The report “Food Colors Market by Type (Natural, synthetic, nature-identical), Application (Food products, and beverages), Form (Liquid, powder and gel), Solubility (Dyes and lakes) & Region – Global Forecast to 2026″ The market for food colors is estimated at USD 4.3 billion in 2021; it is projected to grow at a CAGR of 4.7% to reach USD 5.4 billion by 2026.
The production of food colors is continuously increasing, and companies are investing increasingly in research & development activities of natural and synthetic colors to enhance their existing product portfolio across various regions. The demand for food & beverage products processed with the inclusions of food colors is comparatively higher. The lucrative opportunities are available in the emerging regions due to the growing economy and technological advancement. The market in China is projected to grow at a higher pace due to an increase in industrial activities.
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COVID-19 Impact on the Global Market
The need for natural ingredients with traceability of their origin and extraction has become an important factor due to COVID-19. Veganism has witnessed significant growth over the last couple of years. It is further projected to increase, and consumer demand is projected to shift to plant-based ingredients and products. The outbreak of COVID-19 and negative associations with animal-based foods is further projected to encourage consumers to opt for plant-based ingredients and thus drive thre deamnds for natural food colurs in the food colors market.
Driver: Increase in demand for natural colors
The demand for natural food colors as compared to synthetic food colors is increasing due to the growing consumer awareness for clean label products, health hazards associated with synthetic colors, and the health benefits achieved by using natural food colors. Synthetic colors can cause allergic disorders among consumers. The use of chemicals with heavy metals, such as lead or arsenic, to manufacture synthetic food colors can cause life-threatening diseases. Natural food colors are gaining market attention due to their natural origin, appealing to consumers who view them as a “safe to use” product. Natural colors reduce the risk of allergies and intolerance among consumers. These factors are witnessing an increase in demand for natural colors in food & beverage applications.
Opportunity: Increase in ventures undertaken by manufacturers in Asia Pacific and South America
Food color manufacturers have significant opportunities for growth in the Asia Pacific and South American regions. Localizing operations could help in reducing costs and improving access to local distribution networks, thereby optimizing profit margins. Resources and labor are readily available at a cheaper rate in these regions. The governments in China and India are providing incentives for multinationals to set up Greenfield ventures. The Indian government has declared major tax breaks to attract multinational investors. China provides special tax incentives over the usual tax holidays to encourage foreign investors.
India, China, and Brazil are focusing more on investing in biotechnological development and its application in the production of natural coloring ingredients. Food & beverage manufacturers are witnessing significant demand from these countries due to the increased spending power of consumers on healthy food and changed eating habits & preferences. These factors are offering growth opportunities for food colors market in the emerging economies of Asia Pacific and South America.
By application, the food products segment is projected to grow at the highest CAGR during the forecast period.
Food colors find exhaustive applications in the food products market through end use industries such as bakery & confectionery products, meat, poultry, and seafood; oils & fats; and dairy products. Food colors are widely used in these products as they increase the product appeal. Further the retail sales for processed foods are projected to witness significant growth in the market through online sales amidst the spread of the COVID-19 pandemic.
The liquid segment, by form dominated the market in 2020.
Liquids are the most widely available and preferred form of food coloring due to their convenience in usage and lower cost. They are available in squeeze bottles that allow gradual coloring until the required tone is achieved. Liquid dyes are the most conventional forms applied in almost all varieties of foods. Their applications include tinting icings, batters, and doughs. Food colors in liquid form are used for food items that require lighter and more pastel colorings for items, such as cake icings, candies, and meat substitutes. They are easy to mix and provide color consistency. Liquid food colors also reduce problems of poor pigment dispersion
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Europe is estimated to be the largest market.
There are key players in the European markets that supply high-quality food products in the European markets, such as DSM (Netherlands), Naturex (France), and Campbell Foods Belgium NV( Belgium) and they are significantly encouraging the trends of developing new products in the region. The high demand for packaged food and the growing bakery and confectionery and dairy & frozen products market in Germany. Furthermore, investments in new technological developments are projected to encourage the formulation of innovative natural or nature-identical colors for applications, such as pharmaceuticals and processed food.
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