What Sensient Technologies Corporation told the SEC could break it.

Because Sensient depends on crop-derived natural ingredients, climate-related factors — reduced crop availability, water shortages, higher water costs, reduced water access, droughts and more severe weather — increasingly threaten the supply and cost of its raw materials.

“reduced crop availability, water shortages, increased water costs, reduced access to water, droughts, and other potentially more severe weather events, are becoming increasingly important.”

Sensient's colors, flavors and extracts are made from agricultural commodities — vanilla, corn, sugar, soybean meal, fruits, plus onion, garlic, chili peppers and other vegetables under grower contracts — purchased largely at unhedged market prices; price spikes or crop-supply swings in these inputs feed directly into its cost of goods.

“The Company is the purchaser of certain commodities, such as vanilla, corn, sugar, soybean meal, and fruits. The Company generally purchases these commodities based upon market prices that are established with the vendor as part of the purchase process.”

Trade policy hits Sensient's globally-sourced ingredient supply chain: UFLPA sanctions (banning Xinjiang-region imports) and U.S.–China trade changes affect the cost/availability of China-origin raw materials, tariffs reduced Asia Pacific volumes, and an antidumping/countervailing-duty case on paprika oleoresin imports from India threatens duties on a key color raw material.

“changes in the trade relationship between the U.S. and China has affected, including the UFLPA sanctions (which prohibits importation of products from the Xinjiang region), and may continue to adversely impact, the availability and cost of our raw materials and products originating in China.”

Sensient obtains some raw materials from a single supplier or a limited number of suppliers, and even where multiple suppliers exist there are occasional shortages; disruption at those concentrated sources could constrain the availability of specialty ingredients, though it can sometimes reformulate or shift to alternate geographies.

“In addition, we obtain some raw materials from a single supplier or a limited number of suppliers. Disruptions or other issues with those suppliers could affect the availability of those materials. Even if there are multiple suppliers of a particular raw material, there are occasionally shortages.”