As food companies cater to consumer preferences, bulk ingredient manufacturers are well positioned to satisfy demands.
There are tremendous growth opportunities for bulk ingredient producers and processors, barring obstacles such as weather, diseases, and bacterial contamination. The global bulk food ingredients market was valued at $369.51 billion in 2015, and is expected to reach $472.10 billion by 2021, a CAGR of 4.2%, according to MarketsandMarkets. The clean label trend encourages producers of bakery, confectionery, snacks and spreads, ready meals, and alcoholic and non-alcoholic beverages to use nutritious food ingredients in their products, Priyanka Goswami, analyst, MarketsandMarkets, told Food Dive in an email.
MarketsandMarkets research finds the ready meals segment is projected to grow at the highest rate in the global bulk ingredients market due to busy lifestyles, urbanization, and increases in disposable incomes. Mintel reported in May in the executive summary from a report on prepared foods that while "weak sales results in the prepared meals category are in line with a broader move away from more processed foods in favor of fresher and healthier alternatives, the category’s defining benefit of convenience remains compelling." As such, food manufacturers will find opportunities with products made from natural ingredients and those offering specific health benefits.
And in April, Mintel reported that natural ingredients are increasingly important to consumers of snacks, where 79% of snackers agree it’s important to be able to recognize the ingredients in snacks. More than half of those surveyed agreed it was important to buy snacks that contain only a few ingredients.
"The growth of clean label is providing significant opportunities for many bulk ingredients as consumers seek recognizable and wholesome ingredients that are sourced from nature," John Madden, head of ingredients, Euromonitor International, told Food Dive in an email. He said that consumer research of nine major international markets found a clear focus on clean labels, where "all natural" was important, as were limited or no artificial ingredients.
Challenges to the quality and stability of bulk food ingredients include high price volatility and unstable supplies, Goswami said. Price volatility results from changes to seasonal agricultural output, such as weather, diseases or pests. What’s more, because it takes time to produce ingredients, the available supply is not able to respond quickly to price changes in the short term. Other market restraints can be found in developing nations such as India, China, and Brazil in regard to the storage and transportation of ingredients, as well as the possibilities for spoilage and bacterial contamination.
Bulk ingredients are on point
Goswami said bulk ingredient manufacturers are and should turn attention to R&D activities to develop innovative products to cater to constantly changing consumer demands. He said among the types of bulk food ingredients, the processed herbs and spices segment is projected to grow at the highest rate, attributed to consumer interest in the benefits associated with these ingredients. Food manufacturers are adding more value with a broader array of flavors that come from spices and seasonings found worldwide, not to mention increasing nutritional value.
The future will also see the rise of replacements for sugar, including the use of alternative bulk sweeteners such as honey and agave syrup in place of high-intensity natural sweeteners such as stevia, Madden said. "Similarly, growth in the use of grains, pulses, cereals can be expected." Baked goods made with ingredients such as whole grains, seeds, and pulses are in high demand, Kiley Hagerty, culinary specialist, Sterling-Rice Group, told Food Dive in an email. "There’s an increased awareness of the benefits of both fiber and protein, especially in the morning space, and these are often portable, ready-to-eat forms."
In regard to natural preservatives and antioxidants, Madden pointed out the growing application of rosemary extract in ready meals, processed meats and sauces. Celery powder is now more widely used as a natural preservative in organic meats.
Bulk ingredient manufacturers can capitalize on assisting food manufacturers in meeting consumers’ expectations with exciting flavors and forms. For example, prepared meals are a welcome solution to providing meals; however, the importance of a well-balanced, complete meal is important because nobody wants to compromise on quality or flavor, Hagerty said.
Ingredient manufacturers want to be the partners who ensure food manufacturers’ new launches meet consumer expectations.