What Is the New Ingredients Data Telling Us?
The global market for ingredients grew by 2% to 587 million tonnes in 2015 (excludes commodities). However, within the global market there are significant regional differences. Asia Pacific appears strong with 5% growth, although this is a half percentage point decline compared to 2014, reflecting the significant economic slowdown in China. The developed markets of Western Europe and North America were significantly weaker, with Western Europe showing a mild downturn in 2015 and growth in North America static. However, the disappointing data for the developed regions should not obscure the importance of these high value ingredients markets. These regions remain the most innovative in the world and invariably are the first to develop and launch high-value ingredients. Innovation is important to be able to compete in a market showing sluggish growth.
2015 Global Ingredients Market in Figures
Note: The figures above exclude the commodities category
Clean label surges ahead
Clean label remains a dominant trend in food and drinks and is set to become more important in beauty and personal care. The clean label tag can mean many things but at its heart is consumers having trust in the products they consume, and an understanding that they are beneficial and safe. The use of natural ingredients and the removal of artificial and more controversial ingredients, such as certain preservatives and antimicrobials, continues.
Globally, botanicals are forecast to rise by a CAGR of 3% over the 2015-2020 period, with Asia Pacific (4%), Latin America (4%) and Middle East and Africa (5%) the stand out regions. In beauty and personal care, botanicals, and especially plant extracts are increasingly used in skin care, hair care and sun protection products. This increase can be attributed to the trend toward natural ingredients and to the antioxidant benefits of plant extracts.
Polysaccharide hydrocolloids are forecast global growth of 3% over 2015-2020. Pectin, guar, and starch have strong natural credentials and will benefit from this. For example, guar is forecast a CAGR of 14% over the next five years in Asia Pacific.
Omega-3 faltering in developed markets
Omega-3 fortification in food and beverages appears to be struggling in developed markets. This is the case in both Western Europe and North America where omega-3 ingredients posted a CAGR of 1%.The malaise reflects dwindling consumer interest, as despite general acceptance that omega-3 is beneficial, the argument is currently not strong enough to compel consumers to prioritise intake. Consequently, manufacturers have not felt the pressure to include these ingredients which can cause technical difficulties and escalating costs and this has led to a decline in consumption of omega-3s in staple foods like milk and bread.
Over the same period, consumption in Asia Pacific increased at a CAGR of 6%. Over 2015-2020, the Asian Pacific CAGR is forecast to remain at 6% and grow a further 2,085 tonnes. This volume gain is twice that forecast for the six other regions covered by Euromonitor International combined. Clearly Asia Pacific will be the main driver of omega-3 food fortification moving forward, and again this hinges on awareness, with Asian consumers seemingly more convinced of the benefits of fatty acids. The upshot of this is that Asia Pacific will replace Western Europe as the biggest consumer of long chain omega-3 fatty acids by 2020. To replicate this success in mature markets, suppliers need to work on strategies to renew consumer awareness of the benefits of omega-3 and ensure that the message they provide is persuasive enough to create demand and put pressure on manufacturers.
Antimicrobials in the spotlight
Triclosan is an antimicrobial ingredient widely used in beauty and personal care products that has been under debate for years due to growing evidence of its potential endocrine disrupting effects. Oral care is the king category for triclosan, globally accounting for 1,177 tonnes and projected to grow by a 4% CAGR over 2015-2020. There are big opportunities for triclosan replacement especially in liquid soap in North America, deodorant sprays in Western Europe and bar soap in all other regions. Volumes of triclosan have dramatically decreased in the last two years, especially in North America, due to its recent ban in hand soap. Currently, triclosan accounts for 13% of the antimicrobials used in beauty and personal care products in North America, compared to 2013 when triclosan accounted for 25% of total antimicrobials.
Unsurprisingly, withdrawal of triclosan has had a negative impact on other ingredients with antimicrobial properties, due to the huge uncertainty about safety and efficacy of currently available alternatives and fewer products are now marketing antibacterial claims. This opens up opportunities for the penetration of probiotic ingredients in personal care applications, mainly driven by increasing consumer demand for natural and healthy ingredients.
Sun protection trends demand innovation
Looking at the worldwide market, there is a clear trend towards non-sticky and easy applicable waterproof sunscreens with higher SPF that not only prevent sunburn and reduce the risk of skin cancer, but also, protect against air pollution and slow skin-ageing.
The trend toward higher SPF creates opportunities for a range of chemical and mineral filters. For example, we are seeing a global increase in chemical filters such as benzophenones in North America, which are forecast a global CAGR of 15% over 2015-2020, while in Europe homosalate, ethylhexyl salicylate and octocrylene are the UV filters which are forecast to grow faster over the same period at CAGRs of 45%, 17% and 10%, respectively.
While lotions and creams still remain the preferred sunscreen format, more alcohol-based sprays which are easy to apply, dry fast and provide non-greasy skin feeling are reaching the market. Western Europe is forecast to display the fastest growth in alcohol demand from 2015-2020 with a CAGR of 16%, followed by Asia Pacific (10%) and North America (9%).