Market Trends of Europe Flavors & Fragrances Industry
Rising Demand for Natural Ingredient Based Products
European consumers are increasingly opting for natural ingredients in their food and personal care products, which is leading manufacturers to shift towards natural ingredients to cater to this growing demand. This trend is driven by concerns regarding the potential side effects of artificial ingredients, as well as stringent regulations against their use in certain applications. Governmental bodies, such as the World Health Organization (WHO), the Food and Drug Administration (FDA), the European Food Safety Authority (EFSA), and the Food Safety and Standards Authority of India (FSSAI), have recognized the potential hazards associated with synthetic or artificial ingredients and have established guidelines for their use in food products. For instance, as of today, the European Union Cosmetics Regulation provides that 25 fragrance ingredients (they were 26 before the ban on Lilial) must be declared on labels when their concentration exceeds: 0.001% in leave-on products; 0.01% in rinse-off products. Such factors are aiding in the increasing popularity of natural flavors for their health benefits and eco-friendly properties.
Moreover, ingredient-conscious consumers are increasingly seeking food products with "clean" labels, i.e., products that are free from additives such as artificial flavors. This demand is driving manufacturers to use clean-label ingredients in their products, which in turn supports their branding and marketing strategies, thus the market as well. Consumers in countries like Germany and France are particularly drawn to positive labeling claims like "clean label" due to their perceived health and wellness benefits. For instance, a consumer survey conducted by the German Federal Institute for Risk Assessment (BfR) in September 2021 found that 55% of Germans try to avoid food additives while purchasing food products. This growing demand for natural and clean-label ingredients is likely to continue driving up the sales of the market in the region.
Beverages Hold a Significant Share in Application Segment
The European market is experiencing a surge in demand for flavored carbonated beverages, which is driving innovation in the product lines of beverage manufacturers. These innovative products are based on superfruits and tropical fruits that require the addition of flavors to enhance their tastes which is supporting the increasing sales of food flavors in the region. Also, the consumption rate of functional beverages such as energy drinks in the region is also on the rise and almost all of these functional beverages are added with different flavors to enhance consumer's experience. For instance, according to British Soft Drinks Association, in 2021, consumption of sports and energy drinks in the United Kingdom accounted for about 906 million liters which increased from 836 million liters in 2020. Additionally, consumers are increasingly focused on taste when making purchase decisions, which drives the use of food flavors to enhance the taste of beverages. Similarly, there is a shift in their preferences away from sugary flavors and towards more floral, botanical, and savory flavors, further increasing the demand for innovative flavors among beverage manufacturers and creating more opportunities for the players in the market.
Moreover, flavors are essential for beverage manufacturers to deliver palatability and target specific consumer groups, and their use in non-alcoholic beverages like carbonated drinks, coffee and tea, flavored water, and energy drinks is boosting the sales of the market. Furthermore, consumers in the region are increasingly embracing premium positioned, craft, and artisan beverages that offer unique flavor experiences. Craft brewing in Europe has expanded the application of a variety of flavorings for a wide range of beers, with accents like blue juniper berries, blueberry fruit powder, dark sweet cherry powder, Kerry natural blackberry flavoring, Kerry natural flavoring, and others commonly used to add complexity and uniqueness to beer styles. Such factors are expected to boost the usage of flavors in the beverage category, thus the market's growth during the forecast period.
