Industry Overview - The domestic erythritol industry is establishing a new order after a round of capacity reduction and anti-dumping issues in Europe and the United States [1] - Erythritol supply and demand have returned to balance, but market prices remain low [1][2] - The new sugar substitute, allulose, has been officially approved and is expected to launch products within the year, initiating a new wave of competition [1] Company Performance - Sanwei Biological reported a revenue of 320 million yuan in the first half of the year, a decrease of 15.6% year-on-year, while net profit increased by 10.7% to 60 million yuan [1] - Baolingbao's performance improved significantly, with a revenue of 1.4 billion yuan, an 18% year-on-year increase, and a net profit of 90 million yuan, up 33.7% [1] - Baolingbao's sugar-reducing sweetener business generated 370 million yuan in revenue, a 61.2% increase year-on-year, with a gross margin improvement of 5.6 percentage points to 14.9% [1] Market Dynamics - The erythritol market experienced a surge in demand around 2021 due to the popularity of sugar-free beverages, leading to an expansion in production capacity [2] - By May 2023, domestic erythritol production capacity reached 380,000 tons, significantly exceeding global demand, resulting in a price drop from 40,000 yuan/ton to 9,500 yuan/ton [2] - The industry is currently in a painful capacity reduction phase, with overcapacity largely resolved as some new capacities have been halted or repurposed [2] Competitive Landscape - Competition in the erythritol industry has shifted from capacity to efficiency and quality [3] - Companies are focusing on improving production efficiency through advanced technologies, such as synthetic biology and precision fermentation [3] - The market is expected to see a consolidation of smaller players, allowing leading companies to capture a larger market share [3] New Product Development - Allulose has been approved as a new food ingredient, with major sugar substitute producers increasing investments and planning large-scale expansions [4] - Baolingbao's annual production capacity for allulose is expected to exceed 5,000 tons after technical upgrades, with plans to expand by an additional 20,000 tons in March 2025 [4] - The market performance of allulose remains to be seen, as its cost is still higher than erythritol despite improvements in extraction efficiency [4][5]

Core Viewpoint - The domestic erythritol industry is establishing a new order after experiencing capacity reduction and anti-dumping issues in Europe and the United States, while a new competition is emerging with the approval of allulose as a new sugar substitute [1][3]. Industry Overview - The supply and demand of erythritol have returned to balance, but market prices remain low [2]. - The erythritol market saw a significant increase in demand around 2021, driven by products like sugar-free sparkling water, leading to an oversupply situation by 2023, with production capacity reaching 380,000 tons, far exceeding global demand [3][4]. - The price of erythritol has fluctuated, dropping from 40,000 yuan/ton to 9,500 yuan/ton, and currently stabilizing around 10,000 yuan/ton [3][5]. Company Performance - Sanwei Biological reported a revenue of 320 million yuan in the first half of the year, a decrease of 15.6% year-on-year, while net profit increased by 10.7% to 60 million yuan [3]. - Baolingbao's revenue for the same period was 1.4 billion yuan, an 18% increase year-on-year, with net profit rising by 33.7% to 90 million yuan [3]. - Baolingbao's sugar-reducing sweetener business generated 370 million yuan, a 61.2% increase year-on-year, with erythritol revenue growing approximately 89.5% [3]. Market Dynamics - The competition in the erythritol industry has shifted from capacity to efficiency and quality, with companies focusing on improving production processes [5]. - The market is expected to see a consolidation of smaller players, allowing leading companies to capture a larger market share and stabilize prices [7]. New Product Development - Allulose has been approved as a new food ingredient in China, with major sugar substitute producers increasing their investments and planning large-scale expansions [8]. - Baolingbao plans to increase its allulose production capacity to over 50,000 tons by 2025, while Sanwei Biological aims to double its capacity from 10,000 tons to 20,000 tons [8]. - The cost of allulose remains high compared to erythritol, but improvements in extraction efficiency are expected to lower prices [8][9].