US fermentation chemicals demand to reach $8.7 billion in 2007.

US demand for fermentation chemicals is forecast to expand more than twelve percent per annum to $8.7 billion in 2007, with volume approaching 32 billion pounds (excluding active pharmaceuticals such as antibiotics which are outside the scope of this study). Even after the large, fast growing (regulatory-driven) ethanol market is factored out, the remaining fermentation chemicals are projected to advance at a healthy clip of nearly seven percent per year. These and other trends are presented in Fermentation Chemicals, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

Ethanol will provide the best opportunities for growth in fermentation chemicals, with annual gains of more than 15 percent expected through 2007 as the product replaces MTBE in the gasoline pool. However, novel products and applications will continue to play an important role in the fermentation products segment. For instance, the emergence of 1,3-propanediol (PDO) as a raw material in the manufacture of polymers will offer strong growth opportunities. In the longer term, PDO will benefit from use in a broader range of applications (e.g., paints, coatings, adhesives, antifreeze). Erythritol, an artificial sweetener, will see increasing use due to its functional properties as a sweetener and additive in food and beverage applications. Although not a new product, fermentation-derived lactic acid will see a boost in consumption due to the growing demand for biopolymers. There are also a number of products, including acetic acid, biotin (vitamin H), butanol, mannitol, succinic acid and xylito, which are not currently produced on a commercial scale via fermentation but have the potential to emerge within the next decade as novel, cost-efficient fermentation methods.

Fuel will remain the largest market for fermentation chemicals and see rapid growth due to strong ethanol demand. The much smaller plastics and fibers market will see the fastest growth through 2007, posting robust double-digit gains based on the growing use of biopolymers in plastics and textile manufacturing applications. Polylactic acid polymers were on the market in 2002 and propanediol-based polymers are anticipated to see commercial production by 2007.

Fermentation Chemicals (published 05/2003, 260 pages) is available for $3,800 from The Freedonia Group, Inc., 767 Beta Drive, Cleveland, OH 44143-2326. For further details, please contact Corinne Gangloff by phone [phone], fax [phone] or e-mail [e-mail]. Information may also be obtained through www.freedoniaqroup.com.

A limited license to use or reprint information from this news release is granted to you provided attribution for the same--including, if possible, the price of the report--is given to The Freedonia Group, Inc. (Cleveland, OH). We would also appreciate the courtesy of receiving a copy of the article or publication in which we appear.

US FERMENTATION CHEMICALS DEMAND
(million dollars)

                                                        % Annual Growth

Item                              1997   2002   2007     02/97   07/02

Fermentation Chemical Demand      3485   4890   8720       7.0    12.3
  Alcohol                         1825   2880   6010       9.6    15.9
  Enzymes                          584    765   1035       5.5     6.2
  Organic Acids                    622    745    944       3.7     4.8
  Polymers, Gums, Vitamins &
  Other                            454    500    731       1.9     7.9

[c] 2003 by The Freedonia Group, Inc.

Contact: Corrine Gangloff

Media Relations

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