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Changes in food preferences amongst consumers drive the food additive segment in India

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Published on : Nov 21, 2013

The constantly changing lifestyles, mundane work routines, and hectic schedules leave us very little time to cook our favorite dishes in peace or savor the taste of good homemade food. These factors have spawned a huge market for various types of packaged and processed convenience foods. The booming growing retail sector in India introduces the easy-methods of using processed or packaged foods in our day-to-day life. The market frequently introduces new products such as low-calorie, low-fat products, and product lines, especially in the most demanding areas of food and beverage market, leaving behind opportunities for the food additives market to grow and expand.

Moreover, the market also seeks immense encouragement in government measures that maintain and promote easy-to-access loans for budding food processing industries.

According to an analysis of Indian Food Additives Market report shows that the market revenues from Frost and Sullivan that marked a figure of $484.2 million in 2012 is expected to rise to a figure of $897.7 million in 2017. 

The study listed a few food additive classes such as colors, flavors, emulsifiers, preservatives, sweeteners, and stabilizers. All these items are accounted to increase and reach a respective percentage with time and growing demands. For instance, flavors consume 47 percent of the market share, but are expected to grow at 13.9 percent in the coming years. Similarly, sweeteners are slowly growing at a rate of 25 percent, natural colors at 12 percent, synthetic colors at 7.4 percent, food emulsifiers at 10.1 percent, and preservatives at 15 percent. 

An analyst at the Frost and Sullivan’s chemicals, materials, and food research said the food additive industry in India is trending towards the segment of natural colors and natural emulsifiers. This sudden change is coming about due to the health consciousness among the Indians.  

The study also states that due to the presence of multiple sourcing points and lack of centralized supply chain management system, the natural food additive producers find it very difficult to source the raw material in the market. Many participants build false partnerships with cooperatives and counterfeit investments with contract farming. Such sham alliances and tie-ups with research and development (R&D) affect the prices of the nature-derived products.  

The most significant market restraints include the advanced logistics and transportation system for consumable goods leading to wastage of agro-produce, and lack of cold storage infrastructure. All these factors adversely affect the natural food additive producers and farmers in this industry. 

The Indian government has permitted 100 percent foreign direct investment (FDI) so that huge established industry groups could invest in manufacturing cold chain logistics. In addition, the Food Safety and Standards Act (FSSA), 2006, permit only a few colors which are certified by the Bureau of Indian Standards (BIS). Due to these government policies, innovation is stifled, the analyst noted.

Nonetheless, continued food process and product innovations in the food and beverage segment would encourage the additives market to increase its product portfolio and motivate the entry of global participants to serve as market drivers. The margins of the larger manufacturers will advance as the smaller retailers from unorganized sectors will be acquired.