Lingering consumer suspicion of synthetic colours, coupled with the rising preference for all-natural products, is driving uptake of natural food colours within Australia and New Zealand report market analysts Frost & Sullivan.
However, they also note that even as wider product availability and the additional health benefits offered by some natural food colours present new opportunities for growth, premium prices and the dominance of synthetic colours continue to pose significant challenges to market expansion.
From allergies and hyperactivity in children to asthmatic reactions, skin disorders, nausea and increased risk of cancer, consumer concerns persist regarding the detrimental linkages of synthetic food colours to human health. It is these fears that Frost & Sullivan say have motivated consumers to switch to natural colours, which have an established record of safe consumption. This, in turn, is prompting food manufacturers to switch from synthetic to natural food colours.
The report also notes that reduced consumption of synthetic additives and over-processed foods is reflective of the ongoing quest for 'cleaner' and 'safer' foods. In accordance with this trend, consumers are displaying a marked preference for natural food products. The rising demand for 'all-natural' ingredients is expected, therefore, to spur food product manufacturers to source natural food colours for a range of 'all-natural' offerings.
Meanwhile, positive media coverage of the health benefits associated with certain natural food colours is apparently striking a responsive chord with ever-more health conscious consumers. Research findings corroborating the beneficial effects of natural food colours such as beta-carotene, lycopene, anthocyanins, curcumin and lutein are raising public awareness levels, while encouraging their uptake. The use of these colours in the dietary supplement industry due to their perceived health benefits is further supporting consumer perceptions of natural food colours as healthy ingredients.
"As a result, natural food colour companies will increasingly have greater opportunities to leverage the rising significance of natural food colours, toward growing their market,"writes Frost & Sullivan analyst Ivan Fernandez. "This presents marketing departments with the challenge of translating increased consumer demand for natural food colours into wider application by end-user food and beverage companies."
Already, an expanding range of natural food colours and blends has conferred more options on end-user food/beverage manufacturers, helping them justify the high price of these purchases. Increased product availability is also set to improve consumer awareness and approval of natural food colouring additives.
The report estimates annual revenue generation in the natural food colour market in Australia at A$20 million (€11.4m) to A$25 million (€14.2m) with the market set to maintain current growth levels of 5 to 8 percent over the medium term. In 2002, betacarotene accounted for the largest share of revenues in the market followed by paprika, anthocyanins, carmine, annatto and curcumin.
Although these forecasts are generally optimistic, comments Fernandez, premium prices and a failure to match synthetic food colours in terms of various performance parameters are seen as major deterrents to enhanced uptake of natural food colours.
For a variety of reasons, natural food colours are often 10 times more expensive than their synthetic counterparts. And despite the fact that food product manufacturers spend only a small proportion of their total ingredient-purchase budgets on colours, they continue to expect cost savings in this segment.
Also, while significant progress has been made over the past few years to improve the shelf life and stability of most natural food colours, much still remains to be done to improve performance characteristics.
Fernandez notes: "A particularly formidable challenge is for natural colours to achieve the same level of versatility as synthetic colours such that a greater number of customised solutions become a reality in the natural food colour market."
Global multinationals such as Chr. Hansen dominate the Australia and New Zealand natural foods market. Other significant manufacturers in the market include Sensient Technologies, Roche Vitamins Australia, Cognis Australia and BASF.
The unmatched geographical and product coverage, R&D resources and ability to assume high extraction and distribution costs of these large multinationals have made it competitively difficult for many new entrants and smaller firms. For such small firms, a possible strategy would be to focus on developing a limited number of products for niche markets, concludes Fernandez.