1 Existing competitors .............................................. 11 4.2 New entrants ......................................................... 11 4.3 Substitutes ............................................................ 11

5. Commercialisation channels in Europe . 13 5.1 Trade channels for tara gum ................................. 13

6. Marketing and buyer requirements ........ 15 6.1 Product requirements............................................ 15 6.2 Supply chain management ................................... 16 6.3 Standards and certification schemes .................... 16 6.4 Legislative ............................................................. 16

7. Promotion ............................................... 18 7.1 Recommendations for promotion .......................... 18 7.2 Trade fairs ............................................................. 18 7.3 Buyer list ............................................................... 18

8. Glossary ................................................. 19

Table of Contents.

4 | Market Brief for Tara Gum

The plant Caesalpinia spinosa (Molina) Kuntze, or ‘tara’ is a native

plant species in Peru. The local name in Europe is ‘spiny hold-

back’.

Table 1.1: Taxonomic classification by USDA

Classification

Kingdom Plantae

Subkingdom Tracheobionta

Superdivision Spermatophyta

Division Magnoliophyta

Class Magnoliopsida

Subclass Rosidae

Order Fabales

Family Fabaceae

Genus Caesalpinia

Species Caesalpinia spinosa

Synonyms Poinciana spinosa Molina

Caesalpinia pectinata cavanu-

lles

Caesalpinia tinctoria HBK

Tara spinosa

Source: USDA (http://www.plants.usda.gov), 2008

Apart from Caesalpinia spinosa, 6 other species grow in Peru. C.

ancashiana Ulibarri, C. cassioides Willd., C. decapetala (Roth)

Alston, C. glabrata Kunth, C. pulcherrima (L.) Swartz and C. tri-

chocarpa Griseb.

“El cáliz asimétrico, con el sépalo abaxial más

desarrollado y con los dientes del ápice notorios, en combinación

con la alta densidad de espinas (especialmente en las ramas más

jóvenes), son buenos caracteres para reconocer C. spinosa en

Perú” (Factsheet: Datos botanicos de Tara, Botconsult, 2009).

Refer to the herbarium in Lima for more botanical information.

The fruit of Caesalpinia

spinosa is a flat yellow to

orange pod up to 10 centi-

metres long and 2 centime-

tres wide. Every pod con-

tains up to 7 round seeds

with a diameter of 5 to 7

millimetres. The colour of the

seeds is dark red when mature.

In the food industry, tara is sometimes referred to as Peruvian

carob. The properties of tara are similar to that of carob beans and

guar gum, which are widely used in the EU.

Tara gum is the powder obtained by grinding the endosperm of the

seeds of the shrub Caesalpinia spinosa. Tara gum consists of

polysaccharides of high molecular weight composed mainly of

galactomannans.

Table 1.2: EU specifications for tara gum

Criterion Specification limit

Loss on drying Not more than 15%

Ash Not more than 1.5%

Acid insoluble matter Not more than 2%

Protein Not more than 3.5%

Starch Not detectable

Arsenic Not more than 3 mg/kg

Lead Not more than 5 mg/kg

Mercury Not more than 1 mg/kg

Cadmium Not more than 1 mg/kg

Heavy metals (as Pb) Not more than 20 mg/kg

1. Product description

5 | Market Brief for Tara Gum

1.1 International registration

1.1.1. Harmonised System

Tara gum does not have its own code in the Harmonised System.

Tara gum is registered by customs as part of the product group

‘Mucilage and thickeners whether or not modified, from vegetable

product, not elsewhere specified’. The HS code of this product

group is 130239. The Peruvian tariff code for tara gum is

1302391000.

1.1.2. Nomenclatures

Tara gum is an approved food additive within the Codex Alimen-

tarius Commission (Codex) system with INS (International Num-

bering System) number 417. The INS was developed to ‘provide

an agreed international numerical system for identifying food addi-

tives in ingredient lists as an alternative to the declaration of the

specific name which is often lengthy and a complex chemical

structure’. Thus, 417 is the number used on food labels in Europe.

It is shown as E417, where E stands for Europe. Note that the INS

is an identification system and does not imply toxicological ap-

proval by Codex.

The CAS (Chemical Abstracts Service) number is 39300-88-4.

The EINECS (European Inventory of Existing Commercial Sub-

stances) number is 254-409-6.

1.2 Import tariffs

Imports of tara gum are unrestricted. A 0% import tariff applies in

both the EU and EFTA.

6 | Market Brief for Tara Gum

2.1 Market trends

The market for natural gums has just passed a period of great

instability. In 2011, due to strong increases in demand from the oil

drilling industry, prices for guar gum exploded (+400% in one year)

and availability plummeted. The oil drilling industry uses guar gum

as a controlling agent in oil wells to facilitate easy drilling and

prevent fluid loss. The scarcity of guar gum had a profound impact

on the thickeners market. Many food and beverage manufacturers

used substitutes in new products or tried to replace guar gum by

cheaper alternatives. This offered particularly good opportunities

for tara gum, locust bean gum and xanthan gum, which have

similar functional properties.

The price increases were a major factor behind the recent in-

crease in tara imports to Europe. Between 2007 and 2011, exports

by Peru increased by 35% annually.

Table 2.1: Peruvian exports of tara gum to Europe, in US$ million,

2011

Imports Change 2010-2011

France 623 59%

Germany 567 28%

Spain 504 37%

Italy 357 17%

Netherlands 328 81%

SIICEX, 2012

Currently, prices for guar gum are coming down. This is expected

to ease demand for tara gum in the short-term. Nonetheless, long-

term market development will be positively influenced by fat re-

placement, demand for natural ingredients and sustainability.

2.1.1 Fat replacement

Changes in consumer preferences are causing food manufactur-

ers to constantly adapt their food formulations. A current trend in

consumer preferences which affects the market for tara gum is the

preference for low-fat and low-calorie foods. Gums, such as tara

gum can be used in fat-replacement systems and have conse-

quently become of interest to food manufacturers. This trend is

expected to continue to shape demand for at least several years,

as several European governments have taken policy measures to

fight obesity.

Traders of gums can profit most from this trend by providing com-

plete and accurate information about the characteristics and ap-

propriate use of gums in fat-replacement systems.

Sources providing information on fat replacement by gums include

Food Technology magazine (1999, Vol. 53, No. 8:

http://www.dict.uh.cu/Bib_Dig_Food/ift/ft/ft53/08-99-p&t-ing.pdf)

and http://hubpages.com/hub/Fat_Replacement_Products.

The fat replacement capacity also makes tara an interesting ingre-

dient for nutraceuticals, such as weight management products.

2.1.2 Natural

Another change in consumer preferences with implications for tara

gum is the natural trend. Increasing concerns about the safety of

food together with a higher appreciation of products from nature

and a growing environmental consciousness have made natural

products more popular. These natural products also include foods

with additives. A large number of food manufacturers respond to

this demand for natural products by substituting synthetic ingredi-

ents and ingredients which are perceived to be synthetic by con-

sumers (e.g. Microcrystalline Cellulose) with natural ingredients.

Again, traders have an important role in informing and advising

food manufacturers about natural gums.

The market for organic tara gum is small, but growing. Importers

indicate that the availability of organic tara gum is limited and that

organic tara gum offers an answer to the specific requirements of

specialised organic food producers.

The natural trend, which is visible in the food sector is also recog-

nizable in the cosmetics sector. Cosmetics manufacturers are

increasingly using natural ingredients in their products.

However, interviews with traders of tara gum made clear that the

cosmetics sector is not particularly interesting for exporters of tara

gum. The market is very small and cosmetics producers only need

2. European market environment

7 | Market Brief for Tara Gum

small quantities. Direct imports by cosmetics producers are negli-

gible or even non-existent.

2.1.3 Sustainability

Sustainability has become a major focus of the European food

industry in recent years, making it essential for suppliers of gums

to comply with this trend. Consumers are increasingly attracted to

ingredients produced from raw materials which are sourced sus-

tainably.

Sustainable sourcing is a particularly strong trend in commodity

markets. However, an increasing amount of food manufacturer s is

positioning their entire companies, instead of single products, in

the market for sustainably produced food. This type of positioning

also requires sustainable sourcing of additives.

Sustainability in the supply chain is expected to become a major

risk management strategy for many European companies in the

next years.

2.2 Market segments

Tara gum has many different types of applications. It is used in

food, cosmetics, pharmaceuticals, oil drilling, etc. This survey only

discusses the major segments: food and cosmetics.

Tara gum is a thickener and stabilizer. Tara gum produces highly

viscous solutions, even at 1% concentration. Tara also has syner-

gistic effects when used in combination with other gums, such as

guar gum or Locust Bean Gum (LBG) to produce improved gel and

colloid stabilities and properties.

Tara gum is also applied to control the release of flavours, prevent

particle sedimentation or droplet creaming, induce gelation, im-

prove the emulsification of oils and stabilise foams.

2.2.1 Food applications of tara gum

The main market for tara gum is the

food industry. The exact share of

the food industry in tara gum pur-

chases is not known. However, the

fact that uses other than food appli-

cations are hardly mentioned by

industry sources, indicates that the

food industry dominates the market.

Moreover, according to SRI Con-

sulting, food applications account

for 90% of the global market for

hydrocolloids, which include gums,

such as tara.Tara gum is used in

many food and beverage applica-

tions, including water based fla-

voured drinks, liquid milks, frozen

dairy desserts, breads and bakery products, processed fruit and

vegetables, mixed foods, prepared dishes, condiments, sauces

and many other products. Food manufacturers are interested in

tara gum for its functional attributes.

The main reason for many food manufacturers to use gums, such

as tara gum is their cost efficiency compared to other stabilizers

such as starches or gelatine. Gums are used at levels below 1%

and often even below 0.1%. Although the cost per kg is high com-

pared to other stabilizers, the actual cost of use in the final product

is often lower.

Tara gum has synergistic effects when used in combination with

kappa-carrageenan, xanthan gum and agar, comparable to LBG.

In the combination, tara gum increases gel strength and makes the

gel less prone to syneresis (liquid separating from a gel on stand-

ing). Combining tara gum with xanthan gum produces long-term

suspensions giving potential for use in salad dressings, mayon-

naises, sauces and comparable products. Other subtle synergistic

effects of tara gum are shorter flow characteristics and improved

mouthfeel.

Some examples of tara gum applications are given hereafter. In

frozen desserts, tara gum provides a fat-like texture (rich butter

Increase your opportunities:

Exporters can facilitate the substitution of synthetic ingredi-

ents by tara by supplying information on the application of

tara.

Organic certification can result in access to an interesting

niche market for organic tara gum.

Adopt measures to improve the sustainability of your pro-

duction system: energy reduction, reduction in water use,

proper waste management.

8 | Market Brief for Tara Gum

mouthfeel) and heat-shock protection by helping to prevent ice

crystals. In the meat industry, tara is used to replace meat by

water. In a study by the National Agricultural University ‘La Molina’

in Peru, it was shown that the use of 0.28% tara gum allows for a

15% decrease in meat content in sausages through binding water

(+27%). Tara gum is also commonly used in fruit preparations. For

more detailed information about product applications, you are

advised to contact the technical experts of tara gum importers,

which are listed in section 7.3 or order the Handbook of hydrocol-

loids by G.O. Phillips and P.A. Williams

(http://www.woodheadpublishing.com/en/book.aspx?bookID=1478)

The following table shows the size of total trade in the segments

where tara gum has most potential.

Table 2.2: Turnover from trading activities in relevant segments of

leading European markets in 2007, in € million

Meat Ice cream Sauces

Germany 2,648 301 811

France 1,686 456 124

Italy 1,505 103 38

Poland 1,165 34 46

United Kingdom 849 11 85

Spain 323 50 14

Source: Eurostat, 2012

Tara gum could be a solution for many more applications. Cur-

rently, a particularly interesting application is the replacement of

fats in low-calorie foods. Gums have a wide range of function,

including thickening, stabilizing, emulsifying, clouding and flavour

encapsulation. These are functions which have often been per-

formed by fats. Food manufacturers often apply these functions of

saturated fats to improve the textural and mouthfeel properties of

their food formulations. However, consumers are increasingly

looking for low-fat and low-calorie foods. This has caused food

manufacturers to look for alternatives to fats, as simply removing

the fats would result in many changes in the organoleptic qualities

of the food, such as reduction of viscosity or loss of mouthfeel.

Gums offer a good solution.

Related to the value of tara as a fat replacer is the value of the

dietary fibre content. Tara gum is a source of dietary fibre with very

little if any caloric value added. Food manufacturers are interested

in the possibility to claim a higher amount of dietary fibres when

they use tara gum.

Tara gum has to compete with many other gums. It is important to

realize that the food formulation determines which type of gum a

manufacturer will use. Gums perform differently in mixtures with

other ingredients. Moreover, the temperature needed for the

preparation of the food can also influence gum performance.

Blends of different gums or blends of gums with other ingredients,

which combine into unique properties, are also a common solution.

For example, Equacia is a blend of gum Arabic with wheat fibres,

from the leading gum Arabic importer Nexira.

2.2.2 Consumer market

The niche market for consumer tara gum (<1% of total market) is a

very different market from the industrial market. Volumes are much

smaller and packaging is much more important. For example,

agar-agar is offered in sachets of 2 grams. Another aspect of mar-

keting gums in the consumer market is the provision of recipes.

Kalys develops recipes (applications) to promote the use of their

gums. The products are sold through specialized retailers (culinary

shops) and at cooking lessons. The consumer market for gums is

mainly driven by molecular gastronomy. The Spanish cook Ferran

Adria is famous for his cooking skills using molecular gastronomy.

His recipes are very popular among professional and hobby cooks

in many countries.

The largest groups of professional and hobby cooks applying

molecular gastronomy are found in France, Spain and Belgium.

For a better understanding of molecular gastronomy, please refer

to ‘Texture: a hydrocolloid recipe collection’ available at:

http://khymos.org/hydrocolloid-recipe-collection-v2.2-screen-

res.pdf.

The consumer market for tara gum is still a niche market requiring

extensive business-to-consumer promotion. However, margins are

high and there is potential for growth. Note, however, that this

9 | Market Brief for Tara Gum

market will always remain a niche market, due to the limitations of

the applications in molecular gastronomy.

2.2.3 Cosmetic applications of tara gum

Gums are valued by cosmetics companies for their emulsifying

and adhesive properties. Gums are used by the cosmetics industry

for their functional characteristics when synthetic substitutes are

not available, less effective or when cosmetics companies want to

produce a natural product.

In general, gums are mainly used in creams and lotions. However,

there is very little information available about the specific uses of

tara gum in cosmetic applications. This indicates that the use of

tara gum in cosmetic applications is limited. EU importers have

shown little interest in marketing tara gum in the cosmetics market.

10 | Market Brief for Tara Gum

3.1 Price factors and pricing

3.1.1 Price factors

Profitability of tara cultivation depends for a large part on the utili-

sation of different products which can be derived from the tara

tree. Apart from the gum (endosperm), the tara pods contain tan-

nin (consisting for 53% of gallic acid), which can be used in the

leather industry.

In the past decade, availability of unprocessed tara pods has

increased as a result of tree planting for commercial use. The

improved availability has eased the costs of tara pods for tara gum

producers.

However, other cost factors have increased, notably energy prices.

Tara gum producers can control the increase in costs of resources

by reducing their need for these resources (e.g. Integrated Pest

Management) or improving efficiency (e.g. more efficient machin-

ery). The promotion of low energy use and other measures, as a

means to reduce the environmental impact of your production

system, offers an added advantage.

3.1.2 Pricing

Market-oriented pricing offers a good pricing strategy in the current

dynamic tara gum market. By closely monitoring global market

developments, you can anticipate price decreases or increases

and release or hold on to stocks.

Opportunistic market-oriented pricing may damage your long-term

trade relationship with a buyer. Therefore, you are recommended

to be careful in your price negotiations with regular customers.

Also note that this pricing method requires a relatively large

amount of liquid capital in order to finance activities when you are

holding on to stocks. Finally, it is important to realise that price

elasticity is limited by strong competition from substitutes, such as

guar gum and Locust Bean gum.

In light of the tightness in the guar gum market, prices of potential

substitutes including tara gum are expected to remain firm or even

increase further in 2012.

Producers of organic hydrocolloids, such as tara gum may com-

mand a price premium of 30% to 40%, according to Dennis Seisun

of IMR International (2008).

3.2 Price structure

The price structure of natural gums, such as tara is complex. In

many cases, the products first go to an intermediary before they

reach the end-user. Depending on the value addition by the inter-

mediary, the price of the product can increase from a few percent

to a few hundred percent. The mark-up will be minimal (25%)

when the product goes to the end-user through an importer, which

only performs administrative work associated with purchasing and

selling items (arranging sea transport, customs clearance, local

transport, storage, quality control, re-packing, bank charges,

sales). The mark-up will be much higher when the product goes

through a longer channel involving more intermediaries with more

activities. Please refer to Chapter 5 for a detailed analysis of trade

channels. For example, some importers actively source by visiting

suppliers and advise clients on the application of the products. The

importers often sell the product to a processor. The mark-up of the

processor also depends on the kind of processing. The

(re)cleaning of natural gums does not have to be very costly, but

when the processor develops new blends of gums with applica-

tions in complex food formulations, value addition will be much

higher.

Conclusions:

Prices will remain strong in 2012

Monitor guar prices

European intermediaries may add a lot of value

3. Price

11 | Market Brief for Tara Gum

4.1 Existing competitors

Peruvian exporters of tara gum primarily face competition from

other tara exporters. Approximately 80% of global tara production

takes place in Peru. The source of tara, the plant Caesalpinia

spinosa is also found in Chile, Ecuador and Colombia. The plant is

cultivated in China and also in India (Schiaffino, 2004). Tara gum

from all of these countries can enter the EU and EFTA duty free.

Suppliers of other thickeners also compete with tara gum export-

ers. Especially suppliers of Locust Bean Gum (LBG) and guar gum

compete with tara gum exporters. Locust beans grow on the carob

tree which is native to the Mediterranean. The main LBG produc-

ing countries are Spain, Portugal, Italy and Morocco. Guar gum is

produced in India and Pakistan. In the past year, production of

guar gum strongly increased in response to the price surge.

LBG and guar gum have similar functional properties as tara gum.

However, depending on the food or beverage formulation, other

thickeners might also be used instead of tara gum. In that case,

the end-product will have significantly different characteristics than

the products with tara gum. Therefore, substitution of tara gum by

thickeners other than LBG and guar gum is only relevant for new

product development.

The main suppliers of ‘mucilages and thickeners derived from

vegetable products’ are the Philippines, Norway, Chile, Indonesia

and India. All of these countries are major producers of seaweeds

used for production of competitive products like carrageenan and

alginates.

4.2 New entrants

In the future, tara may also be produced in countries other than

Peru, Chile, Colombia and Ecuador. According to the World Agro-

forestry Centre, Caesalpinia spinosa is also native to Bolivia, Cuba

and Venezuela. Additionally, the plant is cultivated in Ethiopia,

Kenya and notably Morocco.

Industry sources say that tara gum can also be produced in coun-

tries where Locust Bean Gum is grown as production conditions

for tara and LBG are similar. Producers of LBG are said to switch

to tara when prices for tara are high.

However, any attempt to produce tara in these countries will be

hampered by the long maturation period for Caesalpinia spinosa.

It takes several years before new tara trees start producing

Due to increasing expectations of the reliability of supplies in EU

trade, many importers are becoming more hesitant to switch be-

tween suppliers. Importers strongly prefer long-term business

relationships over short-term profits. Even when new suppliers

offer better price-quality ratios, importers tend to favour existing

business relationships. Switching to a new supplier implies a time-

consuming approval process. The importer will have to request

and assess a lot of information on product quality, supply capacity,

management, company track record, etc. A thorough assessment

is required to make sure that the new supplier is reliable.

4.3 Substitutes

4.3.1 Application

In the food industry, tara gum is said to bridge the gap between

guar gum, which is cold water soluble, and LBG, which is insoluble

in cold water. Although tara gum is not completely soluble in cold

water, it provides high viscosity at low temperatures. Compared to

LBG, tara gum delivers the same viscosity at lower concentrations.

Moreover, it is more economic in use (20-25%) and the colloid

produced is more resistant to high-shear breakdown during proc-

essing. Industry sources also indicate a negative characteristic of

tara gum. Tara gum is not a good solution for formulations with a

pH value below 4.

It is important to realize that the competing products have been on

the market for a much longer time. Tara gum was only introduced

on a commercial scale in the 1980’s, while other gums have been

on the market for centuries. In that sense, the market for tara gum

still has to develop. Industry sources indicate that the market for

tara gum is currently developing fast. However, it should be noted

that tara gum cannot replace all other hydrocolloids. Tara gum is

primarily a substitute for LBG, which has a market share of around

2%. Therefore, demand for tara is strongly related to the market for

LBG. Importers indicate that demand for tara gum went up in

2006-2007, because supplies of LBG were low. Demand for tara

gum was negatively affected when supplies of LBG recovered.

Importers switched back to LBG, as the price/performance ratio of

LBG was better and they prefer to trade with European partners.

Some importers say that users have already been switching back

to LBG since two or three years.

4. Competitor analysis

12 | Market Brief for Tara Gum

Substitution by guar gum is currently a minor threat. High prices of

guar gum favour the use of tara gum by food and cosmetics manu-

facturers.

4.3.2 Availability

Despite the strong natural trend, tara gum still faces fierce compe-

tition from synthetically produced gums and thickeners which have

undergone non-natural processing. The competition from these

substitutes is largely the result of supply chain problems when

using natural gums. The production of natural gums is subject to

climatic conditions. Bad climatic conditions can lead to small har-

vests and a shortage in supply. Manufacturers need a constant

and reliable supply of ingredients. Sudden shortages can lead to

production problems, which are harmful to sales and relationships

with buyers. Another competitive advantage of synthetic gums

over their natural counterparts is their homogeneity and quality

consistency. Natural products are sometimes derived from different

botanical sources and can vary a lot in quality. In conclusion, syn-

thetic gums pose a severe threat to natural gums, such as tara, if

suppliers of the latter do not stabilise their supplies and do not

guarantee quality consistency.

The substitution of gums is accelerated by the increasing scale of

operations of many EU ingredient suppliers. The ingredient suppli-

ers follow developments in the food and cosmetics industries

which are consolidating. The larger companies put more emphasis

on stability of supply in terms of both quantity and quality and are

developing a strong preference for synthetic substitutes.

Conclusions:

Your competition mainly consists of suppliers of other

types of thickeners

Securing stable supplies forms a major barrier to new en-

trants

Guar gum and LBG are the primary substitutes of tara

gum

Synthetic thickeners remain a threat as long as you do

not have a system in place to ensure reliable supplies

13 | Market Brief for Tara Gum

5.1 Trade channels for tara gum

5.1.1 Most suitable trade channel

Gums enter the EU mostly through specialised importers, concen-

trated in Hamburg, Germany (A2 Trading; C.E. Roeper; Willy

Benecke) and France (Cargill; Starlight Products; Kalys). Direct

trade with end-users in the food and cosmetics industries is not

possible as many end-users require small quantities, which cannot

be imported cost effectively, or do not have the means to import

the products themselves (quality control, logistics, customs). Im-

porters and often agents handle this business. The number of

importers handling gums in the importing countries has declined

considerably in the past 10 to 20 years. The decline is partly the

result of consolidation in the industry.

5.1.2 Roles of importers and processors

Many of the importers combine their import activity with processing

(e.g. analyzing, purifying, spray-dyring, blending). Other importers

sell the products on to specialized processors, blenders or directly

to end-users. Gums are processed on large scales by various

companies in the EU. Consequently, most demand for unpro-

cessed gum comes from the facilities of these processors.

There are no importers which have specialised in the supply of the

cosmetics market. Importers focus on the food market and some-

times find extra customers in the cosmetics market.

End-users of gums can have a wide variety of problems with food

formulations, which require gums. The variance in the problems

requires that solutions are tailor-made. Traders in the EU therefore

gather information on the food formulation of the end-user in which

the gum (blend) will be used and on the manufacturing process.

The information is then used to find the correct gum solution.

In fact, EU processors continuously carry out research to develop

new thickeners, which appeal to consumers and meet the expecta-

tions (and detailed product specifications) of food manufacturers.

The EU processors have the intrinsic knowledge of the EU food

market, necessary to identify demand for new or improved prod-

ucts. This expertise is difficult for companies in developing coun-

tries to obtain, because the distance to the EU food market is

much larger, both physically and in terms of business links. Also,

up-to-date knowledge of food legislation requirements in far-away

export destinations is not always easy to obtain.

Research is furthermore needed to develop thickeners which are

low-cost but still retain their functional properties under specific

conditions (e.g. light, heat and acidity). Establishing communica-

tion with the food manufacturers, needed to transfer the required

knowledge, is often easier for EU processors than for developing

country exporters.

One way for Peruvian exporters of tara to overcome the barriers

of reputation, technical expertise and/or supply variability is to use

EU-based traders and agents. The proximity to the market and

close contact with buyers allows traders and agents to serve as a

bridge between the distant exporter and the EU market. Agents,

which never own the products, can help to outsource processing

and/or provide extra services to the end-users. Those services are

usually technical solutions for end-users. For example, a food

manufacturer requiring improved mouthfeel and stability of its food

formulation may get advice from the agent on the application of

tara.

The current trend amongst end-users in the gum market is to skip

the blenders and deal directly with the producers or importers. The

end-users no longer accept to rely on blenders for their supplies of

gum blends. Blenders create blends without disclosing the infor-

mation on the composition of the blend to the end-user. This

makes the end-user completely dependable on the blender as it is

a costly process to find another solution. In the past, some blend-

ers used this advantage to increase their prices without negotiating

5. Commercialisation channels in Europe

14 | Market Brief for Tara Gum

with the end-users. Since recently, end-users are increasingly

asking for the formulations of gum blends and purchase the gums

themselves. The blending process is also done by the end-users

or is outsourced to blenders. The effect of the trend described

above is a decreasing number of blenders.

Another development is concentration of the industry. Due to the

consolidation in the food and cosmetics industries in the EU, trade

in natural ingredients for these industries is concentrating. Com-

panies in the trade of natural ingredients are increasingly produc-

ing both conventional and organic product lines, and are offering

ingredients destined for the cosmetic and food sectors. The ex-

pansion offers the companies economies of scale.

Conclusions:

Importers which combine importing and processing are

the most common market channel

European intermediaries play a major role in helping food

manufacturers to use tara gum

15 | Market Brief for Tara Gum

6.1 Product requirements

6.1.1 Product specifications

The product specification of the EU for tara gum are shown in

table 1.2.

Tara gum is available in viscosities of 2,500 to 6,000 cps (1%

concentration). However, in the EU, only two grades of tara are

traded. The medium viscosity grade offers 4,500 cps in a 1% con-

centration. The high viscosity grade offers 6,000 cps in a 1% con-

centration.

It is important to realize that importers also assess the variance in

viscosity in the gum supplies. Normally, the variance of a batch of

high viscosity grade should be between 5,500 cps and 6,500 cps.

A smaller the variance is better.

Producers can improve the homogeneity of tara gum viscosity by

milling at low temperature. Conventional hulling of the seeds in-

volves acid treatment or roasting. The roasting can alter the prod-

uct characteristics. Additionally, many producers use stone grind-

ing, which also generates high temperatures. New technologies

enable low temperature hulling and milling, resulting in a more

homogeneous product. Moreover, such technologies also reduce

the need for cooling water, which in turn reduces the risk of bacte-

rial contamination.

Another aspect of quality is mesh size. Importers often prefer finer

mesh sizes, as these will result in better dispersion. Additionally,

importers also value the origin of the gums. Gums from different

origins can differ in transparency level and molecular changes in

their applications.

Differences in quality aspects, such as viscosity and mesh size for

tara gum powder, should be minimal between batches. This can be

realised by grading the raw material and separating processing of

different grades.

Batch sizes are also an important indication of the quality consis-

tency that suppliers can offer. Larger batch sizes (>10 tonnes)

indicate a better quality consistency. Larger batch sizes also have

the advantage that the importer has to perform less analyses.

Quality control analysis

Although many importers will analyse samples themselves, access

to laboratory analysis is valuable. Monitoring of your product’s

quality serves to prevent non-compliance to buyer requirements.

6.1.2 Packaging, marking and labelling

The packaging of tara gum should preserve the organoleptic quali-

ties of the gum, such as colour and viscosity. Gums are hygro-

scopic and should therefore be packaged in waterproof material.

Tara seeds can be packaged in paper bags, cartons or jute bags.

Tara gum powder is normally packaged in multi-wall paper bags

with a plastic (e.g. polyethylene) lining.

The required marking mostly depends on the specific requirements

of the importer. Information that is often required includes date,

supplier name, address, product name, net weight, if the product is

intended for food use, grade, recommended storage conditions.

The information should be in English and using EU measures (e.g.

grams).

Quality labels, such as a label for organic products or Kosher or

Halal products could also be put on the packaging.

6.1.3 Documentation

Depending on the sourcing methods of the importer, documenta-

tion might be important and elaborate or obsolete. Some importers

prefer to visit companies from which they have received interesting

offers, while others prefer to gather documentation which proves

that the company can meet their requirements.

Documents required by most gum importers include:

Certificate of origin

Certificate of analysis (stating amongst others if the product is

foodgrade, that the product is allergy free and the amounts of

heavy metals)

Technical data sheet (TDS)

Material Safety Data Sheet (MSDS)

GMO-free certificate

Health certificate

Certificates that show compliance with third party standards,

such as HACCP, GMP or ISO 9000

A packing list and a bill of lading are also required for the transport

of tara products.

6. Marketing and buyer requirements

16 | Market Brief for Tara Gum

Buyers generally prefer payments through open accounts. How-

ever, due to high risks for the supplier, other terms of payment are

common. Cash-Against-Documents (CAD) and letters of credit are

both used for payment of the goods. Some importers prefer CAD,

as it is a faster payment method for them.

6.2 Supply chain management

Buyer requirements regarding supply chain management are

becoming increasingly strict. This is particularly relevant for tara,

because many potential importers have little confidence in the

supply of tara.

Supplies of tara gum should be stable. This implies that production

should be planned and controlled as much as possible. In the case

of wild-collected tara, a natural resource management system

should be in place to secure supplies. It could also imply that

buffers are kept. The quality should be consistent.

6.3 Standards and certification schemes

6.3.1 ISO 9000 and 14000

Although not an obligatory standard for producers of food ingredi-

ents, the ISO 9000 is strongly increasing in importance in Europe.

Companies can obtain a certificate that is valid for three years.

Keep in mind that to become ISO 9000 certified means that the

whole company must be dedicated to it, and that it takes time and

financial resources. The ISO 9000 standards provide a framework

for standardising procedures in an entire organisation, regarding

quality, health, safety and environmental issues.

Furthermore, the best known environmental system is ISO 14000,

within which ISO 14001 is specifically aimed to minimize a com-

pany’s impact on the environment.

6.3.2 ILO and SA8000

The International Labour Organisation (ILO), installed Conventions

and Recommendations so that basic human and labour rights are

respected within a company. Issues that are addressed in the

Conventions are for example minimum wage, minimum age, and

discrimination. The ILO is internationally accepted and provides

information and guidance to companies regarding human rights.

SA8000 is one of the most well-known voluntary global standards

to ensure social accountability. SA8000 includes standards in the

form of a Code of Conduct. The codes are based on the ILO Con-

ventions and on other human rights Conventions.

6.3.3 GMP and GACP

The Good Manufacturing Practice (GMP) and Good Agricultural

and Collection Practice (GACP) state the minimum quality and

hygiene requirements. These standards are binding for UN mem-

ber states and have to be incorporated in their legislation.

6.3.4 Fairtrade

Fair trade certification does not offer significant benefits to tara

gum producers. Tara gum is used in low concentrations as addi-

tives in composite food products and offers limited possibilities for

labelling to food manufacturers.

6.4 Legislative

Legislative requirements are the minimum requirements which

must be met by tara gum exporters marketed in the EU and EFTA

countries. Products which fail to meet these requirements are not

allowed on the EU and EFTA market.

The EFTA States, with the exception of Switzerland, take part in

the European Economic Area (EEA). This means that Liechten-

stein, Norway and Iceland follow EU food legislation in general.

The main differences between EEA and Swiss legislation applica-

ble to dried physalis is shown in Table 6.1.

17 | Market Brief for Tara Gum

Table 6.1: Legislative requirements applicable to tara gum

Requirement Description Further information

Legislation application to EEA countries

Hygiene of foodstuffs

(HACCP)

The EEA legislation

on hygiene of food-

stuffs (HACCP) is

legally binding for

food processors, and

is recommended for

farmers (primary

production).

EC 852/2004

Microbiological con-

tamination of food

The EEA has set

microbiological crite-

ria for foodstuffs

EC 2073/2005

Additives in food The EEA has set

requirements for the

use of food additives

EC 1333/2008

Legislation application to Switzerland

Ordinance on food

hygiene

Establishes the gen-

eral hygiene require-

ments related to food

products regarding:

production plant,

personnel, production

processes and

microbiological crite-

ria.

RS 817.024.1

Tara gum may not be used in jelly mini-cups, which have been

banned by the European Commission. The ban was imposed as

the jelly mini-cups have shown to constitute a risk for choking.

Conclusions:

Critical requirements:

HACCP

Basic documentation (Technical Data Sheet and Material Safety

Data Sheet)

GACP, GMP

Traceability

Increasing your competitive edge:

Ensuring consistent quality

Product documentation and information

Implementing a recognized quality management system

Natural resource management

Organic certification

18 | Market Brief for Tara Gum

7.1 Recommendations for promotion

When highlighting the properties of tara, one can focus

on the natural origin, its viscosifying strength at low con-

centrations, the high resistance to high-shear break-

down, the synergistic effects when used with other thick-

eners, its low calorie content and the possibilities for fat

replacement.

Have your product documentation ready and up-to-date

(see Chapter 6 for relevant documentation). Based on

this product information, a new buyer of tara gum should

be able to assess the features of the product and to eas-

ily compare it with substitutes. Documentation is also of

major importance when approaching existing buyers. Ex-

isting importers are hesitant to switch to new suppliers,

as the assessment for the approval is a time-consuming

process. Suppliers could greatly reduce the efforts

needed by importers, by providing proper documentation.

Documents should be easily recognizable and filed in a

logical order.

Suppliers of tara gum should show importers how they

ensure stable supplies to convince them of the reliability

of tara gum supplies in terms of quantities. Transpar-

ency in the supply chain will help to build trust in the rela-

tionships between buyers and suppliers.

Certification schemes such as ISO and HACCP serve to

prove the reliability of a supplier regarding quantities and

quality.

English is the most frequently used language in Euro-

pean trade. Although most European trade partners will

not be native speakers themselves, the vast majority

speaks English fluently. In almost all cases, foreign lan-

guage skills are essential when entering the European

market.

7.2 Trade fairs

The main trade fairs in Europe which are relevant for the promo-

tion of tara gum are:

BioFach (http://www.biofach.de) the largest organic trade fair

worldwide; highly relevant to meet the main industry players

and promote your product in the organic market.

Food Ingredients Europe (FI)

(http://fieurope.ingredientsnetwork.com) leading trade fair in

the food ingredient sector; interesting to meet potential clients

in the food industry.

Prepare your trade fair participation by producing com-

pany and product documentation

Prepare representative samples of different qualities

(e.g. mesh sizes or viscosity), which you can deliver and

indicate in what quantities and with what frequency you

can deliver them.

7.3 Buyer list

The EU market for natural thickeners is consolidating, character-

ised by mergers and acquisitions. The result is that a small and

decreasing number of dominant players dictates the market for

natural thickeners, particularly in the larger, more mature markets

for hydrocolloids, such as xanthan gum and alginates. The con-

solidation results in fiercer competition for Peruvian exporters and

in a smaller number of potential buyers.

You can find a list of potential buyers in a separate document.

7. Promotion

19 | Market Brief for Tara Gum

Abbreviation Explanation

EEA European Economic Area

EU European Union

EFTA European Free Trade Association

GSP Generalised System of Prefer-

ences

HACCP Hazard Analysis and Critical

Control Points

LBG Locust Bean Gum

8. Glossary

20 | Market Brief for Tara Gum

Osec

Swiss Import Promotion Programme

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Fax: +41 44 365 52 21

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