INTRODUCTION
This market research report is an update of a prior report published in 2002 and written by the same author, a Ph.D. chemical engineer. Quite a bit has happened in the intervening years to justify this complete and updated overview of food additives in the United States.
Many in the general public consider foods and the additives that go into them rather mature, dull, and prosaic products and markets—however, nothing could be further from the truth. Food additives are a complicated and technical business, one that gets more complicated each year as food and food additives suppliers work to create products that meet modern American society’s demands for convenience, safety, taste, and other requirements.
The food-safety aspect has taken on more importance in recent years as consumers in the U.S. have experienced what appears to be an increasing number of incidents of numerous people getting sick from eating particular food products. The most recent of these scares took place at the end of 2008 and concerned commercial peanut paste, which caused many cases and several deaths from salmonella infections.
There also has been increasing concern over the global nature of food products. No longer can a consumer only get foodstuffs and food products produced in the U.S., which meant, for example, that fresh produce was only available in the summer. These days, a large portion of our country’s food products are imported, both from countries like Chile, where the seasons are reversed, but also increasingly from China and other developing nations, whose standards of cleanliness and safety (e.g., Chinese dairy and pet products were found contaminated with melamine, also lower standards of business ethics) are often lower than those in the U.S. and other developed nations.
While food products are made to become more convenient and safe, these products also increasingly strive to be more “natural” and less suspect of being “chemicals.” The last point, that is, the chemical nature of food additives, deserves more attention, for it focuses on some of the most important aspects of this report. By studying food additives, one can meet and interact with many or most of the variables that currently affect American (and world, for that matter) business, public perceptions, and politics. Consider some of these factors:
- First, food additives are, after all, chemicals, either synthetic or natural, and therefore, this is a “chemical” study with all its concomitant public and political perceptions and problems of anything even remotely “chemical” or connected with chemistry. Modern chemical technology is constantly responding to public demands for new, convenient, yet still tasty and nutritious food. However, these improvements are often looked at suspiciously.
- Second, these chemicals are in the foods we eat. Adding to the last sentence in the first bullet point, this makes such chemicals even more suspect by an increasingly suspicious and nervous consuming public that demands a risk-free society. Witness the ongoing controversy over genetically modified grains and foodstuffs to see just how concerned the public is (and how easily it can be manipulated by activists.) But that is another story. More recent events mentioned earlier, with contaminated food products from China and elsewhere, have not helped to build confidence in our food supply.
- Third, chemicals that go into consumer products can influence consumer-buying habits simply by their presence. Food additives are affected by societal and demographic changes. These are especially noticeable in the United States, with the many changes that have taken place over the last generation, for example, two-breadwinner families, an aging population, increasing influence of different ethnic groups, and other factors. Food processing companies respond with new flavors in order to meet new ethnic food markets.
Mix all these factors together and problems and ironies are found, however, there are also opportunities for those companies who can exploit both public desires and concerns. Researchers consistently find that what the public says it wants and what it actually buys often are not the same. By the same token, public desires and realities also are often at opposite ends of the spectrum. People want prepared processed foods, such as microwave foods, to look, smell and, most of all, taste as good as those prepared at home and come out of an oven. To accomplish these desires, more, not fewer additives usually are needed and are added to prepared foods. The success of these efforts can be seen in the taste, texture, and general attractiveness of new processed dinner items, compared to the “TV dinners” of 50 years ago.
STUDY GOALS AND OBJECTIVES
The objectives of this study include the following:
- An overview of the changing U.S. food industry and its business climate, including data and discussion of the American diet and food distribution systems and some major factors that affect markets for food and food additives.
- Definition and delineation of the food additives field by classifying these additives into workable categories, and technically describing these major categories and the most important individual products that compete for places in the market
- Market analyses and forecasts for U.S. food additive market values, in constant 2009 dollars for our base year of 2009 and a 5-year forecast to 2014; in these market analyses, dollar markets and growth rates are segmented for food additives both by type of additive product (e.g., acidulants) and by food product application groupings (e.g., bakery goods)
- Discussion of current and new developments in food additive research and development, and reviews of important new technology areas
- Discussion of important factors in the marketing of food additives, including distribution channels, impact of large food processors, and end-user selection criteria
- Trends and factors that will have the greatest effect on future food additives markets
- Elaboration of the competitive atmosphere among food additive suppliers, both basic producers and formulators/distributors, including their relationships with end-user food processor companies
- Discussion of environmental and regulatory considerations affecting food additives and their impact on products and markets
- Identification and profiles of many of the most important food additives suppliers, their products, and their strengths and weaknesses.
REASONS FOR DOING THE STUDY
BCC Research commissioned this study to provide a comprehensive and updated reference for those interested in food and food additives, and for those in industries that both serve and benefit from foods and food additives. Unlike some other market studies, which focus in great detail on one specific segment of food additives, such as acidulants or calorie-reduction agents, this report covers all the major categories in significant detail. This enables the reader to get a picture of the entire industry, including interactions between (and competition among) different classes of food additives.
U.S. society has undergone rapid demographic changes in the past generation or so, the major change being the increase in immigration of ethnic groups, primarily Hispanic but also significantly from Asia. This influx of new ethnic groups has continued at a significant rate to the present. Without the current severe economic downturn, we would expect such immigration, both legal and illegal, to continue apace for the foreseeable future. But economic conditions have slowed immigration, especially that of illegals from Latin America.
Even with ethnic immigration slowing down at present, there are now a large number of different ethnic groups in the United States, all with different palates and desires for particular foods. Thus, to meet this changing demand, the nature of foods sold in America continues to change, increasingly in popular prepared foods bought and served by a public that seems no longer to have the time to start every meal from scratch. Ethnic foods also tend to have specific flavors, often with spices and the like. This makes a new market for some food additives. Many of these changes are highlighted in this report and their effect on markets for food additives is noted as well.
INTENDED AUDIENCE
As we discuss in detail in this report, the U.S. food industry is very large, and the food additives industry that serves it also is large. Because of this huge infrastructure that includes many different kinds of companies ranging from small compounding shops to huge multinational chemical and food companies, this report should be of interest to a wide group of organizations and individuals. This includes people who are involved in the development, design, manufacture, sale, and use of food additives, as well as politicians of all stripes and the general public. BCC Research believes that this report will be of value to technical and business personnel in the following areas, among others:
- Marketing and management personnel in companies that produce, market, and sell foods and food additives, as well as those in organizations serving these industries. This latter group includes those who produce and install food processing equipment and parts, components, maintenance materials, and chemicals for cleaning and other uses
- Personnel in companies and other organizations who may not work in, or serve the food additives industry, but who may want to do so
- Financial institutions that supply money for such facilities and systems, including banks, merchant bankers, venture capitalists, and others
- Personnel in end-user food companies, communities, and industries who purchase and use food additives
- Government personnel, since food additives are deliberately incorporated into foods, they are watched and regulated by governments at all levels, from federal to local.
SCOPE OF REPORT
Depending on who is doing the categorization, there can be a large number of food additive categories, and no report can attempt to cover them all, especially low-volume exotic additives with small markets. In this study, the focus is on the most important classes of food additives, both the older and mature products, such as acidulants and colorants, as well as several newer, exciting products. This latter group, in recent years, has encompassed the large “calorie-reduction (CR) agent” segment, which includes fat replacers and nonnutritive sweeteners. SCOPE of report (Continued)
The scope of this study is limited to those chemical products and materials specifically considered food additives. Two terms describe the type of materials considered here:
- Direct food additives, which means those intentionally added to food, as opposed to chemicals that, for example, can migrate into food from packaging materials; the latter are called indirect food additives and are outside the scope of the report.
- Nonnutritive food additives, as opposed to food ingredients. The simplest way to differentiate food additives from food ingredients is that additives tend to improve the food but do not add nutritional value. Thus, we exclude caloric sweeteners such as sugar and high-fructose syrups, mineral and vitamin supplements, caloric flavorings like butter and chocolate (usually added in larger than trace amounts), and other food ingredients.
This study covers food additive markets in the United States, and all forecasts are for U.S. sales. Some international aspects of this large and diverse market are also mentioned, when appropriate. For example, some important food additives are imported, especially exotic, plant-derived products from specific locations throughout the world. These are noted and included where appropriate; some of them are quite important. Because food additives are, for the most part, high value-added, specialty chemicals, often produced to an end user’s specifications, volumes in pounds are less meaningful than market values in dollars. For this reason, all our market estimates and forecasts are in constant 2009 U.S. dollars.
Because of the inherent imprecision in market forecasts for dynamic and proprietary markets such as food additives, all values are rounded to the nearest million dollars. Due to this rounding, some forecast values might not exactly agree with the percentage compounded annual growth rates (CAGRs) that accompany the dollar forecasts. This discrepancy will be most apparent in small markets where 5-year growth, when rounded to the nearest million dollars, does not appear to fit the projected CAGR.
This report is segmented into sections, of which this is the first.
The second section is a summary that encapsulates study findings and conclusions, and includes summary major market tables. It is the place where a busy executive can find the major findings of this study in summary format.
The third section is an overview of the food and food additives industries and their products. It starts with a general discussion of food markets, diet, and distribution in the United States. The study then defines and classifies food additives, introduces readers to suppliers of these materials, and ends with a discussion of some factors that influence food additives markets. ope of Report (Continued)
The fourth section is the first of the market analysis sections, this one devoted to market analysis by type and/or materials used. The food additives segment is broken into seven major categories: acidulants, calorie-reduction agents, colorants/adjuvants, flavors/flavor enhancers, formulation aids, preservatives, and processing aids/others. The last group listed includes food additive enzymes, gelling agents, humectants, and several other types of additives that do not fit into other categories.
The next section looks at food additive markets by major applications and end uses in a number of markets. These include bakery goods, beverages, confectionery, dairy products, meats/seafood, snack foods and some others. It concludes with two major matrices that array the materials and markets for the years 2009 and 2014.
The next is devoted to technology, with sections covering some important current and new technologies, competitive processes and products, and the state of research and development in the food processing and food additives industries.
The following section looks at structure, competitive factors, and trends in the U.S. food additives industry, along with a broad sweep of global business and markets. Suppliers and distributors of raw materials and food additives are analyzed. The section ends with a discussion of the marketing of food additives and some international aspects.
The next section is devoted to a discussion of environmental, legislative, and regulatory factors affecting the food additives industry. These include federal laws and the regulatory process, state and local regulations, and packaging/disposal of food additives; also included is a comprehensive status report on the Nutritional Labeling and Education Act of 1990 (NLEA). The report ends with a discussion of public perceptions and policies relating to what go into food.
The last narrative section is devoted to profiles of more than 90 of the leading supplier companies in the industry.
The report ends with an appendix containing a glossary of some important terms, abbreviations, acronyms, etc., used in the food and food additives industry and related technologies.
Some topics and materials covered in the text of this report are not included in the market forecast tables. These topics and materials are included for completeness and to give the reader a full picture, for example, of new product research and development. However, they are either outside the scope of this study (such as discussion of many international activities) or may be too new to have yet developed into a measurable commercial market.
In addition, this study is devoted to food additives used in commercial processed food products; products that are also sold in stores for family use are outside our scope. This differentiation is probably most easily noted in sales of noncaloric (high-intensity) sweeteners, which are made and sold into both markets, both in bulk for food and beverage processors and in smaller packages for tabletop use in the home. An attempt was made to differentiate these usages, but it is often difficult to separate them when a producer sells the bulk product into different market segments. Thus, some of our market estimates may be lower than those of other analysts who include all uses.
Many or most of the food additives covered in this report are chemical compounds or entities. Some of them have complicated chemical names, and often, more simple generic names or acronyms, such as BHT for butylated hydroxytoluene. Many of these are listed and defined in the glossary. Product trade or brand names usually are given in uppercase letters, signifying a proprietary, often copyrighted trade name. On the other hand, generic names are given in lower case. Many chemical names often are abbreviated and shown as acronyms, such as BHT.
INFORMATION SOURCES
Extensive searches were made of the literature and the Internet, including many leading trade publications, as well as technical compendia, government publications, and information from trade and other associations. Much product and market information was obtained from principals involved in the industry. Information for our company profiles was primarily obtained from the companies themselves, especially the larger, publicly owned firms. Other sources included directories and articles.
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DISCLAIMER
The information developed in this report is intended to be as reliable as possible at the time of publication and of a professional nature. This information does not constitute managerial, legal, or accounting advice; nor should it serve as a corporate policy guide, laboratory manual, or an endorsement of any product, as much of the information is speculative in nature. The author assumes no responsibility for any loss or damage that might result from reliance on the reported information or its use.
Report Code: FOD009E, Published: November 2009, Analyst: Charles Forman
