SCUP Report

Table of Contents

Abstract

This report covers six major food additive product categories, including thickeners and stabilizers, alternative sweeteners, colors, emulsifiers, enzymes, and shelf life extenders (including antioxidants and preservatives). During the past ten years the "nutraceutical ingredients" category has become so prominent that it is now covered in the SCUP Nutraceutical Ingredients report. The term food additive applies broadly to chemicals that are added to food, either intentionally or indirectly, to facilitate processing, maintain product consistency, extend shelf life, ensure microbiological safety, improve or maintain nutritional value, or enhance the organoleptic qualities (flavor, color and texture) of the finished products.

The food additives industry as a whole is highly fragmented, with a plethora of products and participants serving a common end-use market—the food industry. Additives manufacturers vary greatly in size and product/market focus. However, with a few exceptions, producers typically supply additives in a limited number of product categories (e.g., colors, enzymes, vitamins) or service selected food sectors (e.g., dairy-based products, meats, bakery products). Downsizing and consolidation in the food industry have over the last fifteen or so years had considerable impact on traditional customer-supplier relations. Food additive manufacturers are required to provide more technical service and formulations expertise and to compete more aggressively for a smaller number of large accounts. Distribution is typically direct from additive producer to food processor for large-volume sales, with distributors playing an important role in servicing/supplying regional and/or smaller accounts.

The following pie chart provides a breakdown of the total consumption of food additives in North America, Western Europe, Japan and China:

While there are many differences in food tastes and preferences among the world regions, the major trends driving the food additives industry appear to be very similar in all regions—concern over health and nutrition (particularly the need to control widespread obesity and diabetes and recognition of food allergies), food safety, desire for convenience, the concept of value-added products, the ever-increasing costs of energy and raw materials and high costs associated with R&D and regulatory compliance, and new product commercialization. Growing concern regarding the connection between diet and major diseases such as cancer and heart disease has caused consumers to reexamine their diets and lifestyles and seek healthier alternatives. Consumers' desire for healthier, more nutritious and allergy-free foods will favor natural additives and ingredients as well as those that reduce calories, sodium and cholesterol, and additives that sound natural (e.g., pectin, vitamin C, enzymes) versus chemical (e.g., potassium benzoate, butylated hydroxyanisole) will have a more favorable consumer image.

The practice of adding chemicals (e.g., salt, spices, herbs, vinegar, smoke) to food dates back many centuries. In recent years, however, the ubiquitousness of chemical additives in processed foods has attracted much attention and public concern over the long-term safety of additives to humans. Although the food safety issue is by far the leading concern today, there is scientific consensus that food additives are indispensable in the production, processing and marketing of many food products, and that the judicious use of chemical additives—typically in the range of a few parts per million to less than 1% by weight of the finished food—contributes to the abundance, variety, stability, microbiological safety, flavor and appearance of the food supply. While food additives offer a major contribution to the palatability and appeal of a wide variety of foods, their level of use is relatively insignificant in the total human diet.

R&D for food additives can be quite costly, with R&D expenditures as a percent of sales ranging from 1% or less for average products such as preservatives to 5% or higher for more technical products such as high-intensity sweeteners, nutraceutical ingredients and natural colors, and 5–10% for flavors. These costs, coupled with the time and money needed to perfect, gain approval for and successfully market a new food additive product, may make new product development unattractive for many additive producers. Volumes of some additives used by the food industry are quite small and pricing is highly competitive, so potential sales are not large enough to warrant extensive R&D.

Genetic modification of foodstuffs or the raw materials from which many additives are derived is an issue on which the major regional markets have significant disagreement. In the United States, there is no requirement that food ingredients or additives derived from GMO sources be labeled as such on finished food products. In Europe, where suspicion of biotechnology is much more entrenched, regulation requires that foods and food ingredients wholly or partly derived from genetically modified soybeans and corn must be labeled accordingly.

The safety of the food supply continues to receive a great deal of attention from the press, public and government. The outbreak of E-coli food poisoning in the United States in 2002, eventually traced to ground beef, caused fundamental changes in regulatory policies and demonstrated to food processors the need for increased caution against food pathogens.

The value of food additive consumption for the product areas covered in this report is projected to grow at an average annual rate of 2.4% (fixed price dollar basis) per year to 2015. The fastest growth rates for these products will occur in China, with moderate growth rates in the United States and Western Europe, and little to no growth in Japan.