The global market for natural flavours is forecast to overtake the synthetic flavours market by 2020 with Australia experiencing stronger than average growth, according to a recent report by RTS Resource.
The Flavours – Natural and Synthetic report* reveals that, in terms of top note or high impact flavours, the Australian food and beverage industry accounts for 1700 tonnes of natural flavours per annum, compared to 2300 tonnes of synthetic flavours per annum. Over the last five years, the natural flavours market has been growing at a rate of 11 per cent a year in Australia, which is slightly faster than the overall global market growth rate of 9.1 per cent.
“The synthetic market might be larger, but it’s static, almost in decline, while the natural flavours market is growing quite dramatically,” Jamie Rice tells F&DB.
Key growth categories include confectionery, soft drinks and snacks. There’s a slightly different dynamic in the latter category as the snack market itself is in a growth phase, however, there is an increased use of natural flavours beyond the base market growth. Interestingly, the alcoholic drinks category is still showing some growth in synthetic flavours.
“This is in part due to the increased consumption of alcopops,” says Rice. “Generally there’s less concern over synthetic flavours in adult products.”
From a global perspective, natural flavours are experiencing strong growth in developed markets in the US and Europe, but also emerging markets such as China and Mexico. Despite this, Rice describes their adoption as patchy with little uptake in Africa or Eastern Europe.
“From our research, there’s not that pressure in these countries, consumers aren’t interested and retailers haven’t got the power to dictate [that manufacturers switch from synthetics to natural flavours],” says Rice.
Interestingly, the natural colours industry appears to be gaining better value out of its proposition than that for natural flavours. Volume wise, the global food and beverage market accounts for 133,000 tonnes of natural flavours per annum, compared to only 53,000 tonnes of natural colours. However, in value terms they are much closer, being worth $3.3 billion dollars for natural flavours and $2.5 billion for natural colours. Rice attributes this to the fact that there’s been a lot of high tech developments with natural colours, such as micro encapsulation, that have increased their value.
RTS forecasts that natural flavours will overtake synthetics by the end of 2020. There are however technical and supply issues and an ongoing price differential that are expected to hinder growth, which is set to slow, both in Australia and globally.
“There is still growth to be had, but that growth will start to slow in a few years,” says Rice. “As with any growth industry, it will reach a certain point when the roller-coaster reaches the top of a hill, but we’re a way off from that yet.”
Generally speaking, there’s a wide price gap between the two, although the extent varies from category to category.
Sustainability of supply will become a major issue as demand for natural flavours increases and this is likely to further increase the price gap between natural and synthetic flavour, making the use of naturals unfeasible in some instances. Additionally, there are technical issues, such as stability under different processing conditions with natural flavours and manufacturers can’t always achieve the same strength and clarity of flavour in certain applications. Rice believes this could lead to a increasing acceptance of synthetic flavours.
“I think we’ll start to see a gradual acceptance of synthetics in certain product categories,” says Rice. “A good example is chewing gum. A lot of synthetic flavours and sweeteners are still used [in chewing gum] and sweeteners without anybody batting an eyelid.
“They’re not demanding a natural mint, they’re demanding a powerful lasting flavour and that isn’t always possible from a wholly natural source. It’ll take a long time, but I think we may start to see a gradual acceptance of synthetics, especially if there’s a growing understanding of their safety.”
“There are still cases where synthetics need to be used and that’s borne out by the data,” Rice concludes. “You might say, I’ll still supply synthetic flavours to these categories but I’ll concentrate on developing natural flavours because that’s where the future lies. I think as an ingredients supplier you have to have a broad portfolio and manage your strategy according to the product category.”
*The RTS report focused predominantly on industrial flavours and excluded herbs, spices and seasonings.
