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.

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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.