Trade Statistics Europe Natural Colours Flavours Thickeners 2014

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CBI Trade Statistics

Natural Colours,

Flavours and Thickeners

Broadcasting your trade statistics

Management summary

The European colours, flavours and thickeners market has shown strong

performance over the past 5 years. The market has now fully recovered from

the global economic crisis, which had caused a dip. Higher prices of raw

materials and more production of complex products caused a strong increase in

turnover of colours, flavours and thickeners manufacturers. Natural flavours

gained market share at the cost of synthetic flavours and this shift is expected

to continue in the next few years.

Imports of colours, flavours and thickeners

Figure 1: Leading suppliers of European imports of

natural colours, 2009-2013, in million

Figure 2: Leading European importers of natural colours,

2009-2013, in million

Source: Eurostat (2014) Source: Eurostat (2014)

0

100

200

300

400

500

600

2009 2011 2013

India

Peru

China

Other DC

imports

Non-DC

imports

0

20

40

60

80

100

120

Netherlands Germany Spain France UK

2009

2011

2013


natural flavours, 2009-2013, in million

Figure 4: Leading European importers of natural flavours, 2009-

2013, in million


0

200

400

600

800

1,000

1,200

1,400

2009 2011 2013

Indonesia

Brazil

Argentina

China

India

Other DC

imports 0

50

100

150

200

250

300

France Germany UK Netherlands Ireland

2009

2011

2013

CBI Trade Statistics Natural colours, flavours and thickeners


Table 1: European imports of natural colours, flavours and thickeners, 2013, value in million and

volume in thousand tonnes

Source: Eurostat (2014)

Suppliers of natural colours, flavours and thickeners benefit from rising price levels

Between 2009 and 2011, the global food ingredients market recovered again

from the global food crisis and European buyers replenished their stocks.

Leading suppliers India and China benefited most from the recovery,

followed by Sudan and Brazil.

Although prices of a few raw materials decreased in 2013 (e.g. gum Arabic),

rising average costs of raw materials and energy continued to drive up total

import values in 2013. Moreover, China and India are becoming major

consumption markets that compete with European buyers for raw materials.

Suppliers of guar gum benefited from exceptionally high prices ( 15 /kg)

between 2010 and 2012. Prices came down to 2 after decreased interest

from the oil industry and increased production.

Nonetheless, high pressure on land use in certain geographical areas can

cause farmers to switch to others crops. It is therefore expected to lead to

sustained higher prices for raw materials which can only be grown there.

Supply chain problems for many natural colours, flavours and thickeners

slow down imports of these products. Many European food and beverage

manufacturers continue to use synthetics, as supply chains for those

products are sometimes more reliable.

Major suppliers of flavours such as citrus and vanilla are developing strong

provenance stories, which strengthen trade relationships with their buyers.

By using the provenance story in their marketing, buyers also make

themselves more dependent on these particular products.


natural thickeners, 2009-2013, in million

Figure 6: Leading European importers of natural thickeners, 2009-

2013, in million


Product group Import value Import volume

Colours 498 64

Flavours 1,239 115

Thickeners 1,180 324

Total 2,893 502

0

200

400

600

800

1,000

1,200

1,400

2009 2011 2013

Pakistan

Philippines

China

Sudan

India

Other DC

imports

Non-DC

imports0

50

100

150

200

250

300

Germany France UK Italy Spain Netherlands

2009

2011

2013



Table 2: DC suppliers of colours, flavours and thickeners

Leading DC

suppliers

Main products Share in European

import value

(2013)

Annual growth

(2009-2013)

India Guar; oleoresins 9.4% 23.4%

China Essential oils other

than mint and citrus;

carrageenan

6.9% 16.7%

Brazil Citrus oils 2.2% 12.0%

Indonesia Essential oils other

than mint and citrus;

carrageenan

2.1% 10.4%

Sudan Gum Arabic 2.3% 16.2%

Argentina Lemon oil 2.2% 16.1%

Philippines Carrageenan 1.5% -1.9%


Cochineal and turmeric are two major natural colours imported into the EU.

Peru, accounting for 85-90% of global cochineal production, exported

cochineal with a value of approximately 42 million in 2013. Between 2010

and 2013, cochineal export value fell sharply from 156 to 42 million.

After 2 years of exceptionally high prices, price levels had normalised again.

India accounts for most supplies of turmeric and exported 89 thousand

tonnes in 2012 with a market value of 65 million.

Table 3: Market value of colours

Carotenoids

Market value 2010

in millions*

Expected annual growth

(2010-2018)

Beta-carotene 197 3.1%

Lutein 176 3.6%

Astaxanthin 170 n/a

Capstanhin 96 n/a

Annato 96 n/a

Other 171 n/a

Total 906 2.3%

* food industry and others

Source: BCC research

CFA1: If you supply a product which cannot be sourced in Europe, promote it as

a unique product and stress the particular production conditions

CFA: Be careful with market entry at times that prices are exceptionally high, as

they can fall rapidly

CFA: Please refer to CBIs Product Factsheets for more information on specific

flavours, colours and thickeners, including prices, trade channels and

competitive forces

CFA: Improve the reliability of your supplies to Europe to facilitate substitution

of synthetics by European manufacturers

1 Considerations for action



CFA: Stress the reliability of your supplies in your promotion

CFA: If you want to position your product as a unique product, you can relate a

provenance story to your products specifications

Exports of colours, flavours and thickeners

Figure 7: Main destinations of European exports of colours, flavours and

thickeners, 2009-2013, in million


Large companies dominate intra-EU trade

Exports by European companies mainly consist of value-added products (i.e.

blends of different thickeners and flavour ingredients).

The re-exporters are primarily concentrated in Western Europe and 60% of

these re-exports are destined for other European countries.

The port of Rotterdam in the Netherlands is one of the main European

distribution hubs where customs clearance takes place. This explains the

large role of the Netherlands in re-exports.

Market Total European exports (2013)

Main (re-)exporters

million

million tonnes

Colours 530 46 thousand Netherlands (134), Germany

(73), Denmark (67)

Flavours 998 59 thousand France (240), UK (168),

Germany (132)

Thickeners 783 152 thousand France (172), Spain (143),

Germany (119)


In the short term, European exporters will expand their business significantly

in East European markets and other emerging markets, such as Southeast

Asia and Latin America. This will increase competition in the respective

markets. However, growth in these emerging markets may also increase

opportunities for other suppliers.

In that same period, the shares of natural and synthetic flavours in total

exports are expected to slightly change in favour of natural flavours.

0

500

1,000

1,500

2,000

2,500

2009 2011 2013

Italy

UK

Netherlands

France

Germany

USA

Other destinations



CFA: Please refer to CBIs Market Channels and Segments for more information

about trade structure.

CFA: Emerging markets outside Europe, such as Southeast Asia and Latin

America also offer plenty of opportunities.

CFA: Please refer to the following section on industrial demand for more specific

information on the European industry and its key players

Industrial demand

Flavours

Figure 8: Development of the worlds leading flavour manufacturers, sales in

billion

Source: Leffingwell & Associates (2014)

Demand for flavours remains strong

Increased West European demand for more complex flavours has driven

sales values of flavour manufacturers upwards. In Eastern European

markets, increased demand for flavours in general has stimulated sales.

Emerging markets outside Europe, such as Southeast Asia and Latin

America, also made a significant contribution to the growing sales of flavour

manufacturers.

In recent years, natural flavours performed notably better than synthetic

flavours as a result of the clean labelling trend. Clean labels do not contain

the names of ingredients which sound unhealthy to the majority of

consumers, such as chemicals.

0

2

4

6

8

10

12

14

16

18

20

2009 2011 2013

Other

Robertet SA

Frutarom

T. Hasegawa

Mane SA

Sensient Flavours

Takasago

Symrise

IFF

Firmenich

Givaudan



Figure 9: Composition of Western European flavours market in 2009 and 2014

Source: RTS Resource, 2010

Rising costs of raw materials, such as essential oils, and energy continued to

drive up sales values of flavours in 2013. Suppliers of the raw materials

benefit from the high prices.

Between 2012 and 2013, the euro crisis, which mainly affected South

European countries, caused a stagnation of growth in demand for flavours in

these countries. Since most economies recovered from the crisis in 2014,

demand for flavours is expected to grow again.

Consumer interest in natural flavours also remains strong in 2013, as

consumers continue to look for natural and healthy products.

CFA: You can target both Western and Eastern European markets to diversify

your markets and reduce dependency on either single market

CFA: If you aim to export relatively expensive, niche flavours, Western Europe

offers most opportunities

CFA: Clean labelling offers opportunities to suppliers of all natural ingredients,

except for those that are not perceived to be healthy

CFA: Rising prices for flavours and their raw materials indicate good

opportunities to enter the market, as supplies do not meet demand

CFA: For more information on the European food industry, please refer to the

2012 Data & Trends of the European food and drink industry, as provided by

FoodDrinkEurope



Colours

Figure 10: Composition of the global market for food colours, 2011

Nature identical colours have the exact same molecular structure as the naturally derived

equivalent, but are derived through chemical synthesis instead

Source: Market Research Times, 2013

Natural colours continue to gain market share

Between 2007 and 2011, the value of the global food colours market

increased by 13% to an estimated 1.6 billion. The share of natural colours

(39%) overtook the share of synthetic colours (37%).

The greatest shift from synthetic to natural colours occurred in Europe. In

Europe, research into the negative health aspects of certain synthetic colours

received considerable media attention. Between 2009 and 2011, 85% of

colours used in new food and beverage launches were natural. Estimates of

the European natural colours market range from 155 to 193 million.

Consumers perceive natural colours to be safer than synthetic colours. In

addition, the perceived health benefits of some natural colours (such as

curcumin, beta carotene, lutein and lycopene) encourage the replacement of

synthetic colours. Natural colours have become increasingly stable in varying

conditions of temperature, light and pH and, as a result, can more easily

replace synthetic colours than in the past.

Future growth of natural colours is threatened by rising raw material costs

and supply insecurity. Many manufacturers have already undertaken

measures to safeguard future supply, such as joint ventures with producers.

CFA: Support manufacturers in switching to natural colours by addressing two

problems:

1) lack of knowledge about reformulation with natural ingredients: provide

detailed information about specifications, applications and behaviour under

different temperatures, acidity levels and light conditions

2) quality inconsistencies: implement a strict quality management system to

supply products with a consistent quality

CFA: Stabilise supply volumes by increasing control over your own supply

chains, protecting crops against irregularities in climatic conditions (e.g.

controlled irrigation) or keeping stocks

CFA: Secure long-term business with existing buyers instead of short-term

profit from single orders

39%

37%

24%

Natural colours

Synthetic colours

Nature-identical



Thickeners

Figure 11: Composition of global thickeners and other hydrocolloids market

Source: Food Ingredients First, 2009

Demand for thickeners is stable

The European market for thickeners was estimated at 1.4 billion in 2012,

which represents one third of the global market.

From 2011 to 2012, the European food industry grew by 3.1%, which has

been a driver for the thickeners market. However, unstable supply chains for

many thickeners, mainly due to adverse weather conditions, limited the

positive effect of this development.

Maturity and saturation of the Western European markets is slowing down

growth in 2013; this will continue into the near future. In contrast, Eastern

European markets add to the growth rate.

In the short-term, the European market for thickeners is expected to grow as

there is an increasing demand for low-calorie and low-fat food products.

In the long-term, greater demand for new, complex foods (e.g. slower

melting ice cream) will drive industrial demand for natural thickeners.

However, the growth rate will be low, as the sustainability of supplies of

many thickeners is under pressure.

CFA: The fact that many food and beverage manufacturers still use synthetics,

less efficient thickeners (e.g. starches) and non-vegetarian thickeners (e.g.

gelatine), means there are still many opportunities for substitution by natural

gums

CFA: If a thickener that is in short supply could be replaced by your thickener

(e.g. guar and tara gum), target users of the relevant thickeners and highlight

the substitution options

CFA: As most Eastern European markets are supplied through traders in

Western Europe, you do not need to adapt your distribution strategy if you are

already supplying to these traders

31%

20% 11%

10%

5%

5%

4%

3%

3% 3%

2% 1% 1%

1% Starches

Gelatin

Pectins

Carrageenan

Xanthan

Agar

Gum Arabic

Carboxy Methyl Cellulose

Locust bean gum

Alginates

Guar gum

Microcrystalline cellulose

MC/HPMC

Other



Production

Flavours

(!) Please note that production data on essential oils is unavailable or incomplete

from several European countries. For that reason, production is based on the

following countries: France, Germany, Italy, the UK, Denmark, Greece, Spain,

Poland, the Czech Republic, Hungary, and Bulgaria. Therefore, care should be

taken when drawing conclusions based on the figure below.

Figure 12: European production of essential oils, 2009-2013, in million

Source: Prodcom (2014)

Market efficiency keeps European production profitable

Between 2009 and 2011, growing demand for natural ingredients,

particularly for fragrances, and high prices drove essential oil production in

terms of value. From 2011 to 2013, average prices and production of

essential oils stabilised with exceptions for individual products.

In the short-term, production is expected to remain stable, as producers

have strong ties with manufacturers of flavours, foods and beverages. The

latter often prefer to purchase from European producers, as these generally

have better reputations than producers in developing countries.

As suppliers in developing countries improve their reputation, they will

become stronger competitors. Competition is therefore expected to lead to a

decline in European production in the long term. Production of flavours that

require a great deal of labour will come under most pressure.

CFA: Benefit from low labour costs in your country to compete on price with

European producers

CFA: Improve your reputation by:

1) Submitting representative batch samples

2) Delivering according to the agreed terms

3) Showing an understanding of the buyers needs

CFA: Please refer to CBIs other Market Intelligence products on Natural colours,

flavours and thickeners for more information

0

100

200

300

400

500

600

700

2009 2011 2013

Other

Bulgaria

UK

Italy

Spain

Germany

France



Thickeners

Figure 13: Provenance of thickeners and other hydrocolloids in Europe

Source: ProFound

Europe only produces a few types of thickeners

European production of thickeners is coming under pressure from foreign

competition. Locust bean gum producers face particularly strong competition

from guar gum producers in India and Pakistan, and tara gum producers in

Peru.

Many seaweeds and algae used for European production of thickeners are

already sourced outside Europe. The Philippines, India, China and Indonesia

are major suppliers of (semi-)processed seaweeds and algae.

Pectin production in Europe has grown strongly. Major manufacturers have

invested heavily in the production of this natural gelling agent and stabiliser

in response to the clean labelling trend.

CFA: Despite good alternatives for high-priced thickeners which are produced in

Europe, many food manufacturers lack the knowledge about availability and

application of such alternatives and need to be informed

CFA: Supplies of seaweed- and algae-based thickeners are dominated by very

strong companies, which makes it difficult for SMEs to enter this market

CFA: Producers of thickeners which can be substituted by pectins face strong

competition

This survey was compiled for CBI by ProFound Advisers In Development

in collaboration with CBI Sector Expert Peter Meschede

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

Trade Statistics Europe Natural Colours Flavours Thickeners 2014

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