Health fuels beverage additive growth

With health trends continuing to gain pace, and manufacturers turning to 'added- value' ingredients, the market for beverage additives should expect to see decent growth, rising to 1.7 billion (€1.65bn) in 2006, claims market researchers the Freedonia group.

US demand for beverage additives is expected to increase by 3.4 per cent per year, driven by strong gains in products such as fruit beverages, sports drinks, ready-to-drink (RTD) tea and coffee, flavoured milk and energy drinks.

Advances in these sectors will spur growth in demand for flavours, texturisers and preservatives, continues the report. In addition, a strong focus on adding value through the use of innovative ingredients will increase demand for trendy nutritional additives such as vitamins, minerals, energy boosters and herbs.

Artificial sweeteners, with projected demand of over $580 million in 2006, will continue to be the largest product segment, based primarily on their extensive usage in carbonated soft drinks. However, these high intensity sweeteners will post the slowest growth due to their reliance on US diet soft drink production, which has been among the slowest growing beverage markets over the past five years, adds Freedonia.

Strong gains are expected for smaller volume additives such as nutraceuticals and texturisers, with annual growth of 5.8 and 7.3 per cent, respectively. Texturiser demand will benefit from robust growth in dairy beverages and RTD coffees, where they create a rich texture. Further increases in nutraceutical beverage additives will be restrained by the higher price tag typically attached to nutraceutically enhanced beverages and growing scepticism regarding the efficacy of herbal additives.

The report claims that the large flavour market will also post healthy growth as beverage makers increasingly turn to flavour innovation as a major growth driver. Demand for flavour additives is projected to increase 5.2 per cent per year up to 2006, with the fastest gains in flavoured dairy beverages, energy and sports drinks. Further advances will be moderated by lacklustre increases in production of carbonated soft drinks (a key flavour market traditionally accounting for some two-thirds of flavour demand).

Carbonated soft drinks will remain the largest market for beverage additives in 2006, with nearly two-thirds of total sales. However, this market will be the slowest growing of all additive outlets over the next decade due to market maturity and competition with newer beverage introductions, including energy drinks and flavoured water.

The fastest gains are expected for energy drinks, ready-to-drink beverages, sports drinks and flavoured milk, spurred by new product introductions offering innovative flavours and a widening array of nutraceutical additives. Despite stellar growth, these beverages will remain niche markets for the most part, concludes Freedonia​.