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The market for flavors in food and drinks is fast growing, according to several recent market reports, although it's debatable about how long the growth spurt for natural flavors will last.
According to a report from market research firm RTS presented during the annual symposium of the British Society of Flavourists, the €89 billion soft drinks market in Europe is driving growth in use of flavors, colors and sweeteners.
Meanwhile, the global market for natural flavors, excluding seasonings and flavoring materials, is worth $3.3 billion and is growing at rate of 9.1% per year, a separate RTS report revealed. However, despite consumer pressure, retailer demand for natural ingredients, and globalization of food and drink products, the global market for natural flavors is still highly fragmented, RTS said.
The study, “Flavours – Natural and Synthetic,” found that issues such as the sustainability of supply and stability under different processing conditions will prevent natural flavors from overtaking synthetic flavors until 2022. In fact, at 184,236 tonnes the global usage of high-impact synthetic flavors in food and drink remains larger than that of natural flavors (currently at 132,842 tonnes). Also, rapid growth in market for natural flavors is set to slow, not only in Europe and North America but also emerging markets of China, India, Mexico and Turkey.
For example, the market in China, which enjoyed 15% year-on-year growth over the past five years, will see this slow to 7.5% year-on-year to 2015, the report said. This suggests that as these markets develop and competition grows, flavor manufacturers will need to understand and respond to the specific trends for each region in order to succeed in a fragmenting market.
The largest segments of natural flavor use globally are soft drinks and ice cream while the fastest growing are yogurts and confectionery as manufacturers of these products switch to natural alternatives, the report said.
A separate report by research firm Markets and Markets still sees "tremendous" room for growth in the global natural color and flavor market. Rising demand for natural foods and consumer avoidance has led to strong progress for natural colors and flavors market capturing around 30% global color and flavors market, the report said.
Also, unproven links between hyperactivity and behavioral problems in children and artificial colors and flavors are other driving factors for this market, the firm noted. Still, color and flavor degradation with change in pH, light, temperature, and oxidation with other ingredients is "major restrain for global natural color and flavor market," the independent research firm added.
Global consumer expenditure on food and drink in 2011 was $1.6 trillion in North American Free Trade Agreement (NAFTA) countries, $1.7 trillion in Western Europe, $600 billion in Eastern Europe, $600 billion in Central and South America, $1.7 trillion in Asia Pacific and $300 billion in the Middle East and Africa, according to RTS.