Market Trends of Annatto Industry
Growing Use of Natural Food Colorants in Processed Food Industry
- The demand for natural food colorants is growing as awareness of health and environmental issues has increased significantly. As the need for natural dyes is expected to grow in the forecast period, the use of annatto will also increase, as it naturally gives a unique red/orange color. Annatto is a natural colorant responsible for the yellow color of butter, margarine, and cheese. It is also used in many commercial products, such as processed meats, smoked fish, beverages, and various packaged foods.
- For instance, in January 2021, GNT Group added a new pink shade coloring agent under its EXBERRY® brand with the name EXBERRY® Shade Pink - OD, developed for fat-based use applications. It is also available in variants of red, yellow, orange, blue, and green.
- Furthermore, the growing awareness of the ill effects of synthetic colors has triggered the demand for natural colors, which have high costs compared to synthetic dyes.
- The increasing disposable incomes and changing lifestyles in emerging countries drive demand for processed foods. Moreover, companies tend to add food colorants to attract a more significant target segment. Natural food coloring in the food and beverages industry is gaining popularity, with an increasing number of raw food colors and dyes produced commercially.
- One of the main strategies corporations use to meet the escalating consumer demand is innovation in natural food colors to lessen the application difficulties encountered by the food industry. Therefore, due to growing health awareness, food manufacturers are concentrating on using raw food additives that are organic, functional, have high effectiveness, and have low toxicity in food products.
- For example, Kraft Foods recently announced that its boxed noodles products would be colored with natural ingredients, such as annatto, paprika, and turmeric. Hence, the factors mentioned above act as significant market drivers globally.
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North America Dominants the Annatto Market
- North America holds the largest market share in the annatto market globally. Furthermore, the United States is one of the largest markets for annatto. According to Food and Agriculture Organization (FAO), with nearly 40% of global imports, the USA is the largest annatto market worldwide. It sources over 60% of the supplies from Peru and the remainder from the Caribbean region. The increasing government support for adopting natural food colors in various food & beverage applications is expected to boost the growth of the annatto market in North America.
- Also, the rising health consciousness, favorable food safety standards, the popularity of clean-label products, and substantial R&D investments are favorably driving the market. Because of the rising rates of foodborne disease and the growing demand for safe food products free of objectionable food additives, the United States has strict regulations for food colorants. Synthetic food colorants currently dominate the industry, but it is predicted that customers' shifting preferences toward natural food colorants will propel this category at the fastest growth rate.
- Beverage consumption has grown significantly over time due to the availability of products for every type of customer that needs health-related outcomes, including functional foods, enhanced drinks, juices, and CSDs (generally regarded as an indulgence). Since colorant is one of the essential ingredients in most beverages, the growth of the beverage sector directly complements the development of the food colorant market, which in turn drives the food colorant market (including Annatto) in the region.
- For instance, in 2022, according to Beverage Marketing Corporation and International Bottled Water Association reports, the most popular type of beverage in the United States was bottled water, which consumed over 25% of all beverages. Further, it is followed by carbonated soft drinks, which accounted for approximately 18.7%.
- Additionally, according to UN COMTRADE, from 2018 to 2021, the United States remained the top importer of non-alcoholic beverages (HS code: 220299) when compared globally, with an import value of USD 1,059,010 thousand. Hence, this can be attributed to increased sales growth for food colorants such as annatto. Therefore, the increasing demand can be attributed to the growth of the annatto market in this region.
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