Specialized new products will drive food additive growth
By Staff -- Purchasing, 6/3/1999
Most food staples grow at close to GDP levels, so use of commodity-type additives will continue at that pace. It is the more specialized and newer products that drive the growth of food and beverage additives.New product formulations are the main consumer of increased demand, since once food products are formulated, ingredients are not usually changed. Also: Prepared, processed, and other foods with high additive content help drive demand up.
Prices for glycerine (naturally refined, 99.5%) were stable for much of 1998--with contracts hovering at 49¢/lb for the second to fourth quarters. Contracts rose slightly in the first quarter of this year, up to 50¢/lb, according to the latest data from Purchasing's monthly chemical transaction price survey. Buyers say prices should settle to 49¢/lb again for the second half of '99. Spot prices declined in '98--falling from a first-quarter average of 53¢/lb to 49¢/lb by year's end. Tags jumped up to 53¢/lb in the first quarter of this year, but buyers forecast tags to slip again--dropping to 51¢/lb over the next six months.
Contracts for citric acid (USP, anhyd) were stable throughout 1998, averaging 69¢/lb in each quarter. Tags dipped slightly in the first quarter of '99 to 67¢/lb. Buyers forecast prices to fall further as the year goes on--dipping to 63¢/lb in the third and fourth quarters. Spot tags rose from an average of 71¢/lb in 1998 to 78¢/lb in the first quarter of this year. However, buyers project these prices won't hold and forecast that prices will average 65¢/lb in the second half of the year. Buyers say both domestic and imported material should remain in good supply throughout 1999.
Sodium bicarbonate (USP grade) tags have remained fairly consistent. Both contract and spot price tags hovered at 18¢/lb for the second half of 1998, and both posted first-quarter averages of 18¢/lb for this year. Contracts did inch up in the second quarter, averaging 19¢/lb, but buyers forecast that the second half of the year will see both spot and contract tags back at an average of 18¢/lb.
Demand growth continues
Demand for food and beverage additives in the US are expected to grow 6.1%/yr through 2002, according to a recent study by The Freedonia Group. The switch toward more natural additives and more specialized flavor systems will help increase demand.
Over one-third of food and beverage additive demand is for flavors and flavor-enhancers. It is consumer demand for more ethnic and exotic flavors that is helping steer demand in this area. Demand for these products will grow at 6.4%/yr through 2002.
However, enzymes will show the fastest growth--up 7.3%/yr through 2002. Products resulting from biotechnology will help create a host of new applications within food and beverages. Nutraceutical additives will see 6.9%/yr growth from consumer adoption of healthier-billed foods. This trend toward "healthier" products will also push advances in the preservatives market (up 6.8%/yr through 2002). Here higher-value natural preservatives will grow, enabling food processors to use more natural ingredients.
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