The global food additives market is valued at approximately US$19.60 billion. Flavours represent the largest segment with a value of US$5 billion, followed by hydrocolloids at US$2.82 billion, flavour enhancers US$2.5 billion, acidulants US$2.16 billion, sweeteners US$1.5 billion,
and gums and thickeners US$1.41 billion.
Annual global volume growth for food additives is estimated at 2.5-4.0 percent for 1997-2002.
The largest geographic markets for food additives are Europe, the United States and Japan, accounting for US$12 billion of the total world market demand. Developing countries made up about US$3 billion.
Growth is predicted to be most robust in emerging markets in Latin America and Asia, especially China, Brazil, Mexico and India. These countries are becoming increasingly important for food additive suppliers, as demand for further processed foods in these regions is growing rapidly.
Specific ingredients such as antioxidants and preservatives are in particular demand.
A number of other key trends are also influencing the development of the food and drinks market worldwide, and they will all impact the food additives market. These include:
- an increase in healthy eating, which has boosted demand for artificial sweeteners and fat replacers;
- an increased demand for natural and organic foods, which has held back many additive categories but prompted growth in natural flavours and colours;
- increasing trend towards snacking and convenience, which has implications for a number of additive categories, such as preservatives, which are required to maintain freshness in products that are likely to be eaten on the move, and flavours, with many modern snack foods featuring novel and unusual flavours and tastes.
Consumers have become increasingly interested in improving health through the diet over the past few years. This has led to the development of several entirely new additive categories.
One main focus of healthy eating is fat and sugar reduction in the diet, which has influenced development of the fat replacers and sweeteners categories. Other additives, such as hydrocolloids, many of which can be used as fat replacers, have also benefited from consumer concerns about fat and sugar intake.
The current boom in the functional foods sector has led to the development of an entirely new set of functional foods ingredients, including products like omega-3 fatty acids and phytosterols for cholesterol control, and probiotics and prebiotics for gut health.
At the same time, established food additives like vitamins, minerals, amino acids, proteins and antioxidants are also finding more widespread use as functional food ingredients. More and more foods are being fortified with vitamins and minerals, while amino acids and proteins are being added on to sports and energy foods and drinks.
The international food additives market, which used to be dominated by major western companies, is gradually attracting more Chinese investors, as emerging markets in Asia and Latin America start to develop rapidly. In recent years, these Chinese companies have built up a particularly strong chemical and additive supply industry.
Production in these regions is much cheaper than that in Europe and the US. Consequently, some of the established additive companies have begun to invest in developing their own production sites in these countries for more effective competition.
Currently, however, real innovation in the additive industry, and particularly in areas such as functional food ingredients, will continue to come mainly from European and US companies.
Opportunities in Asias food and beverage sector
But despite having suffered a severe financial setback, Asia remains one of the most attractive and fastest growing economies in the world. With the regional economies showing positive signs of recovery, as well as other factors like on-going industrialisation, increasing demand for processed foods, legislation changes, and a greater discernment on the part of consumers for quality products, ingredient suppliers are becoming increasingly optimistic about the future.
For instance, with the lowering of tariffs in a number of Asian countries, particularly for agricultural products, companies such as Australia-based Manildra Group, which supplies a wide range of flour, starch, sugar and wheat protein products to Asia, foresees good potential in the future.
It was developing a range of protein products from wheat that will replace milk and soy, to be released in the second half of 1998.
The companys spokesman, Peter Simpson, said that the quality requirements of clients in the region are no different from those in the American food and beverage industry. Asia, he says, is quite sophisticated and also require quality raw materials.
For another company, Defiance Milling Co., one of Australias leading miller and bakery which supplies its mixes to Cadbury Schweppes, and Kit Kat, among others, legislation changes would also mean more opportunities for them.
International manager David OBrien said that for instance, there is now a chance for them to enter the Taiwan market, which used to have a 45 percent duty on flour imports. Now, the import duty is only 25 percent. He also pointed out that there used to be only three types of flour in Taiwan or Indonesia due to regulations, but now there are more choices. And in Indonesia, local mixes are at the moment not available.
Currently, a glance at Asias food and beverage industry reveals that major areas of opportunities include Asian foods, as well as localised western products. Also, as consumption trends in the region continue to develop, segments like convenience foods, dairy, bakery, snacks, confectionery and beverages are expected to grow into the next century.
And although the level of sophistication within the food processing industry varies from country to country within the region, some common trends in Singapore and the major cities of Thailand, Malaysia and the Philippines can be observed.
The following are some fast emerging trends within the food market in Asia Pacific.
1. Functional foods
Industry experts are foreseeing a burgeoning market for functional foods in Asia. Consumers are increasingly demanding products that are healthy, convenient and of higher quality, and manufacturers will need ingredients that can assist them in these areas.
Functional foods, usually perceived to be a niche, premium market, would be the segment to watch in the next century as Asias market gets more sophisticated.
Here, a few industry players map out some products that will become popular, with some already launching or aggressively promoting functional food ingredients to cater to them.
Shirley Ng, regional sales manager of Borregaard South East Asia said that food products which have nutraceutical ingredients or good for you benefits would be the next trend. Examples of such products include those that have anti-stress, anti-ageing or health promoting benefits, but possessing intensive flavours, tastes and aroma at the same time, she says.
Orafti is meanwhile focusing on dairy dry mixes and bakery products such as biscuits when promoting their functional ingredients in this part of the world, says Paul Coussement, Ir., its director of sales and marketing and regulatory affairs.
In Asia, the company is concentrating more on calcium rather than the low fat or low calorie claims, as was their strategy abroad. People in Asia do not have a weight problem as they do in the West, it said.
And to capture more market, companies like SKW Biosystems Asia-Pacific and Palsgaard Asia Pacific Pte Ltd had launched functional ingredients like pectin supplements and heat-stable emulsifiers, respectively. Gerald Dard, managing director of SKW Biosystems Asia-Pacific said the pectin supplements, introduced in Japan, were promoted as a cholesterol reducer.
Also, Global Palm Products Sdn.Bhds, a subsidiary of the J.C. Chang Group, has launched carotino a functional edible oil for consumers in 1998. The product, rich in natural carotene and Vitamins A and E is a cooking oil for everyday use, and can also be used as an ingredient in products such as biscuits, bread and other bakery products where fats is an essential components.
Being cholesterol-free, and also free of trans-fatty acids, preservatives or additives, carotino represents a niche market.
Probiotics
Meanwhile, Asian consumers are gradually accepting foods spiked with functional ingredients like probiotics. In the past few years, probiotic cultures such as acidophilus, bifidus and L-casei have generated a lot of interest in the region, especially the developing economies, due to their abilities to aid digestion, displace harmful bacteria in the colon and promote regular bowel movement. This may help to prevent colon cancer, one of the top cancer killers in developed countries.
Probiotics, which were traditionally used in fermented products like cultured milk drinks or yoghurt, are more and more being utilised in non-fermented products. For instance, Nestles new Neslac (for the one-year old onwards) now contains bifidus.
Interest in this area has also led to a possibility of incorporating probiotics in non-dairy foods, beverages, non-fermented milk and dairy supplements.
Apart from health and marketing reasons, incorporating cultures in certain products help lower production costs.
Challenges ahead
1. flavour enhancers to mask offensive smells in vitamins or minerals
Ng of Borregaard South East Asia says the challenge now is for researchers to develop technologically innovative products with new formulations to meet demands in functional products.
There will be an increase in the need for flavourings such as vanillin/ethyl vanillin, as a flavour enhancer to mask certain offensive smells that are apparent in some vitamins or minerals, or to compensate the loss in profile as a result of less sugar, cream or fat, she adds.
One market Ng says should not be ignored is the ageing segment. Food processors should constantly come up with food products that not only offer nutraceutical benefits, but also stronger tastes and aroma. The category of ageing consumers will need stronger and tastier food products, as the sweet and salty senses in elderly people tend to degrade faster.
It would thus be a challenge for ingredient companies to overcome the chemical hurdle involved in finding new replacers for common salt and sweetness, and to discover new ingredients that can produce flavours that are linked to the four taste senses.
2. Adding values to basic food staples
Jean Chew, technical expert for human nutrition and health at Roche Vitamins Asia Pacific, pointed out one way to expand the demand for functional foods - by adding value to basic food staples like rice, flour and noodles. And although manufacturers and consumers alike were suffering from the brunt of the recession in the past two years, and expansion of the functional/fortified food range has taken a back seat, things are expected to turn around when consumers start to pay more attention of vitamins intake.
3. Guidelines/legislation to regulate health or functional foods
There is also a need for guidelines or legislation to regulate the health foods or functional foods segment. Martien van den Hoven and Ben van Valkengoed, marketing and sales director of DMV International and technical sales manager of DMV Far East, respectively, said that countries like China and Japan have already done so. Another set of guidelines is expected soon in Korea.
With an increase in demand for healthy, functional foods, the implication for ingredient suppliers is that more information on functionality and efficacy of ingredients will be needed. As such, more clinical studies need to be done, or that results of FDA- or USDA-approved procedures are needed by ingredients customers, in order to make health claims on their products, they said.
2. Asian ready-to-eat foods
Many ingredient producers are especially optimistic about the regions convenience and ready-to-eat foods sector, as more and more Asians are turning to this segment of the market due to rapid urbanisation and work commitments.
Both John F Botellio, regional business manager and Lee Lai See, market development manager of Eastman Chemicals Asia Pacific foresee a growing potential in processed and convenience foods in the region. Sadao Kokubo, senior manager for overseas marketing of Mitsubishi-Kagaku Foods too remained optimistic of the future of this segment.
As the food industry in the region becomes more industrialised, there is an increasing need to cater to the tastebuds of Asians.
Craig R Park, food and pharmaceutical division manager (Asia Pacific region) of AVEBE (Far East) Pte Ltd thought there remained a need to develop new ingredients that provide functionality to local texture and taste requirements.
Instant noodles
Among convenience foods, the instant noodle segment has been singled out as a potential growth sector.
Etienne Selosse, director of Rhodia Food Ingredients Asia Pacific, said that in this area, Asia leads in terms of technology, and most new developments happen in the region.
Rhodia Food, one of the worlds largest suppliers of guar gum and xanthan gum, has recently established a food laboratory in Singapore, which would work closely with its Shanghai food laboratory to carry out R&D work in instant noodles. It believed further improvements are required for this product.
Philip Ho, regional business manager for Southeast Asia, said that currently, there is a need for manufacturers to come up with a product that can withstand a longer heat treatment. Most consumers prefer the texture of instant noodle to be firm, with a good, chewy bite, but some noodles, despite their initial firm texture, become soggy in the midst of the eating period.
Another problem is oil absorption in noodles during the frying stage. Says Ho, less oil absorption not only reduces production cost, but also allows the manufacturer to have a healthier, less greasy product with a longer shelf life.
He also revealed their involvement with Singapore Polytechnic and the US Wheat Associates (where both institutions have set up the Asian Noodle Development Centre), where they hope to find out how their ingredients can improve noodles in general.
Eastman Chemicals Asia Pacific is another company that is doing more research in instant noodle products. It is conducting experiments with the customers to show them that incorporating antioxidants in their products is actually a more cost-effective strategy.
And to some western companies, the Asian customer is just as important as his western counterparts. In 1996, brand owner of Maggi Nestle created assam laksa and tom yam flavours to cater to the Asian taste buds. In 1998, German flavour house Haarmann and Reimer (SEA) introduced a brand new range of mushroom flavours for instant noodles, as it found that Asia lacks a good mushroom flavour.
Dumplings
Dumplings are popular items with the Chinese in Asia. While there are many such products in the market, especially China and Taiwan, AVEBE thinks that there is room for improvement where quality is concerned.
Explains the companys Park, As an example, you do not need too much functional starch nor value-added ingredients to maintain a traditional fresh (dumpling wrapper) texture. Nowadays, with industrialised production of such products, what is required is a freeze-thaw stable (wrapper). Otherwise the dumpling will split when the consumer picks it up after it has been thawed out. We believe that if the quality of Asian food is made as good as western convenience products, and is conveniently available, the demand will grow.
Ethnic sauces
Besides instant noodles, Rhodia Food is also carrying out research work on ethnic sauces. Ho explains that more ethnic sauces are being manufactured here and exported from this region to Europe.
Although oyster sauce still remains one of the most common and popular ethnic sauces in Asia, the variety of ethic sauces has expanded to include plum sauce, lemon sauce, etc.
The western world is not familiar with such products and they do not have enough know-how or information on them. We therefore need to develop our own knowledge base and concentrate on how we can better stabilise and improve the texture of Asian sauces here in Asia itself, said Ho.
Functionality of hydrocolloids in sauces (and instant noodles) includes better mouthfeel enhancement, moisture retention and longer shelf life.
3. Dairy products
As calcium becomes a vital part of the daily staple in developing countries like Thailand and the Philippines, there is good potential in the dairy sector in the region.
PH Yeoh, regional sales manager of Copenhagen Pectin, a division of Hercules Inc., said they are confident especially of Thailand, which remains a strong market, as government campaigns in recent years have successfully integrated dairy products into the peoples diets. As such, the dairy sector was relatively less affected by the regional turmoil.
Copenhagen Pectin is one of the leading suppliers of pectin to the yoghurt drink and acidified milk product sectors in the Kingdom.
Also active in the dairy industry is Danisco Ingredients, which acquired British flavour house Borthwicks in 1997. In Asia, their products are applied to acidified milk, yoghurts, dairy desserts and ice cream. Annual growth, according to the company, has been 2 digits.
Philip Ho of Rhodia Food expected the market to be even more segmented and specific in their target audience.
You have already witnessed a lot of segmentation going on in the dairy industry. Ten years ago, the market has probably one type of milk powder. Now you have several types, one for expecting moms-to-be, another for after-birth, and a whole range of follow-on formulas for children. The food processing market will be more defined in the coming years as the consumer has more spending power, becomes more educated and sophisticated, he says.
Martien van den Hoven and Ben van Valkengoed of DMV also thought there are plenty of opportunities, since dairy products like milk, yoghurt, cheese and ice cream are gaining popularity in Asia.
Calcium-enriched products
As Asians become more aware of the importance of calcium in their diet, food manufacturers in the region are offering juices, biscuits, bread, milk, milk powders, etc., food products that are fortified with calcium to their marketing advantage.
Frank Systermans, market development specialist (food) from Purac Far East Pte Ltd said that many consumers and processors are looking into what is happening in the States and Europe, and consuming enough calcium in your diet is the most important message now.
The consumption growth of calcium enriched juices in the States, according to Systermans, is 35 percent, as opposed to 3 percent in regular juices. This message is especially applicable to Asia, where demand for sports drinks, energy drinks and Asian-style soy milk are recording commendable growth.
In North Asia, such as Korea, Japan and Taiwan, there is already a big market for clear, non-carbonated calcium water.
4. Lite products
The lite segment, which used to be a purely Western concept, is now apparent in many Asian countries, albeit at different levels of acceptance.
Mike OMahony, Director of Kelco Biopolymers at Monsanto Singapore Co., said that many beverage producers in Asia are reducing sugar in their product formulations. This partial sugar replacement, he says, or what was called mainstream product improvement, is definitely the next in-thing in the region.
The Monsanto Company will be concentrating on strengthening its core gum and sweetener units as a result. It was also working on a milk beverage featuring the high intensity sweetener aspartame.
Koichiro Inoue, board director and chief representative of the Singapore office of Mitsubishi-Kagaku Foods also sees a rising demand for sugar-free food and beverage products. He cited the growing concern for diabetes in Asia as the main reason. More people are cautious about having too much sugar in their diet. In Thailand, some low-calorie foods have already been introduced, he says. The company is currently waiting for approval from authorities in Southeast Asia on the sale of its low-calorie bulk agent, erythritol.
Anne Jonkhans, managing director of Purac Far East, and Iwan Blankers, regional sales manager, are also confident about this segment of the market. For us, if people are interested in a beverage that is sugar-free, then it is clear that the lite food segment will take off. Lite beverage will be the trend indicator. This means that they are ready to consume low fat, low sugar foods.
Purac produces Lacty, which is a trade name for lactitol, a crystalline polyol derived from lactose. Containing 50 percent less calories than sugars, this non-hydroscopic low calorie bulk sweetener can be applied to chocolate, ice cream, candies, baked goods, chewing gum, and hard panning.
And although going lite is now the trend, most Asians are still not used to consuming low fat, low sugar products. However, Mahony expected their receptivity to functional foods to eventually translate into an interest in products with less sugar or fat.
Low interest for fat replacers
However, some ingredients for the lite segment are finding lukewarm response in Asia, one being AVEBEs range of fat replacers, which include Paselli Excel, Paselli SA2 and Paselli D-Lite.
Gerard Klein Essink, technical manager at AVEBE (Far East) said that they had introduced fat replacers for ice cream, meat and sauces in Asia, with ideas from Europe, but as was probably the case for many other producers of fat replacers, consumers are not ready yet, he said. Nevertheless, some suppliers like Kerry Ingredients was promoting their fry shield system into the Asian region, with the first sales in Malaysia.
Essink said their application work in Asia is mainly concentrated in noodles and Asian convenience foods. The low-fat concept is already applied by customers via the marketing of air-dried noodles and chilled, long-life and frozen noodles. He said noodle producers are eager to reduce the oil content in instant fried noodles, both to make their products healthier, as well as to reduce costs.
James Zallie, business director for starch in Asia Pacific, National Starch & Chemical, while admitting it to be a niche segment, says that small to medium manufacturers may still want to carry such products because of the high profit margins. The company played a big role in developing fat replacers or mimetics in the west. Their N-Lite range of fat mimetics has been used in cakes, dressings and sauces, dairy desserts, and low fat dry mixes.
The future ahead
Of the future, Edison Chan, regional director of Kerry Ingredients says his company will venture into the niche markets like low-fat ice cream. They already have milk protein isolates that allow one-third fat reduction. The other area he foresees burgeoning growth is finger foods, or fast food, where the products are deep-fried with a lot of oil. He expects their fat shield system to come into use in this aspect. Their first markets were Malaysia and the Philippines.
Although actively promoting the fat shield system, Chan says they are not specifically targeting the low fat category as such because the market is still small. The situation for High Intensity Sweeteners (HIS) is similar.
Others have identified growth occurring within certain demographic groups of a country. For instance, in the Philippines, an interest in diet soft drinks is growing in the younger age bracket, predominately among the women. But Mahony admits that, on the whole, it will take some time before there is any substantial growth in the region.
5. Beverages
Tea, coffee and alcoholic products, as well as fruit juice are some of the sub-sectors to look into in the next few years.
The Beverage Ingredients group recently opened a sales and marketing office in Singapore, supplying enzymes and yeast for this industry.
Tea beverages
An existing but nonetheless exciting segment is tea beverages, which continues to burgeon with new concepts and flavours. Silesia Flavours, a relative newcomer to the region, is banking on this segment despite manufacturers cautious approach to new product launches.
Managing director of Silesia Flavours South East Asia C. David Cribb maintains that judging from the popularity of the product, it is no time to halt investments despite the fact that many processors are now holding back on product development due to uncertain economic situation.
He deemed this industry to be very big in Asia, where there are a lot of innovations. In Singapore, there are at least five or six different companies manufacturing tea products. The shelf space for tea products is also not small.
Convenience coffee beverages
One other attractive beverage segment is convenience coffee beverages. According to Ing. Rick Kirpestein, business development manager of Kievit, specialists in spray-dried fat filled food ingredients for instant products, the proliferation of coffee chains such as Starbucks, Coffee Club, Coffee Bean and Burkes Coffee recently has created a coffee culture - and fuelled demand for coffee products in the retail outlets as well.
However, though there are several good 3-in-1, 2-in-1 or even 5-in-1 coffee products, few good instant cappuccino drinks are available on the market. Kievit wishes to bridge this gap by introducing its foaming cappuccino into the region.
The same trend in coffee products is observed by Koichiro Inoue of Mitsubishi-Kagaku Foods Corporation. Since the economy started picking up this year, consumers and manufacturers are steadily regaining their confidence. In Singapore, for instance, a number of premium products have already been introduced, he says, predicting this trend to continue.
Alcopops
The total Asian market for alcoholic beverages was worth approximately US$6 billion in 1997. In recent years, alcopops represents one of the most dynamic sectors of the alcoholic beverage market.
The products hit the shelves of Southeast Asia less than five years ago, amidst an uproar from concerned parents, which eventually subsided. The new segment has since grown to include other labels, such as dv8, which is brewed in Singapore.
Alcopops have also undergone remarkable changes - in profile, character as well as a new name. It is now a full-fledged mainstream beverage called FAB (or flavoured alcoholic beverages).
Ingredients trends for beverages
Ingredient suppliers to the beverage sector need to constantly create new flavours. Pat Yang, executive vice chairman of Chia Mei Food Industrial Corp., a provider of semi-finished vegetable and fruit juice and puree, feels that the need to constantly create new flavours for beverage products can be attributed to the basic nature of the Asian people.
Western consumers do not like their flavours to change constantly, he says, with only basic juice flavours like orange, apple and grape on the market, with some pineapple and fruit punch. In comparison, there are many flavours in Asia because of different nationalities, and also because Asians like to eat and taste new flavours, he says.
One main trend for beverage ingredients is the fusion of eastern and western influences, says
Shirley Ng of Borregaard. In her opinion, the near water concept (flavoured water made of flavourings and ingredients which give flavour direction, sweetness, acidity and body), fusion drinks and fruity soya drinks with low sugar and high protein will continue to develop.
Also, there would be a demand for ingredients for traditional Asian drinks, another drinks segment that has grown significantly in recent years. Humphreys of Givaudan Roure expected to see more commercially processed, traditional drinks on the market. He foresees a lot of opportunities in researching local fruits and traditional ingredients.
However, he says it is unlikely the processors of such drinks will make use of low sugar alternatives in their applications at this moment in time.
6. Snacks
Consumers in the snacks segment are increasingly yearning for local tastes, when in the past, they look for an international taste, like cheese-flavoured snacks.
Managing director O. Nagai of N.P. Foods (Singapore) Pte Ltd, which deals in seasonings mainly for the snacks and instant noodles industries, said that for instance, the satay taste is starting to sell well in Malaysia. In Japan, too, while flavours like garlic or tomato performed well in the short term, 70 percent of the snacks market is still dominated by the simple salt flavour.
More than 95 percent of the companys products are for export, mainly into Asia, except Japan, and the Middle East.
7. Bakery and confectionery products
Confectionery, chocolates, cereals and soya related products would be developed along functional lines. But producers will need to pay more attention to taste and aroma. The confectionery segment will see the growth of the small bite for convenience and different flavouring profiles.
In addition, chocolates that are low in sugar or even sugar-free with low calories will continue to grow.
SINGAPORE: THE CHINESE READY-TO-DRINK TEA MARKET
WITH healthy prospects predicted for the ready-to-drink Chinese tea market, bev erage companies are going the distance to get themselves an even larger wedge o f the pie. The three main players - Pokka, Heaven and Earth and Yeo Hiap Seng -
in particular, have kept a high profile. Yeo Hiap Seng, for instance, tapped i ts tea-brewing expertise and bagged an innovation award for Yeo's ice green tea
at Sial (Salon International Alimentation) 2000 in Paris. The event is one of the world's largest food and beverage exhibitions. YHS' category manager, Ms J oella Yeo, says: 'Our experience in brewing tea ... has enabled us to preserve the full tea flavour in the drink without leaving a bitter aftertaste.' The hom egrown company is credited for introducing ready-to-drink chrysanthemum and her bal teas to the Singapore market in the 1950s. These two beverages are grouped under the Asian soft drink category along with others such as winter melon tea,
lemon barley and longan red date tea. Pokka, on the other hand, has introduced
three varieties of green tea to build up a larger consumer base. Jasmine green
tea and Japanese green tea made their debut here in late 1999. Peppermint gree n tea was introduced early last year. F&N Coca-Cola is putting its money where
its mouth is. To realise its target of generating about $30 million this year from Heaven And Earth, it is investing $3 million this year to market the brand
aggressively. To keep the buzz going, it also launched a new variety, Mandarin
orange, last month. And with three more new flavours brewing this year, the co mpany hopes the brand will stay fresh in consumers' minds. Rather than focusing
on the drink alone, the company is also selling a lifestyle in its advertising
spiel with the tagline: Discover a moment of inner peace. Says Mr Darren Marsh all, F&N Coca-Cola Company's regional marketing director for Singapore and Mala ysia: 'People today are so busy and stressed, they want a moment of inner peace. The light taste and aroma of Heaven And Earth offer that by calming their sen ses.'.
Source: The Straits Times
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