A court in the central Hunan province has ordered a once-prominent producer of the food additive monosodium glutamate, or MSG, to sell its trademarks in the face of mounting debt amid dwindling sales, domestic outlet Jiemian reported Wednesday.
Lotus Health Group Co. was listed on e-commerce giant Alibaba’s judicial auction platform — the go-to site for courts and local authorities — after receiving multiple court orders to clear the company debts, according to the media report. Listings for 24 of the company’s trademarks, including its most prominent Lotus Flower MSG brand, are priced between 822,900 to 6.58 million yuan ($127,000 to $1 million) ahead of the online auction on August 4.
Based in the central province of Hunan, Lotus Health Group was founded in 1983 and became the world’s largest MSG producer over the decade that followed. Its MSG business, which accounted for a significant chunk of its profit, has been in decline since the early 2000s. The slump comes amid growing health concerns around MSG in China, which also happens to be its largest consumer base.
“The younger generations of consumers are steering the seasoning industry towards a new direction, based on their intent to maintain a healthy lifestyle and pursue convenience,” Shine Hu, an analyst at local market research firm ChemLinked, told Sixth Tone.
However, the moderate use of MSG — mostly used as a flavoring agent in many Chinese foods — hasn’t been proven to be detrimental to health, according to health experts. Stigmatized for decades in the West, the additive has since found a new following, with the likes of prominent American chef and restaurateur David Chang and British Michelin star chef Heston Blumenthal debunking the myths surrounding the seasoning.
But that hasn’t stopped its consumption from going downhill. In China, the volume of MSG consumed dropped from 1.14 million tons in 2013 to 922,000 tons in 2017, and is expected to decline even further in the coming years, Jiemian reported, citing data from market research firm Euromonitor.
According to Lotus Health Group’s 2018 financial report — before it was sold off to another company — the company suffered financial losses worth 380 million yuan that year, while its outstanding debts stood at 2.2 billion yuan. But despite new ownership, the company wasn’t able to pay off its debts, largely because of meager profits last year.
It’s likely that the company is less saleable than it was in the past due to changing eating habits and competition from a host of new companies willing to cater to evolving culinary trends. However, Lotus Health Group’s decline doesn’t mean that MSG will soon be gone for good.
“It seems MSG is no longer necessary for home cooking, especially with the introduction of these so-called lazy seasoning bags,” Hu said, referring to sachets and sauces now available that include a variety of seasoning, including MSG.
Lotus Health Group didn’t respond to Sixth Tone’s interview request by time of publication.
Editor: Bibek Bhandari.
(Header image: People Visual)