Annatto Market Size, Share & COVID-19 Impact Analysis, By Type (Solvent Extraction & Emulsified Annatto and Aqueous Extraction Annatto), Application (Food Industry, Natural Fabric Industry, Cosmetic Industry, and Others), and Regional Forecasts, 2020-2032

The global annatto market size was USD 196.55 million in 2019 and is projected to reach USD 361.39 million by 2032, exhibiting a CAGR of 4.71% during the forecast period based on our analysis in the existing report. Moreover, the annatto market size in the U.S. is projected to grow significantly, reaching an estimated value of USD 74.22 million by 2032, driven by rising demand of the product from various end-use industries such as food & beverages and personal care & cosmetics industry.

Achiote seeds extracts or annatto is among the oldest natural dyes known to humans and is extensively utilized by food industries as a natural food grade colorant. The broadening application among both food and non-food sectors is expected to provide future growth opportunities for the market. The product has been recognized as a safe condiment and food coloring product by various regional food safety authorities such as the U.S. Food & Drug Administration (FDA), European Food Safety Authority (EFSA), and others.

Disruptions in Supply Chain amid COVID-19 to Lead to Sluggish Growth

The sudden outbreak of the COVID-19 pandemic has negatively impacted almost all the industries as it forced the workforce across different parts of the globe to stop operations without any proper management. The disturbances created in the supply chains of the product due to production limitations, increased transport rates, and higher delivery costs have impacted the overall market. Moreover, various governments have announced temporary bans on foreign air travel and various state councils have advised self-quarantine to the people to prevent the spread of the virus. These aforementioned factors are predicted to slow down the growth rate of the market.

The limitations on the export and import of non-essential products owing to the temporary border closure situations in some countries are further impacting the annatto market growth. The physical distancing and home quarantine orders given by several governments have negatively impacted the foodservice industry where a considerable amount of food colorants like annatto are required. This is further predicted to result in low demand for the product. However, in response to the chaotic situation caused due to the pandemic, food additive producing companies are continuously working on re-establishing the smooth operations and supply chain. This is expected to surge product sales in the upcoming months.

LATEST TRENDS

Growing Popularity of Clean-label Additives to Boost the Market Growth

The global annatto market is profiting from the increasing awareness about the importance of clean-labeling in assisting sensible purchases. The aforementioned reason is driving the demandfor natural, recognizable, and pronounceable ingredients. Ingredient-sourcing and ethical concepts are touted to take clean-label concepts to advanced growth stages. Companies are actively putting in more effort to receive credible clean-label certifications for their ingredients and additives. Natural food colorants such as bixin will continue to experience greater demands owing to traits like minimally-processed, easy-to-reformulate, non-GMO certified, and safe.

DRIVING FACTORS

Favorable Consumption Patterns of Natural Colorants to Aid Market Growth

The global market is driven primarily due to the strong impetus placed by food manufacturers on the healthier natural alternatives to artificial colorings and synthetic dyes. The future growth trajectory for the product is promising, given the efforts from ingredients manufacturers to capitalize on optimized, convenient, and personalized offerings that are highly suitable for specific food applications. The gradual decline in the incorporation of artificial colors across new product launches is a testimony of the favorable consumption pattern for natural colorants.

Increasing Demand for Natural Colorants in Cosmetics Production to Promote Growth

The tremendous growth in the natural and plant-based industry has lead to escalating buyers' interest in natural ingredients for personal care and cosmetic products. In addition to this, the rising awareness regarding the various benefits of natural beauty products is boosting the demand for natural cosmetic products. Therefore, cosmetic producers are embarking on the adoption of natural colorants. The emerging trend of chemical-free and natural cosmetics is likely to support the incorporation of natural ingredients in the production of various industry cosmetics, which in turn may boost the sales of the product.

RESTRAINING FACTORS

High Cost & Low Stability to Hamper the Growth of the Market

The stability of annatto as compared to synthetic colorants such as Azorubine, Allura Red, and others is lower which is a major limiting factor for the growth of the market. Another hindering factor for the speedy growth of the market is the higher cost of the product as compared to its counterparts. Moreover, the hypersensitivity of the product to environmental factors such as temperature and light which results in its color degradation can obstruct the growth of the market during the forecast period.

SEGMENTATION

By Type

Solvent Extraction & Emulsified Product Type to Dominate due to its Wide Application Spectrum

Globally, the solvent extraction & emulsified annatto remains a leading type owing to the nature of foods in which it is frequently utilized such as dairy products. This product type has been long utilized for coloring of dairy products. The recent trend of free-form products established in the dairy sector, the utilization of oil-soluble or emulsified pigments will be more promising and lucrative for manufacturers. The fat-soluble bixin finds extensive application in dairy and meat products. The typical orange and orange-red hues are developed due to high amounts of bixin present in oil-soluble annatto.

The demand for aqueous extraction or norbixin pigments is predicted to remain steady during the forecast period. This is attributable to their easy and superfast solubility with water at room temperature, which is required for the preparation of sauces, gel caps, and others. The cost-effectiveness of this type is another favorable factor for its growing demand among end-users.

By Application

Food Industry Segment to Lead Owing to Increasing Demand for Natural Ingredients

Food processors are increasingly seeking to incorporate ingredients and additives that are Generally Regarded As Safe (GRAS). Annatto extract is in the list of approved colors for the food and feed industries by the European Union (EU), the U.S. Food and Drug Administration (FDA), and the World Health Organization (WHO).

Bakery, beverages, and dairy are some of the common applications where manufacturers are reformulating the organoleptic profiles with the utilization of natural colorings. Consumers are exhibiting high willingness to pay increasing attention towards the formulations of such products that has propelled food processors to utilize natural ingredients. The demand for cosmetics with organic and natural ingredients is witnessing impressive growth. This is predicted to enhance the demand for natural colorants in cosmetics productions in the forthcoming years.

REGIONAL INSIGHTS

Europe to Remain Dominant Owing to Increasing Adoption of Natural & Safe Ingredients

Annatto is a second-most important colorant behind caramel – the production and consumption trend of bixin and norbixin remains promising, given the robust demand for natural inputs in food and beverages. Europe is expected to lead the global market during the forecast period. This region is expected to showcase impressive growth in the forthcoming years. The growth is attributable to the high demand for natural colorants in countries such as the U.K., France, Germany, and others. However, the Asia Pacific market will register the fastest compound annual growth rate of 5.7% during 2020-2027.

The demand for this in North America is increasing on account of escalating demand for the product from various end-use industries such as food & beverage and personal care. Clean-labeling trends, consumer-awareness, enabling policy and regulatory scenario, and the number of product launches with natural colorants within the region are some of the attributing growth factors.

The rising population across Asian economies is contributing in raising the demand for food as well as food ingredients such as colorants. Moreover, presence of annatto production bases in countries such as Philippines, India, and others in Asia Pacific will further boost the market.

The market in South America is anticipated to grow at a speedy pace owing to countries such as Peru, Brazil, Ecuador, and Bolivia where large amount of annatto is harvested annually. High profitability associated with the trade of annatto will aid the production of the product within this region. Furthermore, increasing consumer consciousness towards health & wellness and improving lifestyle is projected to aid the adoption of natural and safe colorants with the region.

The U.S. is an undisputable leader in the North America market due to high demand and consumption of ingredients with clean labels. The per-capita consumption of bixin and norbixin carotenoids (active principles of annatto extracts) in the United States remains significant in baked goods, non-alcoholic beverages, coatings, breakfast cereals, and cheese.

KEY INDUSTRY PLAYERS

Major Companies Focus on Collaborations & Acquisitions to Consolidate their Market Positions

The annatto market is becoming more consolidated due to the strong product portfolio, brand loyalty, and remarkable distribution network of prominent companies in developed and developing countries. Companies are capitalizing on research and development of pre-existing as well as new products to ensure that they obey guidelines made by food regulatory authorities and hence they can be hassle-freely commercialized. Moreover, key market players are embarking on collaborations to increase their market strength and prominence.

Givaudan SA, which is one of the major players in the market is intensively focusing on the new developments, value addition in annatto extracted colors, and mergers & acquisitions to increase its global presence. For instance, in January 2017 Givaudan SA announced the acquisition of Activ International. The acquired company offers a range of natural and organic colors and flavors. This acquisition is projected to help the Givaudan SA to expand its product offerings.

LIST OF KEY COMPANIES PROFILED:

• Givaudan SA (Vernier, Switzerland)


• Archer Daniels Midland Company (Illinois, United States)


• Chr. Hansen Holding A/S (United States)


• Sensient Technologies Corporation (Wisconsin, United States)


• Kalsec Inc. (Michigan, United States)


• Dohler Group (Darmstadt, Germany)


• Dairy Connection, Inc. (Madison, Wisconsin)


• IFC Solutions (United States)


• Biocon Colors (Bengaluru, India)


• Aarkay Food Products Ltd. (Gujrat, India)

KEY INDUSTRY DEVELOPMENTS:

• March 2020 -  Suja, producer and distributor of organic, cold-pressed, and non-GMO beverages has announced the launch of a new line of juices developed in partnership with Whole Foods Market. The company used natural coloring ingredients such as annatto for juice production.


• July 2020 - Chr. Hansen announced the expansion of its food category i.e.soups, flavored drink, surimi, and others that includes products such as annatto for coloring purpose.

Report Coverage 

The market research report provides qualitative and quantitative insights and detailed analysis of market size and growth rate for all possible segments in the market. Along with this, the report provides an elaborative analysis of the market dynamics and competitive landscape. Various key insights provided and covered in this report are the overview of related markets, recent industry developments such as mergers & acquisitions, the regulatory scenario in key countries, and key annatto industry trends.

Report Scope & Segmentation