Spearmint Market Weakens As China and India Compete

13 July 1998 00:00  [Source: ICB Americas]

As China and India proceed with their spearmint harvests, battle lines are being drawn for dominance in this essential oil market. Chinese spearmint has led the marketplace for the last few years, but India appears ready to regain its former command.

At present, Chinese spearmint, with 60 percent carbone, is selling for about $17 per kilo, down substantially from last year's mid-$20 point. Experts expect prices for Chinese material to continue to fall.

The Chinese deflation is blamed on overproduction. But according to an essential oils broker, China's supply of spearmint has been "dramatically eliminated. China has cut back on production. Its stocks [of spearmint] have been reduced," he says.

Other spearmint brokers claim that both China and India continue to stockpile large volumes of spearmint leftover from years of overproduction, saturating the global market, but China is hoarding most of its spearmint for domestic use.

In the meantime, India has been picking up the slack in trade. Indian spearmint is of a poorer quality, only possessing 55 percent carbone. Still, some buyers prefer its odor characteristics, and it sells for only $13 per kilo, giving it a cost advantage.

The Indian spearmint crop began its harvest this May, while China will not begin cuttings until August or September. Though it is too early to predict where the spearmint market is going, Indian exporters are already pushing material, suggesting that they expect a large crop and buyers for it.

But the industry has a sit-and-wait attitude. "Essential oils are in the doldrums," says a broker. "People aren't making sales like they used to." The flat market extends to the North American spearmint industry.

The grower's price for US and Canadian spearmint leaves is $11 per pound. That is, at best, the break-even point for farmers. "The spearmint industry in the US and Canada is tight," a spokesman for domestic growers says.

Strong domestic production has created an oversupply. Add that to a more than adequate world supply and the result is a soft market.

"Demand is stable," says the spokes-man, "with a modest increase of 3 to 4 percent worldwide." However, supply has been growing faster than this annually, and until demand increases, prices for domestic spearmint will remain depressed.

THE FRAGRANCE FOUNDATION has appointed three new members to its board of directors: Robert Jongstra, Gary McNatton and Jean Hoehn Zimmerman. Mr. Jongstra began his career with Procter & Gamble, parent company of Giorgio Beverly Hills, and is currently president and CEO at Giorgio. Mr. McNatton is vice-president of the Gap Inc. and oversees design and development of concepts and fragrances in personal care. Ms. Zimmerman joined Chanel 20 years ago and oversees the domestic marketing of its fragrance brands.

GREEN APPLE SCENT--The journal Headache Quarterly says the smells of certain foods may ease migraine pain. The scent of green apple, in particular, may reduce such headaches.

"Future studies of foods and fragrances should provide new treatment options for mitigating migraines," note Dr. Alan Hirsch of the Smell & Taste Treatment and Research Foundation, and Dr. Chil Kang of Rush-Presbyterian-St. Luke's Medical Center, both located in Chicago, Ill.

Experts have long agreed that certain scents can provoke or warn of a migraine attack. Many migraine sufferers claim specific scents trigger migraines.

Drs. Hirsch and Kang speculated that if odors could cause migraines, perhaps they could reduce them as well. The doctors asked 50 chronic headache patients to rate the severity of their pain before and after smelling an inhaler impregnated with the scent of green apples.

After completing the tests, 35 of the 50 applicants reported disliking the odor. The remaining 15 claimed they found the green apple scent attractive.

"Patients who liked the smell experienced a statistically significant reduction in the severity of their headaches," the report offers, "while patients who disliked the smell experienced no significant effects, either for better or worse."

JAMAICA PIMENTO BERRY OIL--The pimento oil crop in Jamaica is being harvested. Though one major importer of the oil says its price is "relatively stable," he predicts a very poor crop.

The pimento farmers "couldn't get people to collect [the crop]," the importer says. "And there's more of a demand for the spice."

Another problem specific to the oil is that jerk-pork suppliers in Jamaica are cutting down the tree limbs and using them for fuel, reducing the crop yield.

The Jamaican Ministry of Agriculture has been providing farmers with seedlings for replanting, but this incentive will not be felt for several harvests. Importers warn that benefits are seven years down the line.

Currently, Jamaican pimento is selling for $24.50 per pound. Regardless of the troubles cited, the broker sees "nothing suggesting this is going to change." Prices for pimento oil have remained relatively static over the past few years.

SANDALWOOD OIL--A sandalwood auction was held in India last month. The next auction will be in six months. Sandalwood oil is now selling at $325 per kilo. The oil is always in high demand. Trees take 20 years to mature, and the market is almost fully controlled by the Indian government.

"It's all politics," a sandalwood broker charges. "The government sells the wood in auction," thereby controlling its limited supply. Last year, exports of Indian sandalwood faced heavy restrictions, but the broker says the sandalwood ban has been reduced and exports are "fairly good."

A month ago, there was a shortage of the essential oil and its prices were firming. The auction has replenished the marketplace, but prices are still rising.

Oddly, demand for the oil is falling, but brokers expect its price to continue to increase for the next six to eight months. "The shortage of the oil is still smaller than the shrinking demand," a broker explains. "When the shortage and demand meet, then the price will balance."

Experts warn that India always says prices are going up. The vast majority of sandalwood oil is grown in India, with some cheaper, poorer-quality grade available in Indonesia.

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