Flavoring Agents Market

Market Overview

Flavoring agents are among the most significant additives used in foods and medicines in order to enhance taste. They can be either naturally or synthetically obtained. Natural flavoring agents are substances such as essential oils, oleoresin, distillate, or any other essences acquired directly from natural products such as fruits, spices, animals, seafood, dairy, and others through a chemical process. The primary function of these agents is to provide flavor to eatables and not necessarily nutritional properties. On the other hand, synthetic or artificial flavoring agents are obtained by chemical processes from chemicals that are extracted from counterfeit products. Flavoring agents find applications in food and beverage processing, pet food, and the pharmaceutical industry.

Market Dynamics

Stringent Regulations Promoting the Use of Natural Flavoring Agents

Flavoring agents have been in the market for quite a few years now. Although the sectors such as the pet food industry have adopted the product in the past decade, the food and beverage industry and the pharmaceutical industry have long been associated with the product. The product has reached the maturity stage for the food and pharmaceutical sector but has tremendous potential in the pet food industry. The common pet food additions include savory or meaty flavor, which is obtained chemically from some Pyrazines and sulfur compounds or extracted naturally using onions and garlic. Natural flavors are at the takeoff stage as stringent rules and regulations imposed by the government have led manufacturers to decrease the use of artificially flavored agents in food processing. In the recent past, synthetic flavoring agents, such as ethyl acrylate, benzophenone, and styrene, have been deemed carcinogen-prone chemicals, thereby resulting in the replacement of artificial flavoring agents with natural flavors.

Regional Analysis

A Paradigm Shift in Asia-Pacific’s Culture of Dining

The flavoring agents market is proliferating in the Asia-Pacific region due to increased demand for food and beverages. With the Indian government allowing 100% FDI in the food processing industry, the supply chain and employment will shoot up in the country, thereby creating a high demand for flavoring agents in the food sector.

The surging demand for packaged juices, energy drinks, and sports drinks is fueling the market for beverage flavoring agents. Needless to say, in terms of consumer spending on eating outside, Asia-Pacific is the fastest-growing region. The region has witnessed a drastic change in the culture of dining as more and more consumers are now eating out in restaurants. On the contrary, the Americas and Europe have a debatably more mature retail market; therefore, the demand for flavoring agents has saturated in these regions. Moreover, laws pertaining to flavoring agents have become extremely stringent in Europe, resulting in declining demand for flavoring agents.

The rapid increase in the number of pet adoptions in America has led to a rise in requirements for animal pet food, thereby resulting in inflated demand for flavoring agents in that region. The American Pet Products Association (APPA) reported that in the year 2015, 77.8 million dogs and 85.6 million cats were adopted in the U.S.

Segmental Analysis

Pet Food and Pharmaceutical Industries

The demand for flavoring agents has risen tremendously over the past decade. The increase in the use of flavoring agents is not just because of the food industry, but also due to remarkable utilization in the pharmaceutical sector. Needless to say, with rising health awareness, people have become more conscious than ever about what goes into their food. In light of good health, it is observed that consumers thoroughly check the label behind the food product before purchasing it. This awareness among consumers has compelled food and beverage manufacturers to use natural flavors over synthetic ones. Another significant driver for the flavoring agents market is its intensive usage in the pharmaceutical industry. The different types of flavors used in the medicines are sweetening agents, aromatic oils, flavored syrup, and synthetic flavors. North America is the world's largest market for pharmaceuticals, overtaking the markets of Europe and Japan. With the extensive utilization in the medicine market, the demand for flavoring agents has escalated beyond all expectations.

Apart from the aforementioned application, the flavoring agents are used heavily in the pet food industry. All of a sudden, the pet food industry has incorporated a variety of flavors in the food products in order to cater to the taste and health of animals. The pet industry has witnessed rapid growth in the past few years. According to the American Pet Products Association, about 85 million families own a pet, and this scale has gone up from 56% to 68% in the past 30 years. An increase in pet adoption has led to a drastic increase in pet food consumption, thereby surging the flavoring agents market in the USA.

Nevertheless, there are some restraints that are hindering the market of flavoring agents. The primary reason for the downfall of the market is the side effects of the artificially flavored agents on consumers' health. There are some serious health problems budding out of certain chemicals that make up the natural and artificial flavors. For example, hydrogen cyanide content in the benzaldehyde compound can cause nervous system depression and convulsions. The dearth of natural resources and stringent regulations by various governments across the globe have caused the flavoring agents market to slope down.

Consumer Preference for Healthier Alternatives to Spur the Shift from Synthetic to Natural Flavoring Agents

Natural flavors are extracted from naturally-occurring products on earth, such as fruits, animals, spices, and others. On the contrary, synthetic flavors include artificially flavored agents, nature-identical flavors, and other smoke infused flavors, which are obtained from by-products or other chemical substances. Owing to low cost, easy availability and abundance, artificial flavors have continued to enwrap the flavoring agent market for some time. However, with the increase in the healthy mindset population, natural flavors are carving their path into the industry. The rising popularity of alcohol consumption, juices, and other savories and confectionery, among the consumers, has led to a hike in the market demand for natural flavors. Furthermore, the pharmaceutical industry also uses flavors in order to mask the taste of bitter medicines and is mostly used for orally consumable medicines, such as chewable tablets, syrups, and others, that have therapeutic properties.

Need for Constant Taste Improvements in the Food and Beverage Industry

Flavoring agents find use in various applications. The food industry has transformed and evolved over the past years in order to cater to the needs and requirements of customers. Taste enhancement and improvement characteristics of flavoring agents result in their excessive use in the food and beverage industry. Flavoring agents have been a prominent part of food additives that are used to enhance the quality and satisfy the taste buds of consumers. Nevertheless, there have been certain restrictions in the quantity of flavoring agents being used in the food. Some government authorities have barred the industry from using too many flavors and have vigilantly been scrutinizing the process. The FSSAI and the European Flavour and Fragrance Association are a few organizations working in coordination with food safety policies.

Growing Prevalence of Pet Adoption

Animal adoption is gaining traction around the world, with more and more people bringing pets home. Growth in the demand for dog/cat food, which was valued at around USD 12,400 million in 2017, is expected to further propel the growth of this market in the years to come. On a national basis, apart from household-owned pets, the number of animals entering U.S. animal shelters has grown to around 6.5 million every year. This has broadened the market for flavoring agents, as the product is extensively being used to flavor pet food for better health benefits. Pet food manufacturers have seen a new awareness trend among pet-savvy owners. They have become a lot more informed and aware of pet allergies and sensitivities. This, in turn, is prompting pet owners to pick alternative sources of proteins for their finicky pets as the flavor alters the taste of their food.

Growth of the Pharmaceutical Industry by Way of Flavoring Agents

As compared to its involvement in other industries, the excessive use of flavors in medicine is a recent development. In order to mask the original taste of medicines, the pharmaceutical industry started using flavoring agents in bulk in several syrups, tablets, dissolvent-based medicines, and others.

India is a key supplier of generic medicines and drugs worldwide. The Indian pharmaceutical industry provides for around 50% of the global demand for several vaccines. With the rapid increase in the construction of pharmaceutical plants in India, the demand for flavoring agents used in medicines has gone up considerably. For instance, in 2018, the Uttar Pradesh government declared that it would launch six pharma parks in the state, and the government funded more than USD 712 million for the initiative. North America boasts of an enormous increase in pharmaceutical sales. Last year, it accrued about 48.9% of world pharmaceutical sales. As per the report of IQVIA, the US market released 65.2% of sales of new medicines.