Market research company Frost & Sullivan says that carotenoids, still used primarily as a colouring agent for the food and feed industries, have only been widely used in supplements in Germany.
Consumers in other European regions are unaware of their use as a food fortifier or as a new ingredient in a supplement, shows the new report, and this low level of public awareness about the health benefits of carotenoids is expected to stifle market growth in the short term.
"Low consumer awareness of the health benefits of carotenoids particularly affects the newer, naturally-extracted carotenoids lycopene, lutein and natural beta-carotene," said food research manager Anna Ibbotson.
She added that the challenge to educate consumers will be made more difficult by forthcoming European Union legislation designed to clamp down on misleading health claims. European carotenoid makers are also facing the rising threat from Chinese and Indian manufacturers.
Currently, the European carotenoid market is forecast to accumulate $419.6 million in 2010. Revenue expansion is projected to be driven by an emphasis on personal health combined with the rising interest in preventative health measures by Europe's ageing population.
The growing demand for fortified foods and functional foods will also trigger an increase in use of carotenoids by the food industry for their antioxidant properties. Carotenoids have been shown in some studies to reduce the risk of degenerative diseases, such as age-related macular degeneration. They are also linked to a preventative effect on heart disease and certain cancers, although continuing research is aiming to confirm these theories.
The supplements and fortified foods segment is poised to become the fastest growing segment of the carotenoids market, growing from 18.2 per cent of the overall segment in 2003 to 27.0 per cent in 2010, making it the second largest revenue generator behind animal feed.
Revenue share of the relatively smaller pharmaceutical and cosmetic applications segment will also grow based on the use of carotenoids in new products. A joint venture between L'Oreal and Nestle to develop a cosmeceutical product that contains lycopene will likely prompt further innovation.
Principal growth is likely to be experienced by beta-carotene with $23.0 million, lycopene with $26.0 million and lutein with $21.0 million. The small but fast growing use of natural astaxanthin in supplements with compound annual revenue growth forecast at 26 per cent between 2000 and 2010, offers a glimmer of hope for this mature segment, adds the report.
High entry barriers have stabilised the number of market participants to around 28-32 companies. The two leading companies - DSM (formerly Roche) and BASF - control three quarters of the total carotenoids market and dominate the three largest segments of the industry - beta-carotene, astaxanthin and canthaxanthin. Sluggish growth in these segments has intensified competition between the two rivals who are increasingly operating in commodity segments and competing on price.
Smaller market participants are active in high growth potential segments - lutein and lycopene. Here, the growth experienced by all companies has reduced competitive pressures and survival has been helped by turnovers too low to attract takeover bids by the larger companies.
Taiwan-based Allied Biotech Corporation received the 2003 Market Penetration Award from Frost & Sullivan this week. The award recognises the recipient's 'exceptional performance' in capturing market share within the highly concentrated and intensely competitive beta-carotene segment of the European carotenoid market.
"Allied is a relatively new entrant to the synthetic beta-carotene segment and has managed to capture market share from both the leading incumbents, DSM Nutritional Products (Roche) and BASF. Allied has done this by adopting competitive pricing and servicing strategies, which have challenged the traditional duopoly," said Frost & Sullivan food research manager Anna Ibbotson.
According to Frost & Sullivan, despite being a relatively new entrant, the award recipient has swiftly established its position as a leading supplier of nature-identical beta-carotene to Europe. Together with Roche and BASF, Allied currently controls around 90 per cent of the $138.0 million European beta-carotene market.
For more information on the report, 'European Carotenoids Market B260', contact Noel Anderson at Frost & Sullivan.