Food Ingredient Industry Review

Report Highlights

INTRODUCTION

The trend toward further consolidation within the food ingredients industry continued in 2003, with one of the largest being The Solae Co., a Dupont and Bunge joint venture that could possibly lead to $800 million in sales of soy ingredients. Another notable consolidation was DSM's purchase of Roche's Vitamins and Fine Chemicals Division. Many analysts believe that the purchase is yet another milestone in DSM's strategy for moving its emphasis from commodity to specialty chemicals.

Obesity and food safety are the influences driving the trend toward reformulation, detection advances, and more stringent regulatory safeguards. The Center for Disease Control calls obesity "a national epidemic," with one in 10 Americans being overweight. More consumers are turning to the courts for legal remedy, as they blame the food industry for expanding waistlines and contributing to the unhealthy side effects of obesity.

The lawsuit threat, combined with the FDA's trans fatty labeling requirement and consumer embrace of the Atkins and the South Beach Diets, have motivated food manufacturers, ingredient suppliers, and technology companies to join forces to reformulate products. The industry is in the process of taking out the carbohydrates that had been used to replace the fats removed when low- and reduced-fat was the rage. Even breweries have gotten into the act, with Michelob's Ultra low-carb beer having already gained a 3% of the U.S. beer market.

Discrepancies, however, exist in the definition of a carbohydrate, a situation that the FDA plans to address. In response to the agency's challenges to some carbohydrate claims, manufacturers are leaning toward using the term "net carbs" or "impact carbs." Some nutritionists advocate listing the glycemic index on labels, as a better way for consumers to judge the carbohydrate impact of a food. The glycemic index measures the effect of a carbohydrate on the blood sugar, an important component in formulating foods specifically targeted toward diabetics, an up-and-coming market, with the increasing prevalence of type II diabetes.

Biological threats to the nation's food supply are driving the research into sensitive technologies for measuring pathogens, even at the nano level where antimicrobials are being encapsulated in nanoparticles. The role of gene sequencing and advanced separations and detection techniques (biochips, polymerase chain reactions, high performance liquid chromatography teamed with tandem mass spectrometry, ultra-sensitive sensors, etc.) in reducing the risk of infection is expected to accelerate. The irradiation of meats also provides an added measure of security.

Beef producers strongly endorse regulatory efforts to protect the nation's beef supply, having formed Veri-Prime to develop an effective framework for screening the meat sold to fast food and other outlets. Dairy producers are taking steps to protect the nation's milk supply, including locking milk tankers or silos, restricting access to plants, and upgrading adding fencing, alarms, and surveillance systems.

Consumer resistance to artificial or synthetic ingredients and their demand for more healthful food products is leading to across-the-board product developments for natural additives. Natural food ingredients are even making their way into food safety, with freeze-dried egg yolks, peppers, oregano, lactic acid bacteria, cranberries, and allspice being considered as natural options for stopping microbial growth. Natural preservatives are growing in both stature and respect, outdistancing their more suspect synthetic counterparts.

Nowhere is the trend toward natural ingredients making a bolder mark than within the colorant market segment. Some of the more promising natural food colorants are annatto, lycopene, carmine, purple corn, bilberry, radish, and extracts from red beets and grape skins. Natural ingredients (tea, cranberries, etc.) are also creating interest in the nutraceuticals market segment.

Biotechnological advances are expected to have broad implications in the development of flavorings and other ingredients. Taste sensations will be more precisely manipulated, and taste signaling will lead to better understanding of how to block bitter tastes.

Genetic engineering could lead to gum arabic production being normalized and prices stabilized. Applying nutrigenomics, the study of nutrient-gene interactions, especially in the colon, to resistant starches could reverse some of the downturn that the ingredients have experienced with the low-carb diet phenomenon. Bio-based rather than chemical approaches are also being taken in the development of low calorie sweeteners from corn syrup. Biofortification, where the bioavailability of iron and other essential minerals in maize and other crops is boosted, is another milestone in the agri-biotech area, where more biotech crops are planted annually.

One of the most far-reaching actions in the oils and fats market segment is the FDA's requiring nutrition labels to include trans fatty acid levels by January 2006. The decision comes as standard cooking oils are in the midst of a five-year decline, even as demand for specialty oils rises.

This anthology is based on BCC's monthly newsletter Food Ingredient News, which reports on all the issues and forces that affect the food processing industry, such as clinical studies and research that can cause dramatic shifts in consumer demand and eating habits; fluctuating prices of important raw materials; the activities of regulatory agencies that can foster or hamper growth for suppliers. The information report_highlightss:

• New products and new technologies in ingredients and ingredient development
• Research studies that suggest benefits—or harmful effects—from certain ingredients
• Industry news—plants being built, opened, or closed; companies restructuring, mergers and acquisitions
• New regulations—labeling rules that affect product development
• More news—on markets, food safety, resources, and upcoming meetings.