Growing demand for beverage additives in the US is being driven by the trend for nutritional and functional drinks, finds a new report.
Overall demand for beverage additives from US drink manufacturers is expected to grow by 3.4 per cent per year to $1.7 billion in 2006. The demand is being driven by strong gains in products such as fruitbeverages, sports drinks, ready-to-drink (RTD) tea and coffee, flavoured milk and energy drinks. Advances in these sectors will spur growth in demand for flavours, texturisers and preservatives, according to the report by market research company The Freedonia Group.
There will also be a strong focus on adding value through the use of innovative ingredients, increasing demand for trendy nutritional additives such as vitamins, minerals, energy boosters and herbs.
Artificial sweeteners, with projected demand of over $580 million in 2006, willcontinue to be the largest product segment, based primarily on their extensiveuse in carbonated soft drinks. However, these high intensity sweeteners will post the slowest growth due to their reliance on US diet soft drink production, which has been among the slowest growing beverage markets over the past five years, noted Freedonia.
Strong gains are expected for smaller volume additives such as nutraceuticalsand texturisers, with annual growth of 5.8 and 7.3 per cent respectively. Further increases in nutraceutical beverage additives will be restrained by the higher price tag typically attached to nutraceutically enhanced beverages and growing scepticism regarding the efficacy of herbal additives, the report added.
Texturiser demand will benefit from robust growth in dairy beverages and RTD coffees, where they create a rich texture.
The large flavour market will also post healthy growth as beverage makersincreasingly turn to flavour innovation as a major growth driver. Demand for flavour additives is projected to increase by 5.2 per cent per year until 2006, with the fastest gains in flavoured dairy beverages, energy and sports drinks. Further advances will be moderated by lacklustre increases in production of carbonated soft drinks (a key flavour market traditionally accounting for some two-thirds of flavour demand).
Carbonated soft drinks will remain the largest market for beverage additives in 2006, with nearly two-thirds of total sales. However, this market will be the slowest growing of all additive outlets over the next decade due to market maturity and competition with newer beverage introductions, including energy drinks and flavoured water.
The fastest gains are expected for energy drinks, ready-to-drink beverages, sports drinks and flavoured milk, spurred by new product introductions offering innovative flavors and a widening array ofnutraceutical additives. Despite stellar growth, these beverages will remain niche markets for the most part.
The report, 'Beverage Additives', is available from the The Freedonia Group.