Growing urbanization and changing lifestyles are driving demand for convenience and packaged foods. The packaged food industry recorded USD 2.46 trillion in retail sales for the year 2016. In the processed and packaged foods, ensuring the food safety and quality is a major concern. In order to meet this demand, food additives are used. Food additives are used to enhance the taste, color, texture of food, and at the same time, it is used to maintain the freshness and nutritional content. The global food additive market is expected to cross USD 65 billion by 2022; growing at a CAGR of 5.5% from 2017 and 2022.
Processed and Packaged Food Driving the Industry
The mature markets of developed economies constitute 60% of the processed food market. The increasing disposable incomes of the middle class is driving the shift towards convenience and processed foods. It is escalating the need for food additives. The global retail and food service market which crossed sales of USD 4.9 trillion in 2016 is a major driver for the World food additives market. It is also driven by increased consumer’s exposure to packaged food and beverages. This is further supported by growing urbanization and rising organized market in rural regions of developing economies of Asia, South America and Africa. Another major driver in the food additives market is the growing supply chain complexities. Specifically in the food and beverage industry, the transportation costs, last mile reach for food products, storage facilities are growing, which is increasing the complexity in the farm to fork value chain. This emphasized on the use of food additives in order to reduce the spoilage and wastage costs.
However, the restraint is in the slow urbanization rates in spite of an increase in demand. Many countries follow the standard US regulatory approved additives, so, the US regulatory provides stringent laws to determine the safe additives. This is making the process complex for companies to register new additives.
Strong organic movement and decreasing use of synthetic chemicals owing to adverse effects on human health will also challenge the overall food additives industry growth and also impact the food additives market.
Enzymes- The fastest Growing Segment
The largest segment in the market is of flavors and flavor enhancers which recorded USD 12.1 billion in 2016, followed by Hydrocolloids which functions as texturizer, thickening, stabilizing and gelling agents. Food Emulsifiers and Food Enzymes are expected to grow at a CAGR of 5.4% and 8% during 2017-2022. The Fastest growing segment is Enzymes. Other major segment is the sweetener which is seen as an alternative to sugar used in food and beverages. The growing consumer demand for low fat options and low wastage costs is expected to drive the demand for Fat replacers and Antioxidants. In the food colorants market, the natural color additives recorded 45% in 2016, thereby reducing the share of synthetic colors. In the sweetener market the Stevia extracts are used as natural additives. Preservatives particularly are considered very important to reduce the food spoilage that occurs due to microbial reactions. Food Additives find major applications in Fruits & vegetables, Bakery & Confectionary, Dairy & Frozen products, Oils & Fats, Savory snacks, Meat poultry & Sea food products.
North America Leading at the Regional Front
The European food additive market didn’t see any decrease in the food and beverage industry as compared to drastic fall in production in other industrial segments. Any slightest uptick in economy will boost the demand for European packaged foods and food additives market. Acceptance of convenience and package foods in the Asia- pacific regions is a major cause for the demand of food additives. The US market is seeing demand for candies, gums and other confectionary products, apart from its matured demand for baked foods. This is expected to increase the market for emulsifiers, colorants and sweeteners in the US region; growing at an expected CAGR of 6.7% during 2017 to 2022. The North American food additive market is expected to hold a major share. It is mainly attributed to the growing consumer awareness on the natural additives and functional food additives which is driven by their nutritional functionalities. Europe accounts for more than 30% of the global consumption of food additives.
The major players in the food additive market are Cargill, Tate & Lyle, Palsgaard, DuPont, Givaudan, Brenntag, Novozymes, International Flavors and Fragrances, etc. The strategies being adopted in the Food additives industry is in the Innovation in the development of natural food additives and functional food ingredients. Many foreign companies are entering the emerging economies through partnerships. In countries like China, India, Indonesia and Russia, local companies take a larger market share. A major opportunity in the food additives market is the demand for Omega 3, vitamins, fiber and antioxidants enriched foods. Companies need to undertake clean label solutions to meet the safety standards.
Companies are focusing on mergers and acquisitions. Some of the most notable M&A activities are FMC Corporation’s acquisition of Phytone in 2012, acquisition of Cognis by BASF (2010), and acquisition of Diana Group by Symrise in 2014. M&A activities are increasingly favoring the product offerings of major companies which is enhancing their presence in the global food additives market.
Our report on Global Food Additive Market covers the following:
Key Deliverable of the Study