UK market analysts IAL Consultants estimate the global market flavours and fragrances hit $11.6 billion (€8.6 bn) in 2003, split almost equally between the two sectors.
Expected growth for flavours is about 3.3 per cent, with a range of influences such as health and function, driving demand in western Europe.
"The emergence of low-calorie and low-carb foods in the convenience sector has created a wellspring of demand for flavourings associated with healthier cuisine," states the report.
More functional consumer products such as tooth-whitening chewing gums could boost the confectionery sector, which in western Europe is weaker than other global regions.
In 2003 at 30 per cent beverages witnessed the largest slice of the market in western Europe followed by dairy and bakery with 15 per cent and 12 per cent market chunks respectively.
Savoury and convenience foods took 10 per cent of the market, as did meat focused flavours. Snacks pulled in just 5 per cent of the market value.
"After a long period of traditional consumer goods in western Europe, companies are introducing products with more unusual flavours such as lemon-flavoured toothpaste, which have enjoyed more success in the childrens market, and drinks with more exotic flavours where guava and kiwi flavours are added to the more conventional choices of apple and orange," comments IAL.
In both cases the best market prospects are found in eastern Europe, together with the Middle East and Africa for flavours, they add.
According to the report, strong growth can be expected in many parts of the market in eastern Europe. Soft drinks based on fruit juices, for example, are a relatively new innovation while functional foods and drinks continue to draw interest.
Strong demand for canned foods, which tend to contain more flavours, is likely in some less developed regions of eastern Europe that have yet to see a strong infrastructure for fresh food supplies.
Swiss firm Givaudan continues to lead the competitive global flavours industry with an estimated 13.5 per cent slice of the market in 2003, followed by US International Flavours & Fragrances that has an 11.7 per cent share. Firmenich, Symrise and ICI-owned flavours company Quest International are slated to have about 9.8, 9 and 6.1 per cent of the market respectively.