The need to innovate could become more acute as advances are reined in by downward pricing pressure, market maturity, end-user consolidation and a shift away from additives, according to a new report from The Freedonia Group.
But gains are still to be made with the biggest prize likely to come from trends for lower sodium food and all-natural products.
Freedonia predicts that demand for flavors and fragrances in the US food market between 2009 and 2014 will grow 2.7 percent per year, reaching $2bn in 2014.
This compared to 2004-9 when the annual growth figure was 3.9 percent.
Bridget McMurtrie, Freedonia industry analyst, told FoodNavigatorUSA.com: “Intense competition among flavor houses, along with a projected moderation in raw material prices will limit overall pricing gains.
“However, this trend will be offset to some degree by the ongoing consumer interest in natural ingredients in food and beverages, as natural flavors are higher-value materials than their synthetic counterparts.
“Nevertheless, economical blends will continue to dominate as end users step up efforts to keep costs low.”
The Flavors & Fragrances report states that shifting consumer preferences play a major role in the outlook for the food market, such as demand for healthy, all-natural food products with clean labels.
It also highlights the impact of the 2010 Dietary Guidelines for Americans, which included stricter upper limits of 1,500mg per day sodium consumption for about half of all Americans.
These guidelines are expected to “spur the development of more nutrient-rich, lower calorie foods” that may require higher flavor loadings to make them more palatable.
McMurtrie said: “It is expected that flavor companies will continue to invest in the development of products which can help food manufacturers to reduce sodium levels without sacrificing taste.”
She added that both flavor enhancers and masking agents will benefit but there has been particular interest in products that enhance the saltiness or umami taste of foods.
McMurtrie expects the flavor industry to continue to be driven by innovation, devoting significant resources to the discovery and commercialization of new flavors, in particular as trends toward healthier eating are causing many food manufacturers to reformulate their products or develop new, more nutritious ones.
She said microencapsulation “holds promise” in the growing processed foods market (the largest application for food flavors), especially for nutritionally enhanced food products.
And flavor companies will likely invest in developing flavor products that meet growing consumer demand for more complex, exotic and authentic flavors with, for instance, biotechnology playing an increasing role.
However, McMurtrie cautioned that gains in market value may be impacted by continued advances in the science of identifying and reproducing the many constituents of natural flavors.