Consumer demands push specialties
By Staff -- Purchasing, 5/7/1998
While commodity food additives still hold the lion's share of the market, consumer demands are pushing food processors to develop new and different products. As a result, new and more specialized food additives continue to grow in importance.With frozen and processed foods as the fastest growing segments of the food additives market, these pre-prepared items often steer the growth in the industry. Recent trends include vegetarian products; additives with low-caloric, fat and sodium content; and more exotic flavorings. But consumer demand is fickle, and processors must always be ready for the latest trend.
Prepared and processed foods have a high additive content; rising consumer demand for these products pushes additives demand. One key area is artificial sweeteners, which will see one of the fastest growth rates for food additives--up 6.8%/yr through 2003. Aspartame and saccharin are two of the principal artificial sweeteners in this area.
In 1997, flavor blends and mixtures had the fastest growth in consumption at 6.9%. These food additives are expected to show continued growth in 1998 and beyond. Last year, an estimated 1,140 billion lb of flavors and fragrances were consumed by the processed food industry. The baked goods industry was second, taking an estimated 415 million lb of flavors and fragrances. The beverage industry consumed near 350 million lb, according to a recent study by The Market Strategy Group of Cleveland, Ohio.
Food staples tend to grow at GDP levels, so use of most commodity-type additives are expected to continue at that level. Also, once food products are formulated, ingredients typically are not altered. As a result, much of the growth in new and specialty additives comes from new formulations. Food producers are always developing new products. New products are expected to allow strong growth for enzymes, preservatives, colors and acidulants, and fat-replacers--including carbohydrate-based products such as modified starches and gums, and both protein and synthetic-based fat replacers.
Glycerine tags fall, citric steady
Prices for glycerine (naturally refined, 99.5%) were in free-fall in 1997. The first-quarter average was the highest--78(cent)/lb. Contracts fell to 71(cent)/lb in the second quarter, and to 66(cent)/lb in the third, according to Purchasing's monthly survey of chemical buyers. Fourth-quarter prices hit another low, dropping to 56(cent)/lb. Spot prices also followed this downward trend over the year. Buyers should expect no rebound for the first half of 1998. Sources report that prices will continue to slide, albeit at a slower rate, settling at 53(cent)/lb in the second quarter of this year.
But contracts for citric acid (USP, anhyd) were a different matter in 1997. They remained fairly level all year, averaging 71(cent)/lb in the first and second quarters, sliding slightly to 69(cent)/lb in the second and third. Buyers forecast prices to remain at these levels for a while. Contracts will stick at an average of 69(cent)/lb through the second quarter. Spot tags will rise slightly, to 72(cent)/lb. Buyers say both domestic and imported material should remain in good supply throughout 1998.
Sodium bicarbonate (USP grade) will remain stable. Buyers say contract prices remained at 19(cent)/lb for all of 1997. Spot tags also held at 19(cent), except for the fourth quarter where they were 18(cent)/lb. Spot tags should hold at 18(cent) into the second quarter of '98, while contracts will stay at 19(cent), according to buyers.
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