According to market research group Frost & Sullivan, most of the growth potential of the market can be found in added value applications such as functional food and sports products.
Traditional nutritional applications for proteins are becoming more price competitive, and suppliers are focusing on developing functional applications for their existing protein products.
As a result, protein suppliers have been successful in expanding markets and their client base through the development of functional proteins. Proteins are now used in numerous roles throughout the foodindustry as emulsifiers, gelling, foaming, whipping, colouring, coating and palatability agents.
The report expects protein manufacturers to continue investing in the development of products thatdemonstrate specific functionalities in order to target new applications and remain competitive in themarketplace.
But there have been concerns surrounding particular protein sectors. European consumers are increasingly aware of potential health concerns with regard to food ingredients. The BSE crisis for example has had a large impact on the animal protein market.
There is also increasing concern about allergies and gluten and/or milk intolerance. The European Union (EU) requirements to list potential allergens on consumer packaging is expected to have an adverse impact on some products due to BSE and GM concerns.
These issues continue to restrain growth in specific protein areas.
In addition, some of the larger end-user markets for proteins, especially bakery and some meat products have matured, and are expected to show little growth in the next six years.
However, Frost & Sullivan sees increased demand from Eastern Europe as a major driving force for the proteins industry. Demand for processed foods in this region is increasingfaster than in western Europe. Furthermore, these markets are less affluent and this is driving astrong demand for proteins that can act as substitutes for other ingredients, especially if it results incost savings.
And in general, the food industry is looking for improved functionality from its specialist ingredients. The demand for such products, says Frost & Sullivan, will continual to drive growth in the market in the foreseeable future.
There are between 100 and 150 significant manufacturers of protein ingredients currently active in Europe. Most of the individual protein markets are dominated by fewer than ten manufacturers and only a few companies are heavily involved in more than one market.
There are a large number of distributors and in some market imports are important part of the competitive environment. The big product blending companies, such as Kerry and Puratos, are also key participants.
There has been some industry consolidation in most market sectors. The reasons for the mergersinclude: economies of scale; the need to supply the whole European market (not just the homecountry) and in some cases, the poor performance of the protein market in the face of difficulties,such as the BSE crisis, the GM issue and cheap imports.