Anti-caking
agents, humectants, foaming agents, raising agents, flavor enhancer,
and bulking agents are some of the food additives that play a major
role in the food industry. Among these additives, flavors and
enhancers segment hold significant shares and is expected to account
for 32.4% of the market by 2021, as per a report published by
Transparency
Market Research (TMR).
The high demand for flavors and enhancers is due to an increased
demand for different types of cuisines. According to the report, the
global food additives market is expected to rise from US$31.4 bn in
2014 to US$39.8 bn by 2021, expanding at a CAGR of 3.40% from 2015 to
2021. The growing food and beverages industry and the rising health
concerns among consumers, are driving the growth of the market.
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TMR
analysts shed light on three important questions that companies
operating in the food
additives market
have:
Q.
What are the growth strategies commonly implemented by key players
operating in the food additives market?
Companies
such as Archer Daniels Midland Company and Associated British Foods
plc ensure that they are regularly involved in new product
development to maximize their market share. While Associated British
Foods plc launched a high protein bread in New Zealand in April 2015,
Archer Daniels Midland Company launched VivaSweet™ Sucralose in
March 2015, which reportedly has zero calorie content and can be used
with different food products. Such product launches enable companies
to strengthen their market position globally.
Another
strategy adopted by players in the market is business expansion
through mergers and acquisitions. For instance Cargill, Inc.
regularly carries out mergers and acquisitions to strengthen its
market presence. The company acquired Leonardo Olive Oil in February
2014, which helped it to consolidate its position in the premium oil
segment.
Q.
What are the challenges faced by the players in the market?
The
food
additives market is strictly regulated and monitored by various
regulatory bodies. The U.S. Food and Drug Administration (FDA) sets
safety standards in order to determine if a substance is safe for its
usage and whether it does what it is intended to do. As such,
rigorous testing is done to check for compliance. Failing to comply
prevents manufacturers from introducing the additive in the market,
resulting in huge monetary losses.
Another
challenge faced by manufacturers is the difficulty in working with
natural additives. Natural additives are extracted from natural
sources which are not only expensive than their synthetic
counterparts, but also difficult to work with. The demand for natural
additives is on the rise, with the growing awareness about the side
effects of artificial food additives. As such the high cost and
difficulty to work with natural food additives pose a challenge to
manufacturers.
Q.
What are the growth opportunities in the global food additives
market?
While increasing health awareness among consumers has resulted in a growing preference for natural food additives, there are countries such as Malaysia, China, and India, where the use of synthetic additives is still extensively prevalent. As such, these emerging nations in Asia Pacific are expected to be lucrative markets for synthetic additives. The longer shelf life and the absence of any restrictions by governments on the use of synthetic additives, are expected to provide synthetic additive manufacturers an opportunity in the emerging markets.
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