Natural Food Colors & Flavors Market Competitive Dynamics & Global Outlook 2020-2025

The natural food colors & flavors ingredient market size is estimated to be valued at USD 5.0 billion in 2020 and projected to reach USD 6.8 billion by 2025, recording a CAGR of 5.4%. The growing demand for clean label products among the consumers is expected to drive the market. The European segment is poised to dominate the market due to its high population demanding natural ingredient infused food, whereas the South America region is projected to be the fastest-growing, owing to the larger demand of clean label and plant based food, among its millennial population.

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Market Dynamics:

Drivers: Growth in the demand for natural and clean label products

The demand for food with natural ingredients and clean labels is increasing in almost all regions, owing to the increasing health awareness, increasing spending power of consumers, and increasing food adulteration instances. Hence, manufacturers are focusing on expanding their natural food & beverage portfolio.

Clean-label products are organic, natural, non-GMO, and minimally processed consumer-friendly products. According to the Clean Label Alliance, it is observed that nearly 75% of the consumers are willing to pay high prices for clean-label products. Increasing health awareness among consumers drives the demand for natural and clean-label products, which, in turn, will drive the demand for natural food colors & flavors. Consumers are becoming inclined toward clean-label products, as they are becoming more aware of non-synthetic ingredients and their negative effects. This will drive them to adopt products and diets with clean-label ingredients.

Clean label is one of the most important features of packaged foods. Consumer awareness is strengthening the clean label trend, which, in turn, will prompt them to move away from synthetic ingredients and adopt plant-based and natural diets, further supporting the growth of the natural food colors & flavors ingredients market. Retailers are also addressing the growing demand for clean-label products from consumers by offering their private label brands. The recent outbreak of COVID-19 has led consumers to buy more 'clean label' products, owing to their safe consumption and positive health benefits. This will promote the growth of the natural food colors & flavors industry.

Restraints: High cost and limited raw material availability

Many natural food and flavor ingredients are sourced from crops. Limited availability of such raw materials is a key factor causing an increase in the prices of ingredients sourced from them. Farmers are adopting new practices such as precision farming to increase the production of crops to source ingredients. The availability of raw materials for natural food ingredients is subject to seasonal changes. Eastern Australia and the Midwestern US have observed a substantial decline in agricultural output due to extreme heat. Thus, limited raw material availability is projected to be one of the major factors for the rising prices of ingredients, restricting the market growth. However, there are certain countries, such as Russia that have huge untapped production potential.

Opportunities: Rise in the number of end-use applications

The rising number of end-use applications, owing to the multifunctional attributes of various natural ingredients, is projected to create opportunities for growth within the natural food colors & flavors market. The food processing industry mostly uses these colors and flavors in bakery & confectionery, convenience foods, dairy & frozen desserts, and meat products. Flavors and colors are also mostly used for bakery and beverage applications.

Challenges: Lack of consistency in regulations pertaining to various ingredients

The natural food colors & flavors industry faces a legal obligation to abide by the norms and standards of various regulatory standards. International bodies such as the National Food Safety and Quality Service (SENASA), Argentina; Canadian Food Inspection Agency (CFIA), Canada; Food and Drug Administration (FDA); World Health Organization (WHO); and Committee on the Environment; Public Health and Food Safety (EU) are associated with food safety and quality regulations. These organizations have control over the usage of different ingredients and chemicals, including bitterness, used in food processing, directly or indirectly.

The regulations set by different countries also emphasize the usage of natural food colors & flavors and the proper labeling of food products. These stringent regulations can delay or prevent the launch of new products, increase the prices of any new product/ingredient introduced in the market, and may lead to food recalls. Therefore, a lack of harmonization of new regulations and existing regulations can negatively affect the growth of the market. For instance, vanillin continues to be listed as GRAS, despite its ability to inhibit the liver enzyme, dopamine sulfotransferase, by 50%.

In the US, the Food and Drug Administration (FDA) is the key regulating body for food additives. It regulates the inclusion of ingredients in food & beverages. Such regulations have restricted the use and demand for different types of natural food colors & flavors. For instance, ingredients derived from genetically engineered plants must meet food safety requirements similar to ingredients derived from traditionally grown plants. New EU regulations were introduced in May 2018 related to primary food ingredient labeling. Such regulations are likely to hinder the growth of SMEs in the natural food colors & flavors market.

The lack of harmony in regulatory norms and labeling guidelines for the use of organic and natural food ingredients in different countries is also restraining market growth. For instance, Blue #1, Brilliant Blue, which is banned in France, is widely used in other European countries.

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South America is projected to account for the fastest-growing market during the forecast period

Due to the high population in the region and the high purchasing capacity, consumers are looking for various comfort and functional food. The shift in the consumption habits of the population due to an increase in the awareness regarding healthy food and beverages is also increasing the demand for natural food colors & flavors ingredients. This has created the demand for natural food , natural colors & flavors,. The millennial population is increasing the demand for clean label food & beverages, which is again a driving factor for the natural food colors & flavors market.

Key Market Players:

DuPont (US), Archer Daniels Midland (ADM) (US), Givaudan (Switzerland), Kerry Group, Plc (Ireland), International Flavors & Fragrances (IFF) (Israel), Mane (France), Sensient (US), T. Hasegawa (Japan), Firmenich (Switzerland), Robertet (France), Symrise (Germany), Synergy Flavors (US), Amar Bio-Organics India Pvt. Ltd. (India), Taiyo International (Japan), The Foodie Flavors Ltd (UK), Besmoke Ltd (UK), Aromata Group (Italy), Gulf Flavors and Food Ingredients FZCO (UAE), Seluz Fragrances & Flavors Company (Turkey), and Takasago (Japan).

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This release was published on openPR.