Demand for additives

U.S. demand for food and beverage additives is projected to increase 4.4 percent annually to $8.6 billion in 2010, according to a study by The Freedonia Group Inc.

Although the U.S. food and beverage industry is relatively mature, additive producers continue to build market value through the introduction of new additives and improved versions of extant products. Food and beverage processors turn to these additives to improve finished product quality and control costs. Additives in dairy products are expected to post above average growth as a result of the increasing use of probiotic ingredients in yogurt and other products.

China has become an increasingly popular source for food and beverage additives, accounting for a large share of many products, including acidulants, enzymes, and vitamins and minerals, which has put downward pressure on pricing, and driven some competitors out of the business. Concerns about the safety of these products -- following incidents involving tainted pet food additives and pharmaceutical products -- will also influence consumer behavior.

Nutraceuticals, including vitamins, minerals, herbal extracts and probiotics, will register strong gains as they expand their presence beyond traditional applications like breakfast cereals, milk, bread and juices. Recent introductions include soft drinks, snack foods, desserts and candy fortified with vitamins and minerals, water containing vitamins and herbal extracts, and a variety of foods containing probiotics.

Flavors, especially ethnic flavors, and the quest for the elusive“ perfect sweetener” -- a clean sweet taste, no caloric value and no negative health effects -- continues unabated, as exhibited by efforts to commercialize stevia and other alternatives to traditional sweeteners. However, the sluggishness of the soft drink market will suppress overall gains for alternative sweeteners, as will medical studies suggesting that diet soft drink consumption may contribute to obesity.