Food Additives Market Driven due to Increasing Expansion of Food and Beverage Industry

Food additives are substances added to various food products for enhancing their appearance and taste or for preserving their flavor. A variety of food additives have been utilized by man, such as vinegar for the preservation of food by pickling, sulfur dioxide for wines, salting as in the case of bacon, etc. Food additives can be of both artificial and natural origin. For the regulation of these additives and in order to keep customers informed, each food additive has been assigned a unique number called as ‘E number’ in European countries. The Food and Drug Administration (FDA) in the U.S. categorizes food additives as ‘generally recognized as safe’ (GRAS).

The increasing prevalence of obesity, cancer, cardiovascular disorders, and other health issues have strongly created a demand for functional foods that benefits for the prevention, management, or the treatment of chronic diseases. This has spurred a growth in the demand for functional food additives. Increasing cases of obesity among teenagers have fueled the demand for additives such as hydrocolloids, emulsifiers, vitamins, and minerals. Apart from this, the growing population worldwide has led to a growth in the food and beverage industry, which in turn is driving the demand for food additives.

By product, the flavors and enhancers segment led the market in 2014 and will continue to retain its leading position in the coming years, states a TMR analyst. By source, the artificial segment led the market in 2014 and will continue to do so by the end of 2021. By geography, the global food additives market was led by Europe in 2014. However, Asia Pacific is expected to take over the leading position by 2021.

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According to the report, the global market opportunity in food additives will rise from US$31.43 bn in 2014 to US$39.85 bn by 2021 expanding at a 3.4% CAGR from 2015 to 2021.

On the basis of source, the report segments the market into artificial food additives and natural food additives. Amongst these, artificial food additives led the market in 2014. On the other hand, the segment of natural food additives is poised to be the most swiftly growing segment in the forecast horizon.

In terms of geography, the report segments the market into Europe, North America, Asia Pacific, and Rest of the World (RoW). Amongst these, Europe led the market in 2014 and held a share of 30.1% in the market. This region was trailed by Asia Pacific, which stood as the second largest market for food additives and held a share of 27.2% in the same year. This region is predicted to surpass Europe and lead the market by 2021.

As stated in the report, the key players dominant in the market are Cargill, BASF SE, Associated British Foods, and Ajinomoto, among others.

The market has been segmented as follows:

Global Food Additives Market by Product Type:

• Flavors and Enhancers
• Sweeteners
• Enzymes
• Colorants
• Emulsifiers
• Food Preservatives
• Fat Replacers

Global Food Additives Market by Source:

• Natural
• Artificial

Natural Food Additives to Witness Mammoth Demand from Developed Countries through 2021

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.

Synthetic Food Additives Reveal Mammoth Opportunity for Growth in Emerging Countries, Says TMR

The global food additives market is highly fragmented with a wide range of products and an equally large number of market players, working for the food industry. The growth in the food and beverages industry directly impacts the growth of the food additives market. The manufacturers in the food additives market have to consistently modify their products to meet the requirements of customers. Of late, customers are demanding newer flavors, gelatin-free, low fat, and color free products. Thus, companies are focusing on these customer requirements and launching newer products from time to time, Transparency Market Research finds in a new study.

Additive makers in the market comprise small, medium, and large size companies that work with different market and product focus. The major players in the market include Cargill, Danisco, Givaudan, Archer Daniels Midland, BASF, and Sensient Technologies Corporation. These players collectively accounted for a massive 68.5% of the global food additives market in 2011.

Rising Demand for Functional Food to Work in Favor for Food Additives Market

The increasing prevalence of obesity, cancer, cardiovascular disorders, and other health issues have strongly created a demand for functional foods that benefits for the prevention, management, or the treatment of chronic diseases. This has spurred a growth in the demand for functional food additives. Increasing cases of obesity among teenagers have fueled the demand for additives such as hydrocolloids, emulsifiers, vitamins, and minerals. Apart from this, the growing population worldwide has led to a growth in the food and beverage industry, which in turn is driving the demand for food additives.

Strict Monitoring by Regulatory Bodies to Hamper Growth of Food Additives Market

The U.S. Food and Drug Administration (FDA) has set safety standards that needs to be complied with, so that food additives can be used commercially. Rigorous testing is being done to determine the safety of additives. This can hamper the growth of the market. Another challenging factor includes the difficulty in working with natural additives. The demand for natural additives is growing high among the health conscious consumers and suppliers are unable to meet the demands. Natural flavors such as ribonucleotides and monosodium glutamate have several health benefits associated with them. As such, manufacturers are forced to focus on natural sources for developing natural food additives. However, this is proving to be a challenging task owing to the shortage of raw material supply and difficulty in working with natural sources.

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Availability of Synthetic Additives at Cheap Prices to Provide Growth Opportunity to Manufacturers in Emerging Countries

Although the rising health awareness among consumers is driving the demand for natural food additives, the use of synthetic additives is still acceptable in the emerging economies. The rising demand for food and beverages and the availability of synthetic additives at affordable prices is driving their demand. Another factor why synthetic additives are being preferred to their natural counterparts, is the fact that natural additives have low shelf life. Moreover, natural additive products are being perceived as premium products and thus, are extremely expensive as compared to synthetic additives.

By product, the flavors and enhancers segment led the market in 2014 and will continue to retain its leading position in the coming years, states a TMR analyst. By source, the artificial segment led the market in 2014 and will continue to do so by the end of 2021. By geography, the global food additives market was led by Europe in 2014. However, Asia Pacific is expected to take over the leading position by 2021.

According to the report, the global market opportunity in food additives will rise from US$31.43 bn in 2014 to US$39.85 bn by 2021 expanding at a 3.4% CAGR from 2015 to 2021.

This information is based on the findings of a report published by Transparency Market Research titled “Food Additives - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2015 - 2021.”

The global food additives market is segmented as follows:

Product

• Flavors and Enhancers
• Sweeteners
• Enzymes
• Colorants
• Emulsifiers
• Food Preservatives
• Fat Replacers

Source

• Natural
• Artificial

Geography/ Country

North America

• U.S
• Canada
• Others

Europe

• Germany
• U.K
• France
• Others

Asia Pacific

• China
• India
• Japan
• Others

RoW

• Middle East
• Latin America
• Africa

Global Food Additives Market to Reach US$39.8 bn by 2021 due to Increasing Expansion of Food and Beverage Industry

Transparency Market Research report states that the global food additives market stood at US$31.4 bn in 2014 and is predicted to reach US$39.8 bn by 2021, expanding at a CAGR of 3.40% from 2015 to 2021. The title of the report is “Food Additives Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2015 - 2021.”

Food additives are substances added to various food products for enhancing their appearance and taste or for preserving their flavor. A variety of food additives have been utilized by man, such as vinegar for the preservation of food by pickling, sulfur dioxide for wines, salting as in the case of bacon, etc. Food additives can be of both artificial and natural origin. For the regulation of these additives and in order to keep customers informed, each food additive has been assigned a unique number called as ‘E number’ in European countries. The Food and Drug Administration (FDA) in the U.S. categorizes food additives as ‘generally recognized as safe’ (GRAS).

As per the report, the increasing expansion of the food and beverage industry and the rising preference for natural additives in place of synthetic additives are amongst the prominent factors fuelling the growth of the market for food additives. However, growth opportunities for synthetic additives are still seen within developing nations, thus fuelling the overall market’s growth. In addition, the increasing health concerns have resulted in the rising demand for functional food additives, hence boosting the market’s growth. On the other hand, the strict guidelines and regulations involved with the usage of food additives may restrain the growth of the market in the coming years.

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In terms of product type, the market for food additives is segmented into sweeteners, flavors and enhancers, colorants, enzymes, food preservatives, emulsifiers, and fat replacers. Amongst these, the segment of flavors and enhancers led the market in 2014 and is predicted to maintain its superiority throughout the forecast horizon. This segment was trailed by the segment of fat replacers, which is predicted to take the second largest share in the market in the forecast period.

On the basis of source, the report segments the market into artificial food additives and natural food additives. Amongst these, artificial food additives led the market in 2014. On the other hand, the segment of natural food additives is poised to be the most swiftly growing segment in the forecast horizon.

In terms of geography, the report segments the market into Europe, North America, Asia Pacific, and Rest of the World (RoW). Amongst these, Europe led the market in 2014 and held a share of 30.1% in the market. This region was trailed by Asia Pacific, which stood as the second largest market for food additives and held a share of 27.2% in the same year. This region is predicted to surpass Europe and lead the market by 2021.

As stated in the report, the key players dominant in the market are Cargill, BASF SE, Associated British Foods, and Ajinomoto, among others.

The market has been segmented as follows:

Global Food Additives Market by Product Type:

• Flavors and Enhancers
• Sweeteners
• Enzymes
• Colorants
• Emulsifiers
• Food Preservatives
• Fat Replacers

Global Food Additives Market by Source:

• Natural
• Artificial

Global Food Additives Market by Geography/ Country

North America

• U.S.
• Canada
• Others

Europe

• Germany
• UK
• France
• Others

Asia Pacific

• China
• India
• Japan
• Others

RoW

• Middle East
• Latin America
• Africa

Food Additives Market set to expand and become organized during 2015-21

Transparency Market Research has added a global food additives market intelligence report from the food and beverages industry. The report titled "Food Additives Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2015 - 2021" enumerates the various factors that drive or restrain this market in order to derive an accurate trajectory for the market within a given forecast period.

According to the report, the global food additives market is primarily driven by the increasing demand for functional food additives. The food and beverage industry is steadily shifting towards healthier products in order to keep up with this growing consumer trend. Consumers are also showing an increasing rate of aversion to synthetic food additives, pushing producers towards natural food additives instead.The largest end-user industry in the global food additives market for 2014 was the food and beverage industry. This industry has experienced steady growth in the recent past and is expected to continue contributing towards the growth of the global food additives market.

In terms of source, the global food additives market was led by artificial food additives in 2014. This segment is expected to continue leading the market throughout the forecast period, while the natural food additives segment is expected to be the fastest-growing one within the report's time frame.Although the use of synthetic additives is considered as a restraining factor in today's food and beverage industry, it is still an acceptable ingredient for the developing economies such as China, India, and Malaysia, where the demand for processed foods and beverages is increasing at a high rate. As a result, food additive companies based in developed economies of the world are looking to form local-foreign joint ventures within these countries.

The largest region in the global food additives market for 2014 was Europe, followed by Asia Pacific. The report expects Asia Pacific to lead this market by 2021, by when Europe will be in second place.The key players for the global food additives market are Cargill, Inc., Chr. Hansen A/S, BASF SE, AVEBE U.A., Associated British Foods PLC, Archer Daniels Midland Company, and Ajinomoto Co., Inc.

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The global food additives market operates on multiple levels, with small, mid-sized, and large establishments occupying various regions and shares of the market. This again changes with respect to the key areas of focus for each company. Cargill, Inc., is one of the largest companies in the global food additives market and is the second-largest company in the segment of salts. On the other hand, BASF SE is another major player with a vast portfolio of food additives and major market shares in each. Ajinomoto is the largest manufacturer of MSG products and aspartame, while Associated British Foods is currently the second-largest manufacturer of sugar.