The global sales of food and drink additives reached $27.4bn in 2010, according to Leatherhead Food Research’s new publication, The Global Food Additives Market.
The analysts estimate that growing consumer interest in low fat, salt and sugar products, as well as 'better for you' food and drinks, is increasing the appeal of a host of additives including emulsifiers and hydrocolloids; And they predict that demand for food and drinks positioned on some form of health and wellness platform is expected to remain fairly high.
Food flavours constitute by far the largest additives sector, representing approximately 27 per cent of value sales. Flavours, hydrocolloids, flavour enhancers and acidulants sectors account for 69 per cent of all food additives sales by value.
Enzymes eat up market share
“The best performing sector during the years between 2006 and 2010 has been the enzymes category, which grew in value terms by more than 10 per cent per annum. This compares with over 7 per cent for acidulants and 6.4 per cent for hydrocolloids, although much of this can be attributed to increasing world prices,” reports Leatherhead.
Enzymes are being billed as replacements for emulsifiers, many of whose functions they replicate. “From a manufacturer's point of view,” said the analysts, “the great advantage of enzymes is that they are not yet required to be listed as food additives at all.”
The bakery industry remains a major user of enzymes, particularly for extending the shelf-life of products such as bread but they are also being used in the manufacture of dairy products free from trans fatty acids (TFAs), such as margarine.
Natural colours
Consumers’ increasing concern about artificial components is placing additional pressure on additive suppliers to develop ingredients from natural sources: “This is a particularly significant feature of the flavours and colours categories, where natural products are rapidly gaining share over synthetics.”
And usage in food manufacture of the so-called ‘Southampton Six’ group of artificial colours, such as tartrazine, appears set to decrease further, predicts Leatherhead, citing that the term ‘free from artificial colourants’ is now widely used as a product claim for processed foods:
“Natural colours are currently driving the market forward, as a result of which the industry is investing heavily in their development. [But they] continue to face strong competition from colouring foodstuffs (e.g. lycopene), which benefit from the fact that they do not carry an E number and thus cater for clean-label demands from food and drinks manufacturers,” report the team.
Price pressure
But Leatherhead flags up that future growth in market value of additives will continue to be compromised by pressure on prices. “Major influences include the escalating costs of raw materials and energy, as well as the growing significance of China as a supplier and importer,” notes the report.
The hydrocolloid guar gum has seen notable cost hikes in recent months. Traditionally readily available to the food industry and always at cost effective prices, demand from oilfields for the hydrocolloid is continuing to push prices up.
Consolidation
A major trend to have affected the industry in recent years, comments the research team, has been increasing consolidation; the reports cites the recent takeover of Cognis by BASF.
“Industry consolidation has been driven by a number of major factors, examples of which have included intense competition from Chinese producers, the increasing purchasing power of major multinational food manufacturers and retailers and a growing demand amongst customers for application-specific ingredients,” said Leatherhead.
The UK consultancy stresses that the global additives market has not been immune to the effects of the global economic downturn. But waning consumer demand in developed economies such as North America and Europe has been offset by economic resilience and rising consumption levels in countries such as India and China, it added.