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Natural Additives

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Changing lifestyles and hectic work schedules have spawned a large market for processed and packaged convenience foods. The booming organized retail sector further extends the reach of processed foods. Change in eating habits and the frequent introduction of new products and product lines, particularly in the functional food and beverage market for low-fat, low-calorie products, spells growing opportunities for the food additives market. The market also finds encouragement in supportive government measures, such as policies to promote easy access to loans for small-scale food processing industries.

A new study Analysis of Indian Food Additives Market from Frost & Sullivan, finds that market revenues, which stood at $484.2 million in 2012, are expected to reach $897.7 million in 2017. The study covers the food additive classes of flavours, colours, preservatives, emulsifiers, stabilisers and sweeteners. Among these segments, flavours account for 47 percent of the market; sweeteners contribute the least, by growing at a rate of 25 percent, however, expected to become increasingly popular in the coming years. Flavours are expected to grow at 13.9 percent, synthetic colours at 7.4 percent, natural colours at 12 percent, preservatives at 15 percent and food emulsifiers at 10.1 percent.”
The additives industry in India is veering towards natural emulsifiers and nature-derived colours,” said Frost & Sullivan’s Chemicals, Materials & Foods Research Analyst. “This change in preferences emanates from the increasing health consciousness among Indians.”

However, natural food additive manufacturers find it difficult to source raw materials due to the lack of centralised supply chain system and presence of multiple sourcing points. The study finds that participants can forge partnerships with cooperatives and invest in contract farming to counter this issue. Such strategic alliances and joint R&D could also lower the prices of nature-derived products and lead to customised pre-mixes with application specific combination of flavours, colours and other additives for clients.

Some of the market restraints include lack of cold storage infrastructure, an advanced logistics and transportation system for perishable goods, which leads to substantial wastage of agro-produce, adversely affecting farmers and natural food additive manufacturers. In response, the Indian government has allowed 100 percent foreign direct investment to attract large industry groups to invest in developing cold chain logistics.”
Ironically, certain government policies could stifle innovation,” noted the analyst. “For instance, the Prevention of Food Adulteration Act (PFA), which governs the food additives segment, permits only certain colours that are certified by the Bureau of Indian Standards (BIS).” Nevertheless, continuing product and process innovations in the food and beverage sector will motivate the additives market to expand its product portfolio, along with the entry of global participants will serve as market drivers and can lead to an increase in market consolidation. As smaller retailers from the unorganised sector are acquired, the margins of larger manufacturers will improve.

Source: ‘Analysis of Indian Food Additives Market’  –  Frost & Sullivan

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