Annatto Extracts Market Size is Expected to grow at higher CAGR 4.2% Over the Forecast Period.
Annatto extracts are obtained from the outer layer of the seeds of the achiote plant. It is a yellow/orange pigment extract that is being used for more than two hundred centuries in Europe and North America to impart a yellow or deep orange-red color to foods, particularly in dairy products, such as cheese. In recent times, the surging demand for organic food additives has increased the demand for annatto extracts significantly across the globe, making it an important natural colorant in the food and beverage industry. Several industrialists engaged in the food and beverage industry are using the extract as a colorant for their food products that comply with the international standards. However, the high cost associated with these extracts as a colorant and less stability of these extracts compared to the synthetic colorants hampers the market growth.
The bixin pigment segment dominates the annatto extract market on account of its oil-soluble properties and a wide range of applications in the dairy products, cosmetics, and leather industries. Rising awareness regarding the harmful effects of consuming synthetic colorants has compelled the consumers to switch towards the consumption of natural color additives, which is further driving the segment growth. The norbixin segment, on the other hand, is projected to witness significant growth during the forecast period. Norbixin is a water-soluble pigment and is primarily used for coloring cheese. Its demand is projected to rise in the coming years on account of surging cheese consumption.
The oil-soluble segment holds the largest market share during the forecast period. Oil-soluble annatto consists of bixin, dissolved, or suspended oil. Strong suspension colors, better storage stability, and other economic factors provide an impetus to the segment growth. Oil-soluble annatto is used for a wide range of refined food grade oils, such as soybean oil, sunflower oil, and rapeseed oil, and can impart different shades ranging from yellow to orange-red. The water-soluble segment, on the other hand, is anticipated to hold a prominent share in the market. Water-soluble annatto colors consist of norbixin and are primarily used as dilute liquids or powder form.
The food and beverage industry segment holds the highest market share during the forecast period. In the food industry, colorants are extensively used to grab consumer attention. However, rising awareness regarding health issues has surged the demand for minimally processed foods, which is further driving the segment growth. In addition, the growing health consciousness and rising population worldwide have increased the demand for dairy products in the market. As per the Food and Agriculture Organization (FAO), in 2019, global milk production reached 852 million tons, an increase of 1.4% from 2018, further driving the market growth. Furthermore, the increasing popularity of lactose-free dairy products, especially across the western markets, is another factor accelerating market growth.
Growing awareness among the customers regarding the purity and safety of cosmetic products has significantly surged the demand for natural colorant-based cosmetic products. Additionally, the increasing demand for plant-based products across the personal care and cosmetics industry provides an impetus to the market growth.
North America spearheads the annatto extracts market during the forecast period on account of theseismic shift in the individual preferences regarding the consumption of natural-based food and the increasing demand for ingredients that can impart colors naturally to the food product. The U.S. leads hasone of the largest markets for annatto extracts on account of the government support for the adoption of natural colorants across various end-use industries and the presence of a strong distribution and supply chain.
Europe holds the largest share in the annatto extracts market on account of the increasing demand for dairy and dairy alternative products. As per FAO, in 2019, the European Union increased its butter shipments steeply, registering a 35% increase, reflecting a rise in butter production in the international market. The change in consumer eating habits has surged the consumption of plant-based food. Germany, France, and the U.K. spearhead the regional market as they are backed by the presence of leading manufacturers that are using naturally occurring seeds of achiote plant to meet the changing consumer demand.
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