Dosic gains growth with new foothold on European soil
per cent climb in European sales last year - with a mature product
in a mature market - by addressing the crux problem for all Chinese
producers targeting Europe.
Early last year, Dosic secured a distribution agreement with German fats and oils company Gustav Heess.
The Chinese producer has been supplying European supplement makers for more than a decade and claims to be one of the top three Chinese suppliers of evening primrose oil.
China produces around 90 per cent of the world's supply of evening primrose oil. But competition among leading suppliers, including Sanmark and Bolier (trading as VSP), is fierce.
Additionally, scant market growth and commodity pricing have squeezed out research and development budgets. This has made reliability and proximity the principal selling points for one producer over another.
During the years when sales were soaring, achieving stable supplies was the biggest priority. The volume of oil on the market fluctuated strongly in the 1990s as small farmers moved in an out of production with speculative crops. Leading producers have since done much to stabilise supplies, says consultant Peter Lapinskas, former director at Efamol, the brand name synonymous with evening primrose oil.
"During the last five to six years Chinese producers have broken out of the cycle," he told NutraIngredients.com.
However, "prices have been very low and these companies do not have the margins to fund research," he said.
Against this background, Dosic judged that its best option for stronger market positioning was to become, effectively, a local supplier.
The company, which makes half of its sales in the US, compared to 25 per cent in Europe, opened a warehouse with Heess, allowing it to ship supplies directly to Germany and deliver to its clients in France, Germany, Sweden and the Netherlands much more quickly.
Dosic export manager Xu Wei said: "Clients prefer to buy from local suppliers and this means we are in direct contact with our customers."
The company has also geared itself up to deliver bulk supplies, changing packaging from small drums for food grade use to 1000kg containers, making it easier to handle for nutritional product makers.
Dosic's move to strengthen its market position may prove particularly timely.
The price of evening primrose oil is set to rise sharply this year, from around $4 per kg to $5-6 per kg, after the accumulated effects of three drought-stricken summers on raw material supplies.
