The production of natural colours has shown no sign of slowing down recently and companies are heavily investing in both research and development and increasing production. High growth in the former has predominantly been seen in the North American market, but is this set to continue?
Developments in legislation
The drive for food and beverage products manufactured without synthetic ingredients has never been stronger. Conversely, according to the International Association of Color Manufacturers (IACM), the Food and Drug Administration (FDA) Advisory Committee concluded at a recent meeting, held in March 2011 that “based on available evidence, that there is no established causal relationship between the intake of color additives and hyperactivity in children.” Along with this, the committee voted against additional labelling beyond the name of the colour. As natural colours have a higher price than their synthetic counterparts, an ever increasing demand and can cause difficulties in the manufacturing process, could the statement by the FDA cause growth rates of natural colours, particularly in the North American market, to fall?
Increasing profits and production are forecast
Nevertheless, over the past year, a number of companies have seen large rises in profits for their natural colour divisions, including Chr Hansen, (34% in Q3 2010) and Sensient Technologies (23% in Q1 2011). Euromonitor International forecasts an overall constant value CAGR rise of 2% for natural product colours during 2010-2015.
There is great potential for natural colours to be used in a number of food and beverage products. As health and wellness has ever more influence on energy drinks and consumers become more knowledgeable about ingredients, these products are likely to show a further increase in use of natural colours. For example, the energy drinks market is likely to see a constant value CAGR rise of 4% globally during 2010-2015. Fruit/vegetable juice also has great potential, as use of natural colours within fruit/vegetable juice overall and nectars (25-99% juice) is expected to see constant value CAGRs of 9% and 64% respectively during 2010-2015.
The production capacity of a number of manufacturers’ facilities has also risen due to the increase in demand. For example, Chr Hansen has recently upgraded its colour laboratories in France, after expansion at two other production sites in Denmark and Peru, and Sensient Technologies has pumped large sums of money into new production facilities in Missouri, US.
Demand linked to the growing health and wellness trend
This increase in demand for natural colours, particularly seen in the North American and Western European markets, is also a major driver behind the recent launch of a number of new natural product colours. Often these are linked with additional benefits, such as those relating to the continually popular health and wellness trend. For example, LycoRed’s new beta-carotene yellow/orange colour is also known to be a pre-vitamin A carotenoid and astaxanthin, a natural red colour and carotenoid, offering both skin and cardiology benefits.
Is the high growth set to continue?
In the past, questions have been raised about the sustainability of growth for natural product colours and perhaps these are likely to be readdressed following the announcement by the FDA. There is also an increased pressure on availability, especially in the North American markets, and problems relating to their stability under altered conditions, such as pH, light and heat, during processing.
As the health and wellness trend shows no sign of slowing down and large profits have been seen across manufacturers’ natural colours divisions, there are still possible opportunities for use of natural colours. This is apparent in both food and beverage products, and, more recently, beauty and personal care products, as use of natural and organic products continues to grow.
But, as natural colours are typically more expensive than their synthetic counterparts, the latest statement by the FDA may lead to a slight fall in the rate of growth in North American and Western European markets, as, in the current economic climate, companies have been provided with an opportunity to use their cheaper counterparts.