Abstract:Monosodium glutamate is a commonly used condiment in family life, catering industry and food processing industry. In recent years, the output of monosodium glutamate in mainland China has shown a fluctuating trend, with the output of monosodium glutamate in mainland China reaching 2.45 million tons in 2020, the output of monosodium glutamate in mainland China decreased to 2.375 million tons in 2021, and the output of monosodium glutamate in mainland China increased compared with 2021 to 2.63 million tons, an increase of 10.74%. Fufeng Group has the highest market share of monosodium glutamate production capacity in the mainland monosodium glutamate industry, accounting for 43%, followed by Meihua Biotechnology, accounting for 34%, followed by Eppen Biotechnology, accounting for 13%, COFCO Technology accounting for 6%, Linghua monosodium glutamate, Ningxia Cocoa Mei and Sanjiu monosodium glutamate accounting for 5%. In the future, the mainland monosodium glutamate industry will develop towards taste diversification, product health and intelligent production.
1. Definitions and Classification
The chemical composition of monosodium glutamate is monosodium glutamate, which is an umami seasoning that is easily soluble in water, and its aqueous solution has a strong umami taste. When it is used with table salt, it tastes fresher. MSG can be made from proteins such as wheat gluten, or from starch or pyroglutamic acid contained in beet molasses, and can also be synthesized chemically. MSG also has the effect of alleviating alkali, acid, and bitterness. Monosodium glutamate participates in the normal metabolism of protein in the human body, promotes the oxidation process, and has a certain health care effect on the cranial nerves and liver. There is no limit to the amount of food that can be consumed by adults, but it is not suitable for infants. The monosodium glutamate sold on the market is indicated on the packaging, and the content of monosodium glutamate can generally be divided into 99%, 95%, 90%, 80% and other purity monosodium glutamate. The specific classification is as follows:
Second, the business model
1. Procurement mode
The procurement mode of corn and other raw materials of monosodium glutamate production enterprises mainly adopts the procurement strategy of "agricultural broker acquisition + collection and storage + market acquisition". According to the different suppliers and cooperation models, enterprises adopt a variety of procurement modes such as purchasing from farmers' brokers, collecting and storing on behalf of central and local grain reserve depots, bidding for national temporary storage of grain, and other market purchases. The purchase of corn by monosodium glutamate production enterprises is generally paid in the form of cash and spot. MSG production enterprises sign annual procurement contracts with coal enterprises every year, agree on the supply varieties, quality and supply volume and price of each month, and the price will be on the market during the contract period, or the two parties will negotiate and determine with reference to the market price, and the goods will be shipped and settled according to the actual demand every month, and the seller will issue VAT invoices.
2. Production mode
The production mode of monosodium glutamate production enterprises mainly implements the production mode of "sales and production". The customer service center prepares a monthly sales forecast plan and sends it to the production department every month, and the production department prepares a monthly production plan according to the forecast plan and order delivery requirements, combined with the capacity standard, material procurement cycle, and product inventory, and formulates the production schedule according to the monthly production plan and product delivery time requirements, and each production workshop organizes and arranges production according to the production schedule. In this way, businesses can reduce the risk of overstocking and try to meet the immediate needs of the market. At the same time, the enterprise will also make appropriate adjustments according to the supply of raw materials and production capacity to ensure the continuity and stability of production.
3. Sales model
The sales model of monosodium glutamate production enterprises is mainly based on distribution and supplemented by direct sales. Companies sell their products through an extensive distribution network, including wholesalers, retailers, supermarkets, etc., which can help companies cover their products across various sales channels and regional markets. At the same time, companies may also conduct direct sales through their own e-commerce platforms, official websites, or directly with end-users such as large restaurant chains, to increase sales and better control the brand image and customer relationships.
3. Industry policy
1. Competent departments and regulatory systems
The competent authorities of the MSG industry are mainly the State Administration for Market Regulation, the National Health Commission and the National Development and Reform Commission. The State Administration for Market Regulation is responsible for the supervision of food safety, including the production license of food additives, the formulation of quality standards and market supervision. The National Health Commission is responsible for formulating national food safety standards, including safety standards and limits for MSG, and carrying out food safety risk monitoring, assessment and communication. The National Development and Reform Commission is responsible for the research, formulation and administration of industrial policies for the industry
Policy guidance, project approval and other management work.
The self-regulatory organizations of the monosodium glutamate industry mainly include the China Condiment Association. The China Condiment Association is mainly responsible for promoting the prosperity and development of the condiment industry, and promoting innovation and progress in the industry by organizing various industry events, seminars and forums. Formulate and maintain standards and specifications for the condiment industry such as monosodium glutamate, ensure that enterprises and products in the industry meet relevant regulations and quality requirements, and maintain fair competition and consumer rights and interests in the industry. Actively organize and participate in the exchange and cooperation of the international condiment industry, promote domestic enterprises to expand the international market, and enhance the international competitiveness of the mainland condiment industry.
2. Relevant policies
In recent years, the mainland government has introduced many relevant policies to promote the development of the mainland monosodium glutamate industry, such as the "Measures for the Supervision and Inspection of Food Production and Operation", which strengthens and standardizes the supervision and inspection of food production and business activities, and urges food producers and operators to implement the main responsibility. The measures clarify the procedures and requirements for supervision and inspection, which will help crack down on illegally added and counterfeit and shoddy monosodium glutamate products and maintain a fair market competition environment. The "Work Plan for the Steady Growth of Light Industry (2023-2024)" proposes to accelerate the inheritance and innovation of traditional production skills such as condiments. The inheritance and innovation of traditional production skills can bring new production technologies and processes to the MSG industry, and improve the quality and production efficiency of products. The "Guiding Catalogue for Industrial Structure Adjustment (2024 Edition)" includes outdated production process equipment such as glutamate production lines with isoionization process and monosodium glutamate production equipment below 50,000 tons/year into the elimination category. Eliminate backward production technology and equipment, and promote enterprises to adopt more modern, efficient and environmentally friendly production processes, so as to improve the overall technical level and production efficiency of the monosodium glutamate industry.
Fourth, the development process
The initial stage of the monosodium glutamate industry began in 1846 when Rethao in Germany first isolated glutamate from wheat gluten. In 1908, Kikunae Ikeda of Japan isolated glutamic acid from kelp and discovered that the sodium salt of glutamate had an umami taste, which was the prototype of monosodium glutamate. In 1909, Japan began to produce and sell "Ajinomoto" with monosodium glutamate as the main ingredient, which marked the beginning of commercial production of monosodium glutamate. In China, the production of monosodium glutamate began in 1921 and was started by Wu Yunchu. Since the 80s of the 20th century, the monosodium glutamate industry in the mainland has entered a stage of rapid development. MSG factories in mainland China began to use grain as raw materials (such as corn starch, rice, wheat starch, sweet potato starch) through microbial fermentation, extraction, and refining to obtain monosodium glutamate that meets national standards. At this stage, the annual production of monosodium glutamate increases rapidly. Since 2007, with the continuous increase in the output of monosodium glutamate, the production technology level of the industry has also been improved. However, this has also led to the problem of overcapacity. In order to solve this problem, the state has issued a series of policies to restrict the development of monosodium glutamate enterprises with a production capacity of less than 100,000 tons, which has reduced the total number of monosodium glutamate production enterprises from 130 to about 35 at present.
Fifth, industry barriers
1. Technical barriers
The production of monosodium glutamate involves multiple links such as biological fermentation, extraction, and refining, each of which requires specific technical and equipment support. These technologies and equipment often require a long period of research and development and experimentation to master, and they also need to be continuously optimized and improved during the production process. Therefore, if new entrants want to break through technical barriers, they need to have strong R&D capabilities and technology accumulation, and at the same time, they also need to invest a lot of money and time in technology R&D and equipment updating. Technology poses a barrier to new entrants in the industry.
2. Financial barriers
MSG production requires large-scale investment in production lines and equipment, as well as continuous investment in technology research and development and marketing. These investments require a lot of financial support, and it is difficult for new entrants who lack financial strength to withstand such pressure. In addition, the shortage of funds may also lead to difficulties in the production process, unable to ensure product quality and production efficiency, thereby affecting the market competitiveness of enterprises. And in order to meet the requirements of environmental protection and safety, it is also necessary to invest a lot of money in pollution control and the construction of safety facilities. As a result, funding has become one of the main barriers to entry into the industry.
3. Brand barriers
The MSG market is highly competitive, with well-known brands occupying a large share of the market. New entrants need to constantly promote and advertise their brands in the market in order to win the trust and recognition of consumers. Well-known brands tend to have high consumer loyalty, and their products have a high visibility and reputation in the market. For new entrants to gain a foothold in the market, they need to spend a lot of time and resources to build their brand image and market position. This requires enterprises to have strong brand building and marketing promotion capabilities, and also needs to pay attention to product quality and service quality to win the trust and recognition of consumers. Therefore, the brand has also become one of the barriers to entering the MSG industry.
4. Certification barriers
Enterprises need to obtain relevant quality certifications and safety certifications when entering the MSG market. These certifications are an important means of ensuring product quality and consumer safety, and are also necessary for enterprises to obtain market access. However, obtaining these certifications requires companies to have certain production conditions and quality management systems, as well as to undergo rigorous audits and assessments. For new entrants, to obtain these certifications, it takes a lot of time and effort to prepare and apply, which undoubtedly increases the barrier to entry for the industry.
Sixth, the industrial chain
1. Analysis of the industry chain
The upstream of the monosodium glutamate industry chain is mainly the raw material industry, and the main raw materials are corn, wheat, soybeans, sugar beets and starch. The midstream is mainly for the production of monosodium glutamate, which is mainly obtained by hydrolysis, chemical synthesis and fermentation. The downstream of the industrial chain is mainly the catering industry, food processing industry and household consumption. The industrial chain of China's monosodium glutamate industry is shown in the figure below:
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