In the past few years, The Global Food Additives Market has expanded into the nearly $ US 30 billion range…and it’s only going to get bigger. This growth runs parallel to the positive trends that have been seen in the food and beverage industry, thanks to the increasingly healthy state of the global economy. The standard of living is much higher than it was five years in most parts of the developed world, and people are spending more and more on packaged goods, fast food, and specialty items—almost all of which use various additives to improve taste, shelf-life, and even aesthetic appeal.
As is the case in any industry with so much potential for profit, everybody—or what seems like everybody—is trying to cash in on the same “food additives sweepstakes” which leads to the problem of extreme market fragmentation.
While a few vendors lead the market’s pack in revenue (Archer Daniels Midland, BASF, E.I. du Pont de Nemours and Givaudan), the rest of the market is made up of dozens of smaller vendors competing with each other to meet the needs of the end consumer— the food manufacturers.
The good thing, is that there are many categories of food additives with a deep assortment of products therefore vendors are at least somewhat able to specialize in one market scope. Even so, it can be very difficult to identify the differentiating factors between the product offerings of various companies. Therefore, vendors are forced to engage in competitive price wars which obviously has a negative impact on profit margins.
So what’s the solution?
One option is the “mergers and acquisitions route”, as vendors enter alliances with one another to expand their product portfolios and customer reach.
As well, many food additive vendors have started focusing on customized and advanced solutions—for instance products that not only improve shelf life of food, but add nutritional value. On a similar thread, some vendors are dipping their feet into niche market segments, like natural additives or products that satisfy specific dietary restrictions.
Whether or not these approaches are enough to offset the high barriers of the densely competitive market, is yet to be determined. One thing is certain, there’s a lot of profit to be had in the Global Food Additive Market—but when it comes to the question of who will take it home? Well that’s going to take some very careful strategizing.
For more information, view our 2012-2016 The Global Food Additives Market Report.
