Global Ingredients Hydrocolloids

Global Ingredients: Hydrocolloids
Winning Against Cost and

Sustainability Pressures
July 2009
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Euromonitor International > Industry - Sector
Scope
Report Highlights
Hydrocolloids Category Analysis
Product Applications
Where Next?
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Agar
Alginates
Beta-glucan
Celluloses
Cellulose ethers
Carboxymethyl cellulose
Quaternised hydroxyethyl cellulose
Microcrystalline cellulose
Carrageenans (including semi-refined)
Gellan gum
Galactomannans
Locust Bean Gum
Guar gum
Guar hydroxpropyltrimonium chloride
Gelatin
Gum arabic
Konjac
Pectin
Xanthan gum
Scope
Scope of This Report
This report discusses the global market for hydrocolloids, as detailed below:
This report does not include starches and dietary fibre, which will be covered in forthcoming reports. However,
as dietary fibre ingredients are also used to thicken food and drink products, there is some crossover between
these two sets of ingredients.
Many of the hydrocolloids discussed in this report are important sources of dietary fibre, and reference is made
to this in the report.
Inulin and oligofructose, which are used primarily as dietary fibre ingredients, will be covered in a forthcoming
report on dietary fibre ingredients.
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Scope
Report Highlights
Where Next?
5
Diversity drives the market: Volume sales of hydrocolloids, as defined in this report, were over 564,000
tonnes in 2008. The market saw a CAGR of 4.0% by volume between 2003 and 2008, but this is forecast to
slow to 2.9% to 2013. Hydrocolloids are used in a wide variety of products and this has, and will continue, to
keep the market in growth. Current and future growth is forecast to continue in the key regions of Asia Pacific,
Western Europe and North America. This is being driven by continued demand for products such as yoghurt,
ice cream and pet foods, in which hydrocolloids play an important role. As companies continue to do more
research into hydrocolloids and their potential uses, the forecast continues to be positive for these ingredients.
Growth in natural ingredients: Todays consumer is looking to reduce intake of synthetic ingredients. As
hydrocolloids are made from natural sources, their use, particularly in food and drink, is important for end-use
manufacturers who want to use only natural ingredients. This puts hydrocolloid suppliers in a strong position
with end-use manufacturers.
Helping to fight global obesity: As hydrocolloids make effective fat-replacers, they have been at the
forefront of the development of low-fat foods. With the increase in obesity rates in many countries, the
development of good tasting low-fat foods is key to helping fight this global health issue. Some hydrocolloids
have also been seen to have other health benefits, such as being used as prebiotic ingredients, giving them
good potential for future new applications.
The rise of convenience foods: The demand for convenience foods continues to increase, in particular in
the developing regions where consumers are adopting western lifestyles. Hydrocolloids have played a crucial
role in the development of these products, and while demand for convenience foods continues to rise,
demand for hydrocolloids will also keep increasing.
Supply and cost pressures: Due to hydrocolloids being derived from natural sources this has resulted in
supply issues. In particular, the supply of seaweed-derived hydrocolloids has been badly affected by poor
harvests, while at the same time they have seen demand increase, resulting in issues with supply. These
issues, along with the increase in the cost of energy, have resulted in many ingredient manufacturers being
faced with having to increase their prices to their customers.
Report Highlights
Key Findings
6
Opportunities
Weaknesses Strengths
Threats
Diversity Natural ingredients
Health foods Developing regions Supply issues Substitutes
Price Increases Competition
Hydrocolloids are used in a
diverse range of products
,including food and drink, pet
foods, cosmetics and toiletries
and household care. This
means that they are not reliant
on one particular application,
and therefore any negative
changes to these categories
will not have an adverse affect
on the overall hydrocolloids
market.
Hydrocolloids are derived from
natural sources, putting them
in a good position with end-use
manufacturers who want to
use natural ingredients. Many
consumers are looking to buy
products that dont contain
synthetic ingredients, and
manufacturers are meeting this
demand by launching natural
products.
Price increases are leading
end-use manufacturers to look
for alternatives. In particular,
those ingredients produced
from seaweed are at most
threat of being substituted.
Starch suppliers are starting to
compete directly with
hydrocolloid suppliers, offering
products with similar functions
but at a lower cost.
Competition from Asia is
increasing, as the raw
materials are produced locally,
and the cost of fuel and labour
is lower than in other regions.
With price increases hitting
most ingredient suppliers, end-
use manufacturers will be
looking for cheaper sources.
However, Sub.
The increase in demand for
health foods, including low-fat,
low-sugar, gluten-free and
functional foods, has opened
up new avenues for
hydrocolloid manufacturers.
They are well placed to offer
ingredients and formulations to
meet food and drink
manufacturers requirements if
development and research
continues in this area.
The developing regions are
key to long-term growth.
Demand for prepared foods is
driving the market in these
regions. Suppliers have a great
opportunity to tap into this
demand. This can be achieved
by expanding production or
opening sales offices in these
regions to meet the specific
requirements of the market.
Over-demand and decreasing
production levels are causing
issues with supply of raw
materials. This has led to
unreliable supply both in terms
of quantity and quality, which is
having a knock-on effect in the
industries that they sell to.
Working with the producers of
raw materials or having a
dedicated supplier is key.
Hydrocolloids have been hit by
price increases, particularly
due to higher energy costs.
Those derived from seaweed
have been particularly hard hit
because of poor harvests and
soaring demand. It is likely in
the long term that prices will
continue to rise as energy
supplies drop.
Report Highlights
SWOT
7
This growth in demand for convenience foods in these countries and regions is resulting in huge opportunities
for ingredient suppliers.
Report Highlights
Convenience - Global Demand for Prepared Foods
Hydrocolloids have played an important role in the food and drink industry, particularly in the rise in prepared
foods. Demand for these types of products is at an all-time high, not only in Western regions but also in Asia
Pacific, Latin America and Africa.
Countries such as China have seen their incomes rise over the last decade, and younger, more
affluent consumers are changing their habits. Single-person households and couples without
children are often more lazy in their attitudes to cooking at home, as they need not consider
others, such as children or parents. They seek convenient and fast lifestyle solutions. As a
result, packaged foods are taking the place of cooked dinners. Sales of products such as
bakery products, frozen processed food, chilled processed food and ready meals, have been
boosted by the increasing numbers of small households and young consumers living alone.
Other emerging markets, including Brazil, India and Russia, are seeing similar changes to their markets, and
demand for convenience foods is not abating.
Volume, 2003-08 CAGR % of Prepared Foods by Type and by Country
Ready Meals Canned food
Frozen
processed food
Chilled
processed food
Snack foods
Bakery
products
Brazil 12.0 2.6 5.1 6.3 4.5 1.6
Russia 8.9 5.2 9.6 4.1 15.2 -0.2
India 24.2 8.5 9.4 - 11.8 5.4
China 10.0 3.5 8.0 7.6 6.8 9.7
8
The majority of hydrocolloids are used in prepared foods to some extent, but some are more important than
others in this sector of the food industry. Suppliers of these particular hydrocolloids are therefore well placed
to be part of this growing sector of the food industry.
Report Highlights
Convenience - Key Hydrocolloids Used in Prepared Foods
Ready meals Canned food
Frozen
processed
food
Chilled
processed
food
Snack foods
Bakery
products
Beta-glucan

Carrageenan

Guar gum

Konjac

Locust bean gum

Xanthan gum

9
One of the key applications for hydrocolloids
in recent years has been as a fat replacer.
The demand for fat replacers has been driven
by the demand for reduced- and low-fat
products, as consumers try to lead a healthier
lifestyle.
There are more than one billion overweight
adults worldwide, at least 300 million of them
obese. This has been caused by consumers
eating more (including more high-fat and
high-sugar foods) and exercising less. The
associated health consequences include
heart disease, type-2 diabetes, stroke and
some cancers. The problem is not just
confined to the Western world, although the
largest proportion of obese people can be
found in these countries. Many Asian
countries are seeing a rise in obesity rates, as
people become more affluent and in turn eat
a more Westernised diet, high in fat and
sugar. Closely related to the obesity epidemic
is the rise and prevalence of diabetes, in
particular type-2 diabetes.
Report Highlights
Health and Wellbeing Obesity Epidemic Opportunity
0 10 20 30 40
Poland
Israel
Hungary
South Africa
Turkey
Canada
United
New Zealand
Australia
Greece
Mexico
Venezuela
Saudi Arabia
Chile
Argentina
Egypt
USA
% of population
Obesity Rates by Country, 2008
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The better-for-you (BFY) reduced-fat market
was estimated to be worth over US$112 bn in
2008. The market is forecast to see growth to
a value of around US$128 bn in 2012.
The reduced-fat dairy products sector is the
largest sector by value, accounting for over
half of the market. It has also continued to be
one of the strongest performing sectors, and
is forecast to see continued growth ahead of
the overall market. Reduced-fat dairy
products are key applications for
hydrocolloids. They are used to stabilise the
product and provide the texture and
mouthfeel lost by the reduction in fat. Other
key applications include ice cream and
sauces, dressings and condiments, all of
which currently use hydrocolloids to improve
the texture or stabilise the product. Suppliers which market their hydrocolloids as fat replacers will be able to tap into these
sectors, as well as other potential growth sectors, such as soups, snacks and bakery products.
Hydrocolloid suppliers are beginning to meet the demand of food manufacturers to lower the fat
content in their products by launching hydrocolloid formulations that will meet these needs. US
company Gum Technology supplies Coyote Brand CKX-Fat Replacer, which combines
microcrystalline cellulose, konjac and xanthan gum, and which is said to mimic fat and give a
creamy mouthfeel to products. CP Kelcos Simplesse Microcapsulated Whey Protein Concentrate
contains uniform protein particles, which, due to their size and consistency, give the same
mouthfeel of oil droplets when used in low-fat and low-sugar products.
Some hydrocolloids are also used in low-sugar products, such as low-sugar beverages. When used
in these products, the hydrocolloid can maintain the mouthfeel of the product, even with reduced
sugar content.
Report Highlights
Health and Wellbeing Hydrocolloids as a Fat Replacer
World Market for Better-For-You Reduced Fat Products by
Value, 2008
Value
(US$ mn)
2007-12
CAGR %
BFY reduced fat packaged food 112,265 4.0
BFY reduced fat chocolate confectionery 86 -0.2
BFY reduced fat bakery products 2,696 3.3
BFY reduced fat ice cream 3,745 3.5
BFY reduced fat dairy products 58,953 4.6
BFY reduced fat sweet and savoury snacks 2,774 5.8
BFY reduced fat ready meals 5,488 2.0
BFY reduced fat soup 241 3.6
BFY reduced fat oils and fats 2,691 1.9
BFY reduced fat sauces, dressings and condiments 2,604 3.0
BFY reduced fat spreads 120 1.8
Other BFY reduced fat food 6,973 2.7
Note: 2008 data estimates. Value based on current exchange rate in 2007
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Potential health ingredients: Hydrocolloids are added to food and drinks to act as a texturiser, stabiliser,
thickener, emulsifier and to form gels, among other purposes. However, many hydrocolloids have the
advantage of adding potential health benefits to products, in particular as a source of soluble dietary fibre.
Hydrocolloids high in dietary fibre include agar and beta-glucan. Pectin is also being examined as a new
health ingredient. Claims have been made that it has a potential prebiotic effect, high fibre content and the
potential to lower cholesterol.
Consuming soluble dietary fibre is said to stimulate the growth of beneficial bacteria in the gut and improve
digestive health. In Western diets, the amount of soluble dietary fibre may be insufficient, so consumers are
seeking products that can give them the additional dietary fibre they need. Hydrocolloids are some of the
highest sources of fibre, and are well placed to offer these health benefits on top of their traditional functions.
Opportunities for suppliers: Generally, hydrocolloids are added to products in such low concentrations that
manufacturers would not be able to make any health claims when they are used as an additive.
Some hydrocolloid suppliers are, however, creating formulations that will help food manufacturers to increase
the dietary fibre content of their products. TIC Gums launched a range of high-fibre yoghurt stabilisers,
including TIC Pretested Dairyblend YG FB 3, which is a blend of hydrocolloids and starch providing 4g of
fibre per serving. Dow Wolff Cellulosics launched Fortefiber, which is a cellulose-based formulation for a
wide range of products that require additional soluble fibre. Fibregum, from Colloides Naturels International,
is a range of high-fibre ingredients made from acacia gum.
It is not easy for ingredient suppliers to start promoting their products as having particular health benefits. Not
only are they normally used in small concentrations, but significant research is required to make a health
claim. However, it may be beneficial for the industry as a whole to fund such research and realise potential
growth in new untapped areas.
Report Highlights
Health and Wellbeing Possible Functional Benefits
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Natural ingredients: Hydrocolloids fit in with consumer demand for natural ingredients, as they
tend to be derived from plant or animal sources. Consumers are increasingly aware of what they
are consuming and are beginning to understand more about the ingredients that are found in
everyday food and drink products. This puts hydrocolloid suppliers in a strong position to be able
to market their products to end-use manufacturers which are looking to use all-natural
ingredients.
Natural ingredients: Hydrocolloids fit in with consumer demand for natural ingredients, as they tend to be
derived from plant or animal sources. Consumers are increasingly aware of what they are consuming and are
beginning to understand more about the ingredients that are found in everyday food and drink products. This
puts hydrocolloid suppliers in a strong position to be able to market their products to end-use manufacturers
which are looking to use all-natural ingredients.
Organic ingredients: Many end-use manufacturers are looking to expand their ranges into the organic sector,
although there is some debate as to whether this sector will continue to be as successful in the economic
downturn. Generally, ingredient suppliers have been slow to respond to the organic trend, and while the
demand organic products is still present, it would be a key market for ingredient suppliers to target. One such
company that is meeting this trend is TIC Gums. It supplies a range of organic hydrocolloids, including gum
arabic, locust bean gum and guar gum, under its TICorganic brand.
In the US, a number of hydrocolloids can be used in products labelled as organic without having to be from
an organic source. These include agar, carrageenan, alginates, xanthan gum and pectin.
This means that suppliers of these ingredients are able to target the organic market with
their ingredients, without those ingredients having to come from an organic source.
Report Highlights
Health and Wellbeing All-natural Products
The use of natural ingredients is very important to manufacturers who are making claims
about their products being all natural leading ingredient supplier
13
The majority of hydrocolloids are plant-based; however, gelatin is produced from animal sources, including
cattle, pigs and fish. For the majority of consumers this is of little concern, but there is a significant sector of
the population who will not consume products that contain gelatin. This may be for religious or ethical reasons.
The number of people who will not consume products containing gelatin is difficult to measure, but it includes
an estimated:
1.5 billion Muslims
900 million Hindus
14 million Jews
12 million vegetarians in the US and 3.5 million in the UK
This issue became a concern for a wider section of the population during the BSE crisis in the 1980s and
1990s. This caused many people to stop consuming bovine products, including gelatin, and food
manufacturers began to look for alternative hydrocolloids. Although gelatin is perfectly safe, and comes under
the same strict guidelines as all bovine products, the negative attitudes to it have not disappeared. Indeed, the
BSE scare highlighted to many people that what they were consuming contained animal products, which they
may have been previously unaware of.
Some manufacturers are addressing this, and the use of gelatin made from fish skins is increasing. Rousselot
was the first company to produce such a product, under the Rousselot FG brand. While this may not satisfy
the vegetarian population, it opens up the market to products supplied to parts of Asia and Africa, where the
Muslim and Hindu populations are greatest. For manufacturers who wish to have a vegetarian product, other
hydrocolloids can meet that need.
Report Highlights
Health and Wellbeing Gelatin a Cause for Concern?
14
As hydrocolloids tend to be derived from natural sources, hydrocolloid manufacturers are at the forefront of the
environmental debate.
Sustainability of supply: Sustainability of raw materials is important for both the producers of the raw materials
and the ingredient manufacturers, because a shortage of supply leads to price increases. The sustainability of the
supply of seaweed for production of hydrocolloids has come into focus in recent years. Production of seaweed is
declining in many regions, due to a number of factors. Climate change is having an effect on the temperature of
sea water, and farmers are producing less seaweed each year. Wild sources are shrinking or moving to cooler
waters. There is also evidence of some diseases becoming more prevalent, exacerbated by farming the same
species for many years, which also affects the yield.
Sustainable supply of gum arabic derived from the acacia tree has also been an issue. There have been a
number of factors contributing to a falling supply, including changes to the climate, conflicts in countries such as
Sudan, and over farming.
Hydrocolloid suppliers, like all ingredient suppliers, need to be able to maintain the supply and quality of their
products. Some have been looking at new strains of seaweed that may be better placed to meet the changing
climate and give a good yield. To maintain the supply of gum arabic, countries such as Sudan, Chad and Nigeria
are building up reserves and stockpiling for times of shortage. This will help to guarantee the supply to ingredient
manufacturers and keep prices stable.
Fair trade: Ingredient suppliers which use products like seaweed or plants like the acacia tree, guar gum bush or
the carob tree, are often sourcing these from undeveloped regions of the world. Farmers of these
raw materials are often exploited by the buying power of the large multinational companies,
looking to source their raw materials at the lowest cost. However, if the price goes too low, it
becomes unsustainable for farmers to continue, leading to fewer farmers producing these crops,
a reduction in supply, and an increase in prices. A fair price will therefore benefit both the farmers
and the ingredient suppliers.
It is, therefore, important that ingredient suppliers work with the farmers and the countries to maintain production
and trade in a sustainable way, benefiting all.
Report Highlights
Health and Wellbeing Ethical Considerations
15
Scope
Report Highlights
Where Next?
16
Hydrocolloids have been used for hundreds of years as a way of forming gels, particularly in food products, where
they are part of many traditional dishes, notably in Asia. Hydrocolloids have a wide range of applications, including
many industrial applications, and are used in pharmaceuticals, household products, cosmetics and toiletries and food
and drinks. However, it is the growth in packaged foods that has really seen the use of hydrocolloids boom. Found in
products ranging from sugar confectionery and dairy desserts to meat products and soft drinks, there are very few
areas of the food industry where they are not used. The popularity of hydrocolloids with food manufacturers is also
increasing due to the rise in demand for healthier foods. They are being used in low-fat foods as fat replacers and in
prebiotic functional foods, as some hydrocolloids have a high soluble fibre content.
Volume sales of hydrocolloids, as defined in this report, were over 564,000 tonnes in 2008. The market saw a CAGR
of 4.0% by volume between 2003 and 2008, with a peak in growth in 2004/05 due to strong demand for agar used in
prebiotic products. Growth has since levelled off, and the CAGR is forecast to be 2.9% between 2008 and 2013.
No hydrocolloid dominates this market, as they all offer different functions for use across a wide range of products.
Hydrocolloids Diversity Drives Market
0%
1%
2%
3%
4%
5%
6%
7%
8%
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
%

c
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Volume of Hydrocolloids, 2003-13
Gum
arabic
23.6%
Gelatin
19.6%
Xanthan
gum
12.1%
Galacto-
mannans
11.7%
Celluloses
12.0%
Pectins
9.3%
Seaweed
derivatives
8.5%
Beta-
glucan
3.1%
Others
0.1%
Hydrocolloid Market by Volume, 2008
17
Asia Pacific, Western Europe and North America together account for three quarters of the hydrocolloids
market by volume. The market in Western Europe and North America has saw limited growth between 2003
and 2008, with CAGRs of 2.5% and 1.0%, respectively. Many of the key applications for hydrocolloids, such
as sugar confectionery, dairy products and soft drinks, are mature markets in these regions.
Asia Pacific is the main driver of the world hydrocolloids market. An increase in demand for prepared foods,
as consumer habits change and populations increase, is driving the market. The other developing regions of
Eastern Europe and the Middle East and Africa (MEA) have also seen strong growth rates 8.4% and 8.8%,
respectively. However, these growth rates are not forecast to be sustained, due to a downturn in market
growth for the key applications in these regions.
Hydrocolloids Asia Pacific Key Growth Region
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-2% 0% 2% 4% 6% 8% 10% 12%
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%

2
0
0
8
-
1
3
CAGR % 2003-08
Hydrocolloids Market by Region and by Volume, 2008
Asia Pacific
Eastern Europe
Middle East and Africa
Western Europe
Australasia
Latin America
North America
Note: Dashed line indicates CAGR % for world market
Size of bubble represents market size by volume
18
Due to high demand and issues around the supply of gum arabic (regional conflicts, climate and over-farming)
a sustainable source of gum arabic can be an issue for food manufacturers. Xanthan gum was developed in
the US as an alternative to gum arabic and other gums where supply was an issue. Ingredient suppliers are
also continuing to develop products as alternative sources to gum arabic, as supply issues continue. For
example, US company TIC Gums has developed a product for confectionery coatings. The TicaPan coating
system is said to work in much the same way as gum arabic but is more cost-effective. Product developments
like this will be a concern for companies such as Colloides Naturels International, whose main interests are in
gum arabic.
Gum Arabic Supply Issues Could be a Cause for Concern
Gum arabic, also referred to as acacia gum, is obtained from the acacia tree, which is found in the sub-
Saharan zone of Africa. Historically, it was used for non-food applications, such as printing, paint and glue, but
it is now widely used in food products as a stabiliser, emulsifier, binder and texturiser.
Its main use is in gum-based sugar confectionery, such as pastilles and fruit gums. This accounts for the
majority of its market and will remain so while these types of confectionery are popular throughout the world. It
is also used in soft drinks, namely carbonates, concentrates and functional drinks. It is used to keep the sugar
distributed in the liquid rather than sinking to the bottom.
Leading Categories of Gum Arabic Usage, 2008
Categories % Share Vol (tonnes)
Pastilles, gums, jellies and chews 96.1 128,106
Soft drinks 1.7 2,266
Mints 1.1 1,466
Meal replacement slimming products 0.7 933
19
Gum arabic has the largest market of all the
hydrocolloids covered in this report, with sales
reaching 133,305 tonnes in 2008. Volume sales are
forecast to increase to over 153,000 tonnes in 2013,
with an annual increase of 2.8%. The market has
seen steady growth over the review period; however,
a slowdown in the two largest markets, Western
Europe and North America, saw the growth rate drop
in 2007/08. The declines in these markets are being
offset by increases in the developing regions of Asia
Pacific, Eastern Europe and MEA.
As in many ingredients markets, growth in China is
driving this market. The Chinese market for gum
arabic saw an annual growth rate of 10.5% between
2003 and 2008, and a rate of 14.1% is forecast to
2013. Volumes are forecast to reach over 25,000
tonnes by 2013, although this is still some way behind
the US, which alone accounts for 25% of the market.
As the main application of gum arabic, the market for
pastilles, gums, jellies and chews is determining the
growth of this ingredient. Asia Pacific has seen good
growth in this category and is forecast to see even
stronger growth to 2013. Eastern Europe and MEA
also saw strong review period growth, but the sugar
confectionery market is slowing in these regions as
people switch to chocolate confectionery and chewing
gum. This is due to consumers becoming increasingly
concerned about diets that are high in sugar.
Gum Arabic Moderate Growth for Key Hydrocolloid
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
0
50,000
100,000
150,000
200,000
%

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Volume of Gum Arabic, 2003-13
-3%
-1%
1%
3%
5%
7%
9%
11%
13%
0% 5% 10%
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%

2
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CAGR % 2003-08
Gum Arabic Market by Region and by
Volume, 2008
Asia Pacific
Eastern
Europe
Middle East
and Africa
Western
Europe
Latin America
North America
Australasia
20
Although gelatin is a natural product, it is derived from animal sources. For many consumers, particularly
vegetarians, this is a reason to avoid products containing gelatin. It is also leading some manufacturers to look
for plant-based alternatives to gelatin for their products, opening up a wider market for them. Many Hindus are
vegetarians and therefore the market for gelatin is limited in regions such as South Asia. There is also an
issue for other religious communities, in particular Muslims and Jews, who do not consume pig products, and
who also require animals to have been slaughtered in a particular way (halal and kosher). This has led to
companies developing fish-based gelatin. Global gelatin manufacturer Rousselot was one of the first
companies to produce fish-based gelatin, opening up the market to these groups of consumers.
Gelatin Sugar Confectionery Key to its Success
Gelatin(e) is a natural protein that is used in many products to offer gelling and stabilising properties to water-
based products. It is derived from a number of sources including bovine hides and bones, pig skin and bones,
and fish skins. As a by-product of the meat industry, it is dependent on this market for its raw materials.
Other than food products, it is also used in photographic equipment, pharmaceuticals, cosmetics and a variety
of other products. Within food, it is mainly used in confectionery as a gelling agent, in particular pastilles,
gums, jellies, marshmallows and chocolate bagged selflines. It can also be found in some yoghurts, ice cream,
cream cheeses and processed meat products. Due to its smooth texture ,it has been used to replace fat in
low-fat products, such as yoghurts and other dairy products.
Leading Categories for Gelatin Usage, 2008
% Share Vol (tonnes)
Chocolate bagged selflines/softlines 52.6 58,254
Other sugar confectionery 10.8 11,961
Spoonable Yoghurt 3.7 4,098
Canned/preserved meat and meat products 0.5 554
21
The market for gelatin rose steadily over the review period,
and an annual growth rate of 3.1%, with volume sales
estimated at 110,748 tonnes in 2008. Growth in the sector is
forecast to slow, with an annual growth rate of 2.5% to 2013.
The slowdown in growth is due to the two largest markets,
North America and Western Europe, seeing a downturn in
confectionery - gelatins main application. The slowdown in
growth is also likely to be made worse by recession, as many
consumers cut back on impulse purchases during such times,
and impulse sales are important to the health of the
confectionery market. The gelatin market is also being
affected by a slowdown in growth of the yoghurt market in
Western Europe, where the market is now mature. The
spoonable yoghurt market is forecast to have a CAGR of just
0.5% to 2013 within this region.
Despite the issues in North America and Western Europe, the
global gelatin market is still increasing, due to continued
growth in the core end-use markets in Asia Pacific and
Eastern Europe. Here, the gelatin market saw CAGRs of
5.6% and 5.7% between 2003 and 2008, respectively. Within
these regions, sales of pastilles, gums, jellies and chews have
seen healthy annual growth rates of 6.5% and 4.5% by
volume, respectively. Eastern Europe is also becoming a big
market for chocolate selflines, with volumes comparable to
North America by 2013. Growth rates are forecast to be in the
region of 5.6% to 2013, with volume sales reaching around
502,000 tonnes. Outside of its core market of Western
Europe, yoghurt is becoming more widely consumed, with
both Eastern Europe and Asia Pacific seeing consumption
increase, as products become more widely available and
consumers look for healthy and convenient products.
Gelatin Slowdown as Key Markets Mature
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
%

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Volume of Gelatin, 2003-13
-3%
-1%
1%
3%
5%
7%
9%
11%
0% 5% 10%
C
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%

2
0
0
8
-
1
3
CAGR% 2003-08
Gelatin Market by Region and by
Volume, 2008
Asia Pacific
Eastern
Europe
Middle East
and Africa
Western
Europe
Australasia
Latin
America
North
America
22
Xanthan gum is one of the most widely used
hydrocolloids within consumer products. It is
mainly used in the food and drinks industry,
but also has applications in cosmetics,
toiletries and household products. It is
produced through the fermentation of glucose
or sucrose with the bacterium Xanthomonas
campestris, which is found on cabbage-like
plants. It is also relatively cheap to produce so
it remains a relatively cost effective ingredient.
Sales of xanthan gum reached just over
68,000 tonnes in 2008, and are forecast to
reach around 77,000 tonnes by 2013. Growth
was steady in the review period, with a CAGR
of 2.7%, and is forecast to remain at much the
same rate to 2013.
Its steady growth is thanks in part to its
diverse uses. Processed meat products, both
chilled and frozen, account for 47% of its
market. Within these products, it binds water
and prevents syneresis. It is also widely used
in salad dressings and table sauces, making
the products easy to pour and cling to the
food. Outside of food products, it is also used
in toothpaste to give stand when applied to
the toothbrush.
Xanthan Gum Diversity Keeps Market in Growth
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
%

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Volume of Xanthan Gum, 2003-13
Leading Categories for Xanthan Gum Usage, 2008
Chilled processed meats 43.2 29,513
Toothpaste 20.9 14,278
Sauces, dressings and condiments 14 9,564
Soft drink concentrates 5.3 3,621
Frozen processed food (meat) 3.9 2,664
Dried ready meals 3.1 2,118
Dairy products 1.7 1,161
Dog and cat food 1.4 956
Meal replacement products 1.1 751
Ice cream 0.7 478
23
The core regions for growth have been Eastern
Europe, Latin America and Asia Pacific. The
latter is forecast to become the largest market by
2013, due to growth in processed meats. Chilled
processed meats are forecast to see a CAGR of
6.2% by volume between 2008 and 2013, and
frozen processed poultry of 6.4%. The market
has been very strong in Eastern Europe, which
is also due to the increase in consumption of
processed meat products. This has been caused
by the increasingly Westernised diets of Eastern
Europeans, particularly convenience foods.
Eastern Europeans are also purchasing more
luxury products, such as salad dressings,
prompting strong growth in the xanthan gum
market in the region.
Latin America has also started consuming more
processed meat products, rather than fresh meat
(a staple of the South American diet). Again,
cultural changes are prompting consumers to
want more convenience foods, such as chilled
meat products, which is driving the xanthan gum
market in this region.
Xanthan Gum Processed Meat and Developing Regions
North America is currently the largest market for xanthan gum, with sales of 19,189 tonnes in 2008. The market declined
between 2002 and 2006, but has since started to increase again, and is forecast to see a CAGR of 0.4% to 2013. This
decline was due to a fall in consumption of many of the key end-use markets, including chilled processed meats, table
sauces and salad dressings in North America. These markets are not forecast to see growth in the forecast period, with
chilled processed meats at best flat. Toothpaste is contributing to some of the minor growth, having seen a CAGR of 0.5%
between 2003 and 2008.
-1%
0%
1%
2%
3%
4%
5%
6%
-5% 0% 5% 10%
C
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2
0
0
8
-
1
3
CAGR% 2003-08
Xanthan Gum Market by Region and by
Volume, 2008
Asia Pacific
Eastern Europe
Middle East and
Africa
Western Europe
Australasia
Latin America
North America
24
Guar gum and locust bean gum are both
galactomannans. Also falling within this group
are fenugreek gum and tara gum, with the
latter starting to be used more widely.
Guar gum is obtained from the seeds of the
guar gum bush, grown in India and Pakistan
and parts of southern US. It is used to modify
the texture of food products, control syneresis
and increase viscosity. It is used in a wide
range of products, often with xanthan gum,
due to its synergy with this hydrocolloid. As
guar hydroxypropyltrimonium chloride (a
chemically modified version of guar gum) it is
used in toiletries such as shampoo and
conditioners.
Guar gums main use has been in the
cereal/pulse-based drinks sector of the Asian
speciality drinks market. This has kept the
market for guar gum buoyant in this region,
with sales of these types of drinks having
grown by 27% between 2003 and 2008.
Globally, however, it is used in a wide range
of products, including pet food, meat
products, ice cream, carbonates, yoghurts,
sauces and dressings and powder products,
such as dehydrated soup.
Galactomannans Guar Gum and Locust Bean Gum
Leading categories for guar gum usage, 2008
%
Share
Vol
(tonnes)
Cereal/pulse-based drinks (Asian speciality
drinks)
33.1 15,570
Dog and cat food 18.2 8,561
Ice cream 16.8 7,903
Dehydrated soup 13.0 6,115
Tobacco 5.5 2,587
Canned/preserved meat and meat products 4.0 1,882
691
877
1,058
0
200
400
600
800
1,000
1,200
2003 2008 2013
V
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Volume of Cereal/Pulse Based Drinks in
Asia, 2003-13
25
Growth in the guar gum market was fairly steady over the review period, with a CAGR of 2.6% between 2003
and 2008 and volumes reaching 47,039 tonnes. It is forecast to grow at much the same rate, averaging 2.8%
per annum to 2013. The market for Guar hydroxypropyltrimonium chloride is small, since it is only used in
toiletries. Volumes were 2,944 tonnes in 2008, with a CAGR forecast at 2.2% to 2013. This is in line with the
growth in hair care products, which is its main application.
Galactomannans Guar Gum Market Steady
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%

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Volume of Guar Gum and Derivatives, 2003-13
Guar gum Guar hydroxypropyltrimonium chloride % change y-o-y
26
Asia Pacific dominates this market by far, accounting for over 52% of volume. This is primarily due to the use of guar gum
in the cereal/pulse-based drinks consumed in Asia Pacific, which alone account for some 50% of the market for guar gum
in that region. These drinks are still growing, despite the rising popularity of other soft drinks in Asia Pacific, such as ready-
to-drink tea. Ice cream is also helping to drive the guar gum market in Asia Pacific, which saw a CAGR of 7.3% between
2003 and 2008, and is forecast to continue good growth, with a CAGR of 6.2% to 2013. Canned meat products are also
growing in popularity in Asia Pacific, as a convenient way to consume meat. This market saw a growth rate of 4.8%
between 2003 and 2008, and is forecast to continue at around this rate to 2013.
Similar trends in Latin America and Eastern Europe are driving the market for guar gum in these regions. Eastern Europe
is also seeing strong growth in wet pet foods, where sales saw a CAGR of 11.8% between 2003 and 2008.
Unlike other hydrocolloids, the market for guar gum is relatively small in Western Europe and North America. This is due to
other hydrocolloids, such as xanthan gum, being used as a replacement for guar gum, where supply issues could be a
concern. Another factor in the relatively small market in these regions is that the sectors that it is used in are not as
popular as they once were, such as wet pet food, powder products and canned meat products. The small amount of
growth that guar gum is achieving is due to growth in the ice cream sector, and also in carbonates and yoghurts. However,
even in these sectors, growth has slowed, and in the US the carbonates sector is in decline, giving an unfavourable
outlook for guar gum in these regions.
Galactomannans Asia Big and Positive
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
-3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7%
C
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2
0
0
8
-
1
3
CAGR% 2003-08
Guar Gum Market by Region and by Volume, 2008
Asia Pacific
Eastern Europe
Western Europe
Australasia
Latin America
North America
27
Its main market is ice cream, which continues to be in growth in all regions. The traditionally large markets of North
America and Western Europe have seen consumption slow as this market becomes saturated. However, Asia Pacific is
now the biggest market by volume for ice cream, having seen a CAGR of 7.3% between 2003 and 2008. Growth is
forecast to continue at 6.2% to 2013 and, combined with the growth in the developing regions of Latin America and MEA,
the locust bean gum market will remain in growth for the foreseeable future.
The slowdown in growth over the next 5 years is due to a downturn in demand for wet pet foods, as consumers turn to dry
pet foods for convenience.
Locust bean gum is sourced from the
seeds of the carob tree, found mainly in
Mediterranean countries. It is sometimes
referred to as carob gum or carobin, and
is an off-white powder formed from the
endosperm of the seeds. Like Guar
gum, it is often used with xanthan gum
or carrageenan. On its own it is a
thickener, but when combined with these
other hydrocolloids it forms a strong gel.
Locust bean gum is said to be high in
soluble dietary fibre and it is therefore
being more widely used as a functional
ingredient in prebiotic products.
Locust bean gum has continued to see
growth over the review period. Volumes
reached 16,061 tonnes in 2008 and are
forecast to reach 18,560 tonnes by
2013. The rate of growth picked up
between 2005-06 as the consumption of
pre/probiotic yoghurts increased in many
regions.
Galactomannans - Locust Bean Gum
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
20032004200520062007200820092010201120122013
%

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Volume of Locust Bean Gum, 2003-13
Leading Categories for Locust Bean Gum Usage, 2008
Pet food and pet care products 23.4 3,758
Pro/Pre Biotic spoonable yoghurt 13.6 2,184
Sauces, dressings and condiments 2.7 434
28
Western Europe and Asia Pacific are the two largest markets for locust bean gum, reaching 4,717 tonnes and
4,888 tonnes, respectively. These two markets are undergoing different trends though, as many of the end-
use markets for locust bean gum are slowing in Western Europe and growing in Asia Pacific. Ice cream, in
particular, is shaping this market, having seen a CAGR between 2003 and 2008 of only 0.7% in Western
Europe and 7.2% in Asia.
Although only a relatively small market, Latin America has seen the strongest growth in consumption of locust
bean gum. The annual growth rate was 15.6% between 2003 and 2008. This was driven not only by growth in
ice cream consumption, but also an increase in demand for functional yoghurts, which took off in this region in
the latter half of the review period. However, for there to be larger volume sales in this region, demand for ice
cream will need to increase further.
Galactomannans Ice Cream Holds Sway
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
-5% 0% 5% 10% 15% 20%
C
A
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%

2
0
0
8
-
1
3
CAGR% 2003-08
Locust Bean Gum Market by Region and by Volume, 2008
Asia Pacific
Eastern Europe
Western Europe
Latin America
North America
Australasia
29
There are a number of different cellulose derivates
used as hydrocolloids. The main one is
carboxymethyl cellulose (CMC), or cellulose gum,
which is used in a wide range of food products
and household products. Another important
cellulose derivative is microcrystalline cellulose
(MCC) or cellulose gel. Other cellulose ingredients
include quaternised hydroxyethyl cellulose (HEC)
and other cellulose ethers, which are used in non-
food products.
Food and drink products account for only 28% of
the celluloses uses, but they can be used in a
wide range of products, from fruit drinks to ice
cream. CMC is added to food products for texture,
as a protein stabiliser, to retain moisture and to
form oil-resistant films. MCC is used to give
freeze/thaw stability in frozen desserts, as a fat
replacement and to add texture. For this reason,
one of its primary end uses is in ice cream.
Cosmetics and toiletries and household care each
account for over one third of the celluloses use, in
particular they are used in hair care, toothpaste,
laundry detergents and fabric softeners.
The total market for celluloses as defined in this
report was 67,598 tonnes in 2008, and the market
saw a CAGR of 4.1% between 2003 and 2008.
Celluloses Widely Used Hydrocolloids
Cellulose has a variety of functions, making it a widely used hydrocolloid. It can thicken, stabilise, bind water, emulsify, and
form films, giving it the ability to be used in both food and non-food products. Cellulose is derived from the cell wall of
plants. On an industrial scale it is primarily derived from wood pulp and cotton for use in a wide variety of products.
Packaged
Food &
Beverages
27.6%
Household
care
35.1%
Toiletries &
Cosmetics
37.1%
Other
0.2%
% Volume Share of Cellulose Derivatives
by End Use, 2008
0%
1%
2%
3%
4%
5%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
%

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Volume of Cellulose Derivatives, 2003-13
30
CMC accounts for around three quarters of the volume of
celluloses used as hydrocolloids. Volumes reached just
under 50,000 tonnes in 2008, having seen a CAGR of
4.1% between 2003 and 2008. The market is forecast to
increase at much the same rate to 2013. The CMC
market continues to grow due to its diversity as a
hydrocolloid. It is used in food and drinks, household
products and toiletries.
One of its main uses is in fruit-based soft drinks, such as
juice drinks (those that contain up to 24% fruit juice),
where it helps to keep the particles suspended in the
liquid. Fruit-based soft drinks are growing as healthier
alternatives to other soft drinks, such as carbonates. Juice
drinks (excluding Asian juice drinks) saw a CAGR of 7.6%
between 2003 and 2008, and are forecast to see strong
growth to 2013.
Within toiletries, CMC is used in toothpaste as a thickener
and to suspend the abrasives in the product. Toothpaste
consumption has continued to grow, driven by increased
demand due to rising incomes in the developing regions
of Asia Pacific, Latin America and MEA.
Similarly, growth in demand for laundry detergents in
developing regions is helping to keep the CMC market in
growth. In regions such as China, where incomes have
been increasing, the use of washing machines (and, in
turn, laundry powder), there has been an increase in
laundry detergent sales. CMC is used in laundry products
as an anti-redeposition agent, attracting any dirt particles
being redeposited back on the cloth.
Celluloses CMC Dominates the Market
CMC
73%
Cellulose
ethers
17%
MCC
6%
% Volume Share of Cellulose
Derivatives, 2008
Quarternised
HEC
4%
Leading Categories for CMC, 2008
%
Share
Vol
(tonnes)
Soft drinks 28.5 14,155
Powder detergents 20.3 10,082
Hand wash detergents 18.5 9,188
Meal replacement slimming products 0.7 348
31
Asia Pacific accounts for over half of the CMC market, reaching a volume of 27,596 tonnes in 2008. Along
with the other developing regions of Eastern Europe, Latin America and MEA, Asia Pacific has been driving
the growth of this market. Asia Pacific is also forecast to see continued growth to 2013, with a CAGR of 5.3%.
Eastern Europe and Latin America are forecast to see growth rates fall from the rates they saw in the first half
of the review period, as demand for some of the key end-use products slows. In Asia Pacific, however,
demand for juice drinks and toothpaste do not appear to be abating, with juice drinks forecast to see a CAGR
of 12.0% by volume to 2013, and toothpaste 3.0% in the region.
The market for CMC remains relatively small in the Western regions, with Western Europe and North America
together accounting for only one fifth of this market. Within these regions, the markets for the key applications
are now saturated, and any growth is coming in value rather than volume. Products like juice drinks have seen
a decline in North America in recent years, as consumers switch to other soft drinks, such as bottled water
and functional drinks, concerned about the potential high sugar content in some of these fruit-based drinks.
Celluloses Developing Regions Driving Growth of CMC
-4%
-2%
0%
2%
4%
6%
8%
-6% -4% -2% 0% 2% 4% 6% 8% 10%
C
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2
0
0
8
-
1
3
CAGR% 2003-08
CMC Market by Region and by Volume, 2008
Asia Pacific
Eastern Europe
Western Europe
Australasia
Latin America
North America
32
Pectin has been used for many years for jam and jelly making, making it one of the more well-known
hydrocolloids used in food products. It has only been commercially produced since the early 20th century.
Although found in all plants as protopectin, it is primarily sourced from citrus peel and apple pomace, both of
which offer high-quality pectin in relatively large quantities.
There are two forms of pectin produced on a commercial scale, depending on the degree of esterification (DE)
of the pectin molecules. Those with a high DE, of above 50, are known as high ester (HE) pectins, and those
below 50 are known as low ester (LE) pectins. HE pectins will form gels in aqueous products with a high solid
content and low pH, such as traditional jams. LE pectins are able to form gels in products with a low solid
content, a range of pHs, and in the presence of calcium.
The market for pectins increased over the review period, but growth reached a peak in 2004/05, at 9.1%.
Since then, although the market has grown, the rate has slowed.
Pectin A Success Story
0%
2%
4%
6%
8%
10%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%

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Volume of Pectins, 2003-13
Volume (tonnes) % change y-o-y
33
Euromonitor International > Industry - Sector Hydrocolloids Category Analysis
Pectin New Applications Boost Market
Strong demand between 2002 and 2005 was driven by drinking yoghurt (regular and pre/probiotic), which rose
in popularity as a healthier alternative to other soft drinks, such as carbonates. Drinking yoghurts are
particularly popular in Asia Pacific but also in Latin America and MEA.
There was also strong growth in drinking yoghurts in North America in the first half of the review period.
Growth for drinking yoghurts in all regions has since slowed, hence the slowdown in growth of pectins. The
drinking yoghurt market is forecast to see a CAGR of 5.4% to 2013, with pectin forecast to see a CAGR of
4.8% in the same period.
The traditional application for pectins, jams and preserves, now accounts for only 15% of total use, down from
22% in 2002. The market for jams and preserves is still in growth, but at a slow rate of only 1.5% per annum.
The traditional stronghold of Western Europe, in particular, has seen limited growth. This market is also
forecast to see only limited growth of 1.8% to 2013, as consumers shun these high-sugar products for more
healthy alternatives, and as breakfast consumption habits change to more convenient products.
Leading Categories for Pectin Usage, 2008
Drinking yoghurt 51.1 26,872
Spoonable Yoghurt 16.4 8,624
Jams and preserves 15.3 8,046
Flavoured milk drinks with fruit juice 4.8 2,524
Chilled and shelf stable desserts 3.8 1,998
Ice cream 2.7 1,420
Fromage frais and quark 2.7 1,420
34
The developing regions of Asia Pacific, Eastern Europe and Latin America continue to drive the pectin market,
although all regions are seeing good growth to 2008 and beyond. The market for pectin is being fuelled in the
developing regions by dairy products, such as drinking yoghurts, spoonable yoghurts and flavoured milk
drinks, and ice cream.
Asia Pacific accounts for just under a third of the pectin market, and this share is set to increase as the pectin
market increases in this region. During the review period, the pectin market in this region saw a CAGR of
10.3% by volume and is forecast to continue to drive the market with a CAGR of 6.1% to 2013.
Western Europe, the second largest market after Asia Pacific, saw strong growth in pectins between 2003 and
2008, with a CAGR of 5.0%. This growth rate is not forecast to be sustained, dropping to 2.4% between 2008
and 2013, as the end-use markets mature in this region, in particular jams and preserves. Latin America and
Eastern Europe both saw strong growth rates between 2003 and 2008 10.5% and 8.1%, respectively but,
similarly to Asia Pacific, this growth rate is not expected to be sustained in the near future, with consumption
of drinking yoghurts slowing.
Pectin Developing Regions Sustain Growth
0%
1%
2%
3%
4%
5%
6%
7%
8%
0% 2% 4% 6% 8% 10% 12% 14%
C
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2
0
0
8
-
1
3
CAGR% 2003-08
Pectin Market by Region and by Volume, 2008
Asia Pacific
Eastern Europe
Western Europe
Australasia
Latin America
North America
35
Carrageenan is produced from red seaweed and was first used in the Irish town of Carragheen to make a
gelatinous dessert from boiling milk with the seaweed. Although still harvested in Ireland, carrageenan
seaweed is now farmed around the world on a commercial basis, in countries such as the Philippines and
Indonesia.
There are three types of carrageenan produced, depending on the variety of red seaweed used:
Kappa forms strong rigid gels on cooling in the presence of potassium or protein ions
Iota forms an elastic gel with the addition of calcium ions
Lambda does not form a gel but can be used to control viscosity
On a commercial basis these three carrageenans are often blended together.
Carrageenan is manufactured into refined and semi-refined (seaweed flour) carrageenan, depending on the
production methods used. The method used to produce semi-refined carrageenan is a simpler and therefore
cheaper way of producing carrageenan. However, because it is less refined it is not suitable for human
consumption, and so it tends to be used in the pet food industry.
In the Philippines, the production method of semi-refined carrageenan was modified to make the product
suitable for human consumption. This product is referred to as Philippine Natural Grade (PNG) carrageenan. It
does not form a clear solution like refined carrageenan, so it can only be used in products where clarity is not
an issue. The cost to end-use manufacturers is lower than standard carrageenan, so its supply has met strong
opposition from producers of refined carrageenan. However, it is now approved for use in food and drink
products in both the US and Europe.
Carrageenans Production Methods for Different Demands
36
The market for carrageenans was estimated at
39,320 tonnes in 2008, of which refined
carrageenan accounted for 56%. The market for
semi-refined carrageenan has been slowly
declining as the market for wet pet foods has
decreased. In particular, the market for wet pet
foods is declining in Western Europe and North
America, as consumers switch to more convenient
dry pet foods. However, growth is coming from
regions such as Eastern Europe, although the pet
food market is still very small here.
Refined carrageenan is used in a variety of
products. It is used in a wide range of milk-based
products, including ice cream, drinking milk and
dairy desserts, but only small amounts are required
for it to be functional. In ice cream it prevents whey
separation, in chocolate drinking milk it keeps the
cocoa in suspension, and in dairy desserts it
provides thickness. Other than dairy products, one
of its main uses is in toothpaste, where, like other
hydrocolloids, it acts as a thickener and suspends
the abrasive particles in the product.
Due to its diversity, the market for refined
carrageenan has continued to increase, with a
CAGR of 3.9% between 2003 and 2008. This
growth is forecast to slow a little to 2.9% to 2013,
driven by growth in most of its main markets.
Carrageenans Refined Tips Balance
-2%
-1%
0%
1%
2%
3%
4%
5%
0
5,000
10,000
15,000
20,000
25,000
30,000
%

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Volume of Carrageenan, 2003-13
Semi-refined Refined
Semi-refined Refined
Leading Categories for Refined Carrageenans
Usage, 2008
%
Share
Vol
(tonnes)
Other sweet and savoury snacks (cup jelly
products)
21.8 4,788
Drinking milk products 11.2 2,460
Dips 4.9 1,076
Dairy-based desserts 2.5 549
Soy Beverages 2.3 505
Air care 2.2 483
Canned/preserved meat and meat products 1.6 351
37
Outside Asia Pacific, the markets
for toothpaste, ice cream and
drinking milk products are shaping
the carrageenan market. Within
North America, all these markets
saw very little growth through the
review period, and forecasts
suggest these markets will be flat
to 2013. The other developing
regions have seen growth in these
markets, but not to the same
extent as Asia Pacific. Forecasts
indicate that these markets are
not going to fare as well to 2013,
with limited growth outside of Asia
Pacific.
Carrageenans Asia Pacific is Key
Asia Pacific is by far the largest market, with over half of the market for refined carrageenan, and is forecast to
continue growing. Volume reached over 11,000 tonnes in 2008, and with a CAGR of 4.1% to 2013, the Asia
Pacific market is forecast to see volume sales of around 14,600 tonnes. Within Asia Pacific, much of the
consumption of carrageenan comes from its use in jelly cup snack products, which are popular in Asian
countries. The market for these is growing at an annual rate of 5.7% by volume, contributing to the size and
growth of the carrageenan market in this region. Its use in ice cream and flavoured milk drinks is also driving
this market in Asia Pacific, with CAGRs of 7.3% and 15.2% between 2003 and 2008, respectively.
-1%
0%
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4%
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-2% 0% 2% 4% 6% 8%
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CAGR% 2003-08
Refined Carrageenan Market by Region and by
Volume, 2008
Asia Pacific
Eastern Europe
Western Europe
Australasia
Latin America
North America
38
Similarly to carrageenan, agar is a gelatinous substance produced from seaweed. It is produced from the red
seaweed Gelidium and Gracilaria found around the coasts of many countries, including Spain, Portugal, Chile,
Argentina, Indonesia and Japan. It has been used for hundreds of years in desserts in Japan, but is now used
around the world as a thickener, stabiliser and gelling agent in many food products. It is also used in
microbiological work as a substrate for culture development.
Although the market is still small, at 4,434 tonnes, it has been one of the strongest performing hydrocolloids,
with a CAGR of 12.0% between 2003 and 2008.
It is used in a number of different products, including confectionery, yoghurts and soy-based desserts. It is
often used as a vegetarian substitute to gelatin and is used in hot countries, as it withstands higher
temperatures than other hydrocolloids. It has seen particular growth in its use as a prebiotic ingredient in
yoghurts, because agar is a good source of dietary fibre.
Agar Traditional Product Finding New Applications
0%
2%
4%
6%
8%
10%
12%
14%
16%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%

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Volume of Agar, 2003-13
39
Functional yoghurts are seeing strong growth in Western regions, where consumers want products that are
both beneficial to them and taste good. The use of agar in functional low-fat yoghurts helps to give the product
the mouthfeel of a full-fat yoghurt and adds dietary fibre. This has been a particular driver of the agar market in
Latin America, which has seen strong growth in the consumption of agar, at a CAGR of 48.2% between 2003
and 2008. The growth in this market is not going to be sustained at this same rate, but nonetheless the market
is forecast to grow by an annual average of 10.1% to 2013 in Latin America.
The two main markets for agar are Western Europe and North America, which each have around one-third of
the market. This is due to the large market for yoghurts, in particular fruit yoghurts and the smaller, but
growing, market of prebiotic yoghurts. The strong growth in agar in North America is being driven by an
increase in demand for functional yoghurts, which saw a CAGR of 40.1% between 2003 and 2008. This
market is more mature in Western Europe, but nonetheless it enjoyed a CAGR of 12.9% between 2003 and
2008.
Agar Prebiotic Yoghurts Drive Market
0%
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6%
8%
10%
12%
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Agar Market by Region and by Volume, 2008
Western Europe
Australasia
Latin America
North America
Eastern Europe
Asia Pacific
40
Other applications include sauces
and syrups, where it acts as a
thickener; yoghurts, where it
improves the texture; fruit
preparations, such as those used in
the centre of breakfast bars; and
restructured meat and fish products,
where it forms a gel and acts as a
binder.
The market for alginates was
estimated at just over 3,100 tonnes
in 2008, having seen a growth rate
of 6.1%. The market is forecast to
continue to grow at much the same
rate over the forecast period, with
volume sales reaching just over
4,100 tonnes in 2013.
Alginates Enjoying Steady Growth
Alginates, like carrageenan and agar, are also derived from seaweed in the form of calcium, magnesium and
sodium salts of alginic acid. They can be produced from a number of brown seaweed types, including kelp and
the Laminaria species of seaweed found along cold water coastal areas. As with many hydrocolloids, they
have the ability to thicken, stabilise and form gels in a variety of products.
One of alginates main uses is in ice cream products, particularly impulse ice creams, where they act as a
stabiliser. Alginates reduce the formation of ice crystals during freezing, giving a smooth product, and help to
reduce the rate at which the ice cream melts, making it useful for ice creams eaten on the move.
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%

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Volume of Alginates, 2003-13
41
The main market for alginates is Asia
Pacific, which accounted for over 60% of the
market in 2008. Growth has been strong in
this region, with a CAGR of 8.1% between
2003 and 2008, and similar rates are
forecast to 2013. The market for impulse ice
creams is particularly strong in this region,
having seen an annual growth rate of 7.2%
to reach volumes of 4 bn litres in 2008. This
has driven the alginates market in this
region.
Latin America has seen the strongest growth
in the market, with a CAGR of 9.3% between
2003 and 2008. This has been driven to
some extent by an increase in the
consumption of impulse ice cream products,
but the main driver of growth has been the
rise in consumption of breakfast bars. The
annual growth rate for breakfast bars in this
region was 27.5%, due to key product
launches during the first half of the review
period.
The once rapid growth in sales of breakfast
bars appears to be abating. Although this
market is still in growth, it is now starting to
mature, particularly in the key region of
North America. During the review period it
enjoyed a CAGR of 7.6%, but this is forecast
to drop to 1.7% between 2008 and 2013.
Alginates Impulse Ice Creams Key to Success
0%
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Alginates Market by Region and by Volume, 2008
Asia Pacific
Western Europe
Australasia
Latin America
North America
Eastern Europe
Middle East and
Africa
-5%
0%
5%
10%
15%
20%
25%
30%
0
20
40
60
80
100
120
%

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Volume of Breakfast Bars by Region, 2003-13
Volume (tonnes) % CAGR 2032-08
42
Research is being undertaken into using beta-
glucan as a fat-replacer, as the trend for fat
reduction in products continues. Recent research
has seen it being used in high-fat products,
including cookies and peanut butter. Most recently,
research has been undertaken to look at using
beta-glucan in chocolate. Beta-glucan has the
potential to replace some of the cocoa butter, but
still provide the same smoothness and texture. The
reduced-fat chocolate market is forecast to remain
flat to 2013 with estimated sales of only 6,200
tonnes in 2008. These products have not been very
popular as a reduction in fat often results in an
inferior-tasting product. If beta-glucan replaced 10%
of the cocoa-butter content in 10% of the chocolate
tablets sold globally, then by 2013 this would
equate to an extra 4,300 tonnes of beta-glucan.
Beta-glucans Health Benefits Could Drive Market
Beta-glucans are found in the bran of cereal grains, predominantly barley and oats, but also rye and wheat, making them a
good source of fibre. They are used in food products as a texturiser, most often as a fat replacer. It is thought that beta-
glucans may offer some health benefits, including boosting the immune system, preventing coronary heart disease,
lowering cholesterol and reducing glycemic response, which is thought to be linked to its high viscosity. It could be argued
that these health benefits are due to the consumer feeling satiated and therefore eating less when consuming these
products, rather than being directly due to the beta-glucans. They are widely available as a health supplements, which
usually carry the claim of being beneficial to the immune system.
Volumes of beta-glucan reached 17,342 tonnes in 2008, and are forecast to see a CAGR of 2.7% to 2013, taking the
market to just under 20,000 tonnes.
As a hydrocolloid, they are predominantly used in bakery products, particularly those products that offer health claims and
have high amounts of soluble fibre. In the US, the Food and Drug Administration has allowed a heart health claim to be
made on products that contain a minimum of 0.75 g of beta-glucan soluble fibre per serving.
3,864
4,150
4,354
3,600
3,700
3,800
3,900
4,000
4,100
4,200
4,300
4,400
2008 2011 2013
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Potential Increase in Beta-glucan Volumes
43
There are a number of other hydrocolloids that are used to a lesser extent.
Gellan gum
This is a relatively new hydrocolloid compared to others on the market, but is being used in a wide range of
products. It is manufactured through the fermentation of the Pseudomonas elodea microorganism and will
form a gel at very low concentrations (0.1%). Some of its main uses are in air freshener gels, soy drinks (to
suspend particles) and snack foods (as an adhesive for seasonings).
Due to it being a relatively new hydrocolloid and the fact that it can be used in low concentrations, the market
is fairly small. It is estimated that volumes were around 404 tonnes in 2008, but the market is forecast to grow
to over 830 tonnes by 2013, making it one of the fastest growing hydrocolloids within this report.
Konjac
This hydrocolloid has been used in Asia for many years and forms part of some traditional dishes. However,
its main use today is in the konjac jelly cup snack popular in Asia. Konjac has had some bad press over recent
years as konjac jelly cup products have caused a number of deaths from choking, and consequently these
products have now been banned in the EU. The snack needs to be chewed as the product does not melt in
the mouth like other gel-based foods and so can get lodged in the throat. Konjac can be used, as other
hydrocolloids are, in a variety of food products and like some hydrocolloids also has potential health benefits
from its high fibre content, making it a potentially important ingredient for new health products.
The market for konjac is also fairly small, due to its current limited applications. Volumes were estimated to be
1,196 tonnes in 2008 and are forecast to see a CAGR of 3.6% between 2008 and 2013.
Other Hydrocolloids
44
Scope
Report Highlights
Where Next?
45
Both of these hydrocolloids have issues surrounding them. Gelatin, which is derived from animal sources
(principally bovine and pig), can not be consumed by a proportion of the worlds population, due to either
religious or ethical concerns. This is limiting the use of gelatin, particularly in the growth markets of Asia and
Africa.
Gum arabic, which is sourced from a number of African countries, is seeing its supply continually under threat.
Conflicts in regions like Sudan make it hard to guarantee supply, while changes in the climate are also
affecting production of the gum. In the past, devastation of the crop by locusts saw shortages in supply. These
issues are all exacerbated by an increase in demand, as global consumption of products like confectionery
and soft drinks increases.
Confectionery accounts for around
40% of the use of hydrocolloids in the
categories covered in this report.
Gelatin and gum arabic are the two
principal hydrocolloids used, but many
other hydrocolloids are used in both
chocolate and sugar confectionery.
Gum arabic tends to be used only in
sugar confectionery, mainly in
pastilles, gums, jellies and chews,
while gelatin is used in both chocolate
bagged selflines and sugar
confectionery.
Confectionery Leading Category for Hydrocolloids
% Share of Ingredients in Pastilles, Gums, Jellies & Chews,
2008
Ingredient % share
Acidulants 0.9
Colours 0.0
Flavours 0.2
Gum arabic 7.6
Modified starch 3.2
Pectins 0.1
Gelatin 3.5
Sugars and bulk sweeteners 71.0
Aqua/Water 10.3
46
The main market for hydrocolloids in
confectionery is pastilles, gums, jellies and
chews. This market is continuing to grow, with
a CAGR of 2.9% between 2003 and 2008,
driven by increased demand in Asia Pacific.
The largest markets of Western Europe and
North America had been in growth up to 2007.
Products in this sector are primarily targeted at
children, and concerns over childhood obesity
through consumption of high sugar and high
fat products is starting to have an effect on this
market in these regions. Indeed, the market in
North America is forecast to stagnate to 2013.
Key countries for future growth are in the
developing regions. China is set to continue to
be a strong market for this sector of sugar
confectionery, with a growth rate of 14.2%
forecast to 2013. This is being fuelled by a
growing population and increases in
disposable incomes. However, as the
economic situation worsens in some of these
countries, impulse products, such as
confectionery, will be among the first to be
affected. However, population growth will help
to stem any slowdown in growth as a result of
the economic downturn.
Confectionery Concerns Over Obesity Affect Demand
0%
2%
4%
6%
8%
10%
12%
0
100
200
300
400
500
600
%

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Volume Consumption of Pastilles, Gums,
Jellies and Chews by Region, 2008
Volume ('000 tonnes) % CAGR 2003-08
% CAGR 2008-13
Top 10 Countries for Absolute Volume Growth of
Pastilles Sector, 2008-13
2008
Vol ('000 tonnes)
% CAGR
2008-132
Absolute growth
('000 tonnes)
China 166.4 14.2 156.1
Vietnam 19.1 12.5 15.3
Mexico 49.9 3.8 10.2
Japan 55.6 3.1 9.1
Indonesia 21.2 4.5 5.2
Austria 15.1 4.4 3.7
Spain 34.9 2 3.7
Poland 9.4 5.9 3.1
USA 414.2 0.1 2.9
Ireland 6.2 7.3 2.6
47
Although there is less use of hydrocolloids in the
chocolate confectionery market, it is still an important one
for ingredient suppliers. In particular, gelatin is used in
the chocolate selflines/softlines sector.
This sector of the confectionery market is also in growth
and is forecast to continue growing for the foreseeable
future. The sector saw a CAGR of 3.6% between 2003
and 2008, but is set to see the rate fall to 2.4% to 2013.
These products are very popular in Eastern Europe,
which is the second largest market behind North
America. The market in Eastern Europe is also seeing
some of the highest growth in this sector. In particular,
Russia and the Ukraine are forecast to see some of the
largest increases in consumption. Chocolate
confectionery is not as popular as sugar confectionery
products in Asia Pacific, as with many hot climates.
However, India is forecast to see good growth, along with
China, where increases in disposable incomes are
allowing consumers to purchase more indulgent impulse
products.
The MEA region is a very small market but is forecast to
see some of the strongest growth in this sector of
confectionery. Saudi Arabia, Morocco and Egypt have all
seen consumption increase faster than the global
average, but together they had sales of only 4,100
tonnes in 2008. Growth is being driven by consumers
who see chocolate as an everyday snack item, and by
the launch of more multinational brands that offer a better
quality of product than had previously been available.
Confectionery Growth in Developing Regions
-2%
0%
2%
4%
6%
8%
10%
0
100
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300
400
500
600
%

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Volume Consumption of Chocolate
Selflines/softlines by Region, 2008
Volume ('000 tonnes) % CAGR 2003-08
% CAGR 2008-13
Top 10 Countries for Absolute Volume Growth of
Chocolate Selflines Sector, 2008-13
2008
Vol ('000 tonnes)
% CAGR
2008-13
Absolute growth
('000 tonnes)
Russia 302.7 6 101.8
Ukraine 59.4 4.7 15.3
China 19.3 6.1 6.7
UK 56.7 1.7 4.9
Argentina 3.9 15.9 4.3
France 21.8 3.1 3.6
India 3.2 15.4 3.4
Italy 7.7 5.7 2.5
Indonesia 5.5 7.2 2.3
South Korea 11.8 3 1.9
48
In North America and Western Europe,
drinking milk in the form of milkshakes are
popular alternatives to other soft drinks,
such as carbonates. Smoothies have
also driven much of the growth in this
sector, but this trend looks to be abating.
In the UK, the largest market for
smoothies, the sector is in decline. These
products are also likely to be affected by
the financial crisis, as they tend to be
higher priced than other soft drinks, such
as fruit juices. This means that sales are
unlikely to continue at the current level.
Dairy Products Growth in Drinking Milks and Yoghurts
The dairy product category is one of the most important food sectors for hydrocolloids. They are used in a wide range of
dairy products, including yoghurts, dairy desserts, drinking milk and yoghurts, processed cheese and ice cream.
Hydrocolloids are becoming increasingly important in this sector, as they are being used as a fat replacer in reduced-fat
products. These products are particularly prevalent in the dairy sector, as dairy products tend to be a high source of
saturated fats. Hydrocolloids can give a similar mouthfeel and texture that would have otherwise been obtained by fats.
Some hydrocolloids are also said to have other health benefits, particularly those that are a source of dietary fibre, such as
beta-glucan and agar. These hydrocolloids are increasingly being used in prebiotic yoghurts and other functional foods to
promote digestive health.
Within dairy products, drinking milks and yoghurts are a key application for many hydrocolloids. One of the main
applications for pectin is in drinking yoghurts, where pectin makes the products smooth and provides thickness by acting
as a protein stabiliser. Carrageenan is used in chocolate milks to keep the cocoa particles dispersed in the drink.
These sectors of the dairy products category are both seeing strong growth. Drinking yoghurts saw a CAGR of 9.2%
between 2003 and 2008 and flavoured milk drinks 8.9%. The main market is in the Asia Pacific region, where both
yoghurts and milks are popular. These sectors are forecast to see a CAGR of 5.9% and 7.6% to 2013 within this region.
The drinking yoghurt product lassi is a popular and traditional drink in India and Pakistan, while functional yoghurt drinks
such as Yakult are also popular across Asia.
0%
2%
4%
6%
8%
0
2,000
4,000
6,000
%

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Volume of Drinking Yoghurts and Milks by Region,
2008
Drinking yoghurt Flavoured drinking milk
% CAGR 2008-13 % CAGR 2008-13
49
China is forecast to see the
largest growth in both drinking
milks and yoghurts. Increased
demand for drinking milks is
coming predominantly from the
developing regions of Asia
Pacific and Latin America, which
are forecast to see annual growth
rates of 7.6% and 4.9%,
respectively.
The growth in drinking yoghurts
is slightly more diverse, with
growth coming from all regions.
In Western Europe, much of this
growth is coming from functional
drinking yoghurts, which are
being consumed as part of a
healthy lifestyle. These tend to be
probiotic products containing
bacteria that are claimed to be
beneficial to the gut, such as
Lactobacillus casei Shirota.
Dairy Products China Drives Demand
Top 10 Countries for Absolute Volume Growth of Flavoured
Drinking Milk Sector, 2008-13
2008
Vol (mn litres)
2008-13
CAGR %
2008-13 Absolute (mn
litres)
China 3,528.50 9.8 2,104.3
India 76.5 14.5 73.9
Japan 994.6 1.4 73.5
Indonesia 112.2 10.5 72.7
Brazil 288.5 4.3 67.7
Mexico 172 5 47.8
USA 1,144.2 0.8 46.9
Argentina 77.5 8.9 41.1
Thailand 125.8 5 34.7
Saudi Arabia 93.5 6 31.4
Top 10 Countries for Absolute Volume Growth of Drinking
Yoghurt Sector, 2008-13
2008
Vol (mn litres)
2008-13
CAGR %
2008-13 Absolute (mn
litres)
China 1,816.7 8.1 866.4
Brazil 340.7 8.1 163.2
Saudi Arabia 381.3 5.4 114.7
Germany 186.6 5.2 54.3
Thailand 273.3 3.1 44.6
Russia 42.7 14.1 39.9
Mexico 290.4 2.4 36.9
Netherlands 143.9 4.5 35.2
Italy 79.5 7.4 34.2
Spain 195.2 3.1 32
50
Hydrocolloids are used in yoghurts to give
a creamy texture, and are also used in the
fruit preparations of fruit-based yoghurts.
They are being increasingly used in
yoghurts, both as a fat replacer in low-fat
yoghurts and as a functional ingredient.
The main hydrocolloids used are agar,
gelatin, locust bean gum and pectin.
Fruited spoonable yoghurts are the largest
sector of the yoghurt market by volume,
and despite the maturity of this sector, it
still remains in growth in many regions.
Volumes increased by an annual growth
rate of 2.0% between 2003 and 2008. The
market is forecast to see the growth rate
slow slightly to 1.9% to 2013, due to a
decline in the largest market, Western
Europe.
Functional yoghurts are, however,
booming, with consumers looking for
additional health benefits from yoghurts.
These products have been available for
some time in Western Europe, but the
North American market is still developing.
Despite accounting for only 15% of the
yoghurt market in North America at
present, the growth of the pre/probiotic
yoghurt sector is set to see it account for
21% of the market by 2013.
Dairy Products Functional Yoghurts Take US by Storm
-10%
0%
10%
20%
0
500
1,000
1,500
2,000
%

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Volume of Yoghurt by Type and by Region
2008-13
Fruited spoonable yoghurt Pro/Pre Biotic spoonable yoghurt
% CAGR 2007-12 % CAGR 2007-12
Top 10 Countries for Absolute Volume Growth of Functional
Yoghurt Sector, 2008-13
2008
Vol ('000 tonnes)
2008-13 CAGR
%
2008-13 Absolute
('000 tonnes)
USA 250.1 13.8 228.0
Brazil 127.5 12.5 102.1
Germany 121.3 8.3 59.4
France 169.8 3.9 35.7
Mexico 31.0 15.5 32.8
Spain 163.3 3.2 27.5
United Kingdom 120.7 3.9 25.5
Hungary 11.4 21.7 19.0
Italy 54.7 5.7 17.5
Russia 36.1 8.1 17.2
51
The ice cream market continues to be
in growth, with a CAGR of 3.3%
between 2003 and 2008, and is
forecast to remain in growth at a
similar rate to 2013. North America
had been the largest market for ice
cream, until Asia Pacific overtook it in
2005. Volume sales in Asia Pacific are
currently at 5,485 mn litres. The North
American market is very much a
mature market ,with stagnant growth
and dominated by the take-home
sector. Asia Pacific is, however,
seeing strong growth through the
impulse sector, with a CAGR of 7.2%
between 2003 and 2008 and a 6.1%
growth rate forecast to 2013.
Ice Cream Asia Pacific Leads the Market
A number of hydrocolloids are used in ice cream to act as stabiliser and texturisers, including alginates,
carrageenan, guar gum, locust bean gum and cellulose. Pectin is used in conjunction with other hydrocolloids
as a stabiliser in water ices.
Hydrocolloids have been used in ice creams for many years, in particular economy ice creams. These
products tend to use cheaper dairy ingredients with lower fat content, meaning that hydrocolloids are required
to give texture and a creamy mouthfeel. Indulgent ice creams have become popular in many regions as a
treat. These products tend to have a higher dairy fat content, requiring less additional ingredients, such as
hydrocolloids. It is likely that the market for these products will become smaller, due to consumers switching
back to economy brands as their incomes fall in the economic downturn.
0%
1%
2%
3%
4%
5%
6%
7%
8%
-2% 0% 2% 4% 6% 8% 10%
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CAGR% 2003-08
Ice Cream Market by Region and by Volume, 2008
North America
Latin America
Eastern Europe
Western Europe
Middle East and
Africa
Australasia
Asia Pacific
52
The ice cream market is divided into the impulse and take-home sectors. Different regions are distinguished
by their different levels of consumption in each sector. In the mature market of North America, take-home ice
creams are the norm, while in Asia Pacific the market is dominated by impulse ice creams. In most regions, it
is impulse ice cream that is driving the overall ice cream market, particularly in MEA and Australasia.
The market for impulse ice creams can fluctuate from year to year, depending on the weather. Hot summers
mean consumers will buy ice creams rather than confectionery, while cool summers tend to see the reverse.
As with confectionery, ice creams bought on impulse could be affected by the current economic climate, with
consumers looking to rein in such purchases.
Ice Cream Impulse Ice Cream Drives Sales
-1%
0%
1%
2%
3%
4%
5%
6%
7%
0
1,000
2,000
3,000
4,000
5,000
6,000
Asia Pacific Western
Europe
North
America
Eastern
Europe
Latin
America
Middle East
and Africa
Australasia
%

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m
n

l
i
t
r
e
s
)
Volume of Ice Cream by Sector and by Region, 2008
Impulse ice cream Take-home ice cream % CAGR 2007-12 % CAGR 2007-12
53
Although accounting for only a small proportion of hydrocolloids applications, soft drinks are nonetheless an
important market for hydrocolloid suppliers. The main hydrocolloids used in this market are xanthan gum, guar
gum, locust bean gum, gum arabic, celluloses and pectin. They are used to help suspend insoluble particles in
the liquid and also to create texture in some fruit-based drinks.
Hydrocolloids are used to some degree in all soft drink sectors other than bottled water, and with global
volumes of over 262 bn litres (excluding bottled water) it is a lucrative market for hydrocolloid suppliers.
Carbonates account for the largest share of the category, and hydrocolloids such as carboxymethyl cellulose,
gum arabic and guar gum are used in these products, albeit at very small concentrations. Other key sectors
are concentrates, and fruit and vegetable juice drinks.
Soft Drinks Small But Important Market for Hydrocolloids
Bottled water
40%
Carbonates
35%
Fruit/vegetable
juice
12%
Concentrates
1%
RTD tea/coffee
6%
Asian
speciality
drinks
3%
Functional
drinks
3%
% Volume Share of Soft Drinks, 2008
54
Carbonates account for 36% of the soft drinks market, with volume sales of some 154 billion litres worldwide.
The market is now saturated and growth has been very slow compared to previous years. The market is
forecast to see an annual growth rate of only 1.3% to 2013, as the largest market of North America continues
to see a decline.
The main drivers of growth are the developing regions, with Asia Pacific and MEA seeing the best
performances. However, even in these regions, growth in the market is slowing. Asia Pacific is forecast to see
an annual growth rate of 3.0% to 2013, and MEA 3.4%. Within these regions some of the best performing
countries will be Egypt (12.1% CAGR to 2013), Saudi Arabia (5.8%) and China (4.4%). Thanks to hot
climates, growing populations, increased incomes among younger consumers and increasing consumption of
Western products, this sector is being kept in growth in these regions.
Concentrates are, unsurprisingly, the smallest sector of the soft drink sector by volume, with sales of 2.8
billion litres in 2008. As with carbonates, the market is now mature and there has been little growth over the
last few years. The market is forecast to grow on average by 1.8% per annum to 2013, due to flat sales in the
key market of Western Europe. However, Latin America (the largest market) and MEA (the third largest
market) are both expected to see growth in the sector, albeit at a slow rate.
Latin America has seen the CAGR drop from 4.6% between 2003 and 2008, to 3.3% to 2013. In this region,
concentrates are very popular as a cheap way of flavouring water. In particular, powdered concentrates are
popular with parents as they are often fortified with vitamins and minerals and so are seen as a healthy drink
to give to children. Argentina and Mexico are forecast to see some of the strongest growth in this sector, with
CAGRs of 4.5% and 3.0% respectively.
Soft Drinks Carbonates Decline in North America
55
The fruit/vegetable juice sector is forecast to see a CAGR of 5.2% to 2013, driven by the nectars (25-99%
juice) sector. Despite fruit juice drinks being a healthier alternative to other soft drinks, such as carbonates,
there is growing concern over the amount of natural sugars that fruit juices contain, and this is limiting the
market for high juice content products in some regions. However, manufacturers are increasingly fortifying
their products with other vitamins and minerals, positioning them as healthy drinks. Juice drinks (containing up
to 24% juice) are a key sector for hydrocolloid suppliers, and are seeing some of the strongest growth.
Worldwide volumes are forecast to see a CAGR of 7.7% to 2013, with Asia Pacific, the largest market for
these products, seeing strong growth of 12.0%. China, India and the Philippines, in particular, are driving the
global market. Here, juice drinks are cheaper alternatives to fruit juices and the perception of their being
relatively healthy keeps this market growing in this region.
Soft Drinks Developing Regions Buoy Demand
0%
1%
2%
3%
4%
5%
6%
7%
0% 2% 4% 6% 8% 10% 12%
C
A
G
R
%

2
0
0
8
-
1
3
CAGR% 2003-08
Soft Drinks Market by Sector and by Volume, 2008
Functional drinks
Carbonates
Concentrates
Asian speciality drinks
Fruit/vegetable juice
Bottled water
RTD tea/coffee
56
Processed meat products are a small but important
market for hydrocolloids. Hydrocolloids act as a
texturiser in meat products, particularly to mimic fat
and give the same mouthfeel as unprocessed
meats. They can also act as stabilisers and
emulsifiers. The main hydrocolloids used are
carrageenans, gelatin, guar gum and xanthan gum.
The overall processed meat category, which
includes chilled, frozen and canned/preserved meat
products, is forecast to see a CAGR of 3.0% to
2013. The category is dominated by chilled
processed meats, with their share of the category
forecast to increase to 71.2%, as the sector enjoys
an annual growth rate of 3.0% to 2013. This sector
is growing, due to the increasing use of refrigerators
and freezers as incomes rise, and the changing
perception among consumers that chilled products
are better quality than frozen or canned products.
The biggest market for processed meat products is
Asia Pacific, which is also forecast to see the
strongest growth rates to 2013. The other emerging
markets of Latin America and Eastern Europe are
also forecast to see good growth. In Eastern
Europe, consumers are turning their backs on
canned meat products, sales of which fell by a total
of 7% between 2003 and 2008. These consumers
are switching to chilled and frozen meat products
instead.
Processed Meats Chilled Processed Meats Take Lions Share
70.1% 71.2% 71.2%
16.0% 15.9% 16.1%
13.9% 12.9% 12.7%
0%
25%
50%
75%
100%
2003 2008 2013
V
o
l
u
m
e

(
'
0
0
0

t
o
n
n
e
s
)
Volume of Processed Meat by Type,
2003-13
Chilled Frozen Canned
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
-5% 0% 5% 10%
C
A
G
R
%

2
0
0
8
-
1
3
CAGR% 2003-08
Processed Meats Market by Sector and by
Volume, 2008
Western
Europe
Australasia
North America
Eastern
Europe
Middle East
and Africa
Asia Pacific
Latin America
57
Hydrocolloids are used in wet pet foods. This is one of the main applications for semi-refined carrageenan as well
as guar gum, locust bean gum and xanthan gum. The use of hydrocolloids helps to combine the meat chunks
together either in a flavoured jelly or by thickening a gravy. Semi-refined carrageenan is primarily used, because it
is a cheap ingredient compared to other hydrocolloids, helping to keep down the costs of the final product.
The market for wet pet foods has been in decline in the two key regions of Western Europe and North America for
some time. Consumers are switching to the more convenient and premium sector of dry pet foods. The dry pet
foods market is particularly strong in the US, where dry dog foods account for some 84% of the dog food market.
There is still some growth forecast for wet pet foods in Asia Pacific, Latin America, MEA and, in particular, Eastern
Europe. Within these regions, population and income growth are leading to a rise in pet ownership, and
consumers are increasingly buying prepared pet food. Consumers are also trading up from economy brands to
medium and premium price ranges, as they are able to afford to give their pets higher quality products. The
economic downturn is likely to benefit this market, as consumers who had traded up to dry pet foods may look to
cut expenditure by trading back down to wet pet foods and economy brands.
Pet Foods Wet Pet Foods See Growth in Developing Regions
-10%
-5%
0%
5%
10%
15%
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
W. Europe North
America
E. Europe Australasia Asia Pacific Latin America MEA
%

C
A
G
R
V
o
l
u
m
e

(
t
o
n
n
e
s
)
Volume Sales of Wet Pet Food by Region, 2008
Volume (tonnes) CAGR % 2003-08 CAGR % 2008-13
58
Although much of the focus of hydrocolloids is on their use in food products, there are important uses in some
personal care products, including toothpaste and hair care. Within these products, they act to keep the particles
suspended, whilst adding thickness to the product, including enabling toothpaste to be placed on the toothbrush.
The main hydrocolloids found in toothpaste are carrageenan, celluloses and xanthan gum. In hair care products,
celluloses are mainly used.
The toothpaste market is mature in most regions, particularly the Western regions, where increases in population
are the main growth driver. However, in regions such as Asia Pacific and Latin America, increases in income,
health awareness and population are all helping to grow the market, albeit at a slow rate. Asia Pacific saw the
strongest growth during the review period, with a CAGR of 4.5%, and will continue to be the main driver within the
toothpaste market. In many countries, growth may be curtailed by the downturn in the economy, as consumers
have to cut back on products such as toothpaste, which for many of the worlds population is still a luxury.
Cosmetics and Toiletries Population Boosts Toothpaste
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
-1% 0% 1% 2% 3% 4% 5% 6%
C
A
G
R
%

2
0
0
8
-
1
3
CAGR% 2003-08
Toothpaste Market by Sector and by Volume, 2008
Western Europe
Australasia
Latin America
North America
Eastern Europe
Asia Pacific
59
Hydrocolloids are predominantly used in conditioners in the hair care sector. These products tend to have
moisturising benefits, so consumers perceive that these products should be thicker and creamier than
shampoo.
Outside of North America and Western Europe, conditioners are seen as luxury items, but with rising incomes
in developing regions this sector of the hair care market has seen good growth. The increase in younger, more
affluent consumers in Asia Pacific and Latin America has kept this market strong. Whether this market will be
able to continue to sustain the growth forecast as incomes decrease in the economic downturn is yet to be
seen. The market in these regions is not forecast to see volume growth at anything like the levels seen in the
past. For example, Latin America is forecast to see a drop to a 2.4% CAGR between 2008 and 2013 from
12.5% between 2003 and 2008. Much of the growth in this market will come from value growth rather than
volume, with consumers trading up to more premium lines and manufacturers adding value to their products.
Cosmetics and Toiletries Affluent Drive Conditioners
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
-2% 0% 2% 4% 6% 8% 10% 12% 14% 16%
C
A
G
R
%

2
0
0
8
-
1
3
CAGR% 2003-08
Hair Conditioner Market by Sector and by Volume, 2008
Western Europe
Australasia
Latin America
North America
Eastern Europe
Asia Pacific
60
Scope
Report Highlights
Where Next?
61
Euromonitor International > Industry - Sector Where Next?
Competitive Landscape - Secure Supply and Meet Demand
To stay competitive, ingredient manufacturers have traditionally looked at expansion, innovation and price. Remaining
price competitive in the global marketplace and in the current economic environment is becoming harder for companies to
achieve, so staying competitive through innovation and expansion is key.
Expansion can come from entering new markets, either by acquiring existing companies or by setting up new facilities.
Over the last year or so, hydrocolloid manufacturers have sought to expand in order to secure their supply of ingredients.
Expansion has also put them in a better position to compete in markets such as Asia Pacific and Africa.
However, in the current economic climate, expansion is not always possible, and in some cases it is better to consolidate
current facilities to keep costs down. A number of hydrocolloid manufacturers have looked to consolidate. FMC Biopolymer
recently announced that it was seeking to consolidate its alginate production plants in Norway after its acquisition of ISPs
alginates business. Meanwhile, other companies have looked to close production plants. CP Kelco has closed its xanthan
gum production plant in the UK, while Danisco has shut its Chinese xanthan gum plant.
Recent Key Mergers, Acquisitions and Expansions within the Hydrocolloids Industry
Acquisition/Joint venture Facility
expansion
Country Products Notes
Rousselot/Rebire Brazil Gelatin Acquired 2 gelatin production plants
PB Gelatin/Zhejiang Feipeng Gelatin
Industry
China Gelatin Joint venture in growth market
FMC Biopolymers/ISP alginates China Alginates Securing production of alginates
FMC Biopolymers/CoLiving Ingredients China Speciality
ingredients
Securing position in hydrocolloids
for dairy products market
Danisco/Mingtai Taiwan MCC Adding MCC to range and securing
supply
Cargill Texturizing
Solutions
Algeria; Dubai;
Australia
All Sales offices opened to serve new
markets
Danisco India Functional
ingredients
Opened new production plants with
focus on dairy industry
62
All industries have seen price rises over the last few years, primarily due to rising energy costs. Although in
some cases, prices have started to fall, it is likely that prices will begin to rise again in the near future.
Hydrocolloid manufacturers have been affected by this in the same way as all ingredient suppliers, but this is
also providing opportunities for some hydrocolloid suppliers.
Threats
The rising cost of energy, growing demand in developing regions, and falling supplies have led to some
hydrocolloid suppliers having to increase their prices. This has particularly affected companies that use
seaweed. In 2008, FMC Biopolymer announced a number of price increases on its products, including
carrageenan and alginates. In the same year, CP Kelco also implemented double-digit price increases across
a range of ingredients, including those from seaweed.
There have also been price increases for pectin, as global demand for fresh fruit has pushed up the price of
citrus fruit. This is now leading pectin suppliers to look at other potential sources for this ingredient. These
include mango, banana and pumpkin. More recently, sugar beet has also been seen as a potentially cheaper
alternative.
Suppliers of gum arabic have seen price rises due to rising demand and lower production, coupled with rising
energy costs.
Animal-based products have also been affected. Both Rousselot and Gelita increased prices in 2008 for their
gelatin products, as the cost of producing animals has increased. Rising costs of animal feeds, due to poor
grain harvests and more land being used for bio-fuels, coupled with rising energy costs, have led to the
increases.
In some cases, this has led some end-use manufacturers to seek cheaper supplies, particularly from China.
The quality of the ingredients is, however, not up to the standard required, and many manufacturers have now
gone back to sourcing ingredients from the well-established suppliers, and paying for quality.
Where Next?
Competitive Landscape Price as Threat
2008 was very hard in terms of pricing leading ingredient supplier
63
Opportunities
Price rises in ingredients, particularly dairy ingredients, have resulted in food manufacturers looking at ways to
lower the cost of producing their products. Some hydrocolloids can replace certain ingredients used in dairy
products, particularly as a fat replacer (such as gelatin), while pectin has the potential to replace milk proteins.
With the increasing cost of seaweed-based hydrocolloids, ingredient suppliers are launching products that can
replace the likes of carrageenan and alginates. TIC Gums has launched a product called Saladizer Max,
which is claimed to be a direct substitute for propylene glycol alginate, used to stabilise sauces and dressings.
Ingredient suppliers are also looking to find alternatives to gum arabic, as the cost of this ingredient continues
to increase. TIC Gums has developed a coating system for confectionery products called TicaPan, which
acts in the same way as gum arabic, while National Starch launched Q-Naturale emulsifier, a replacement for
gum arabic in drinks.
It will be key for hydrocolloid suppliers to continue researching new formulations and sources, as prices of
current sources are likely to continue rising. It will also be important for established suppliers to compete on
quality rather than just price, as, although manufacturers will not want to pay high prices for ingredients, they
will not want to compromise on the quality of their end products
Where Next?
Competitive Landscape Price as Opportunity
64
Innovation for hydrocolloid manufacturers comes through R&D of new ingredients, new formulations and new applications.
New ingredients
The number of new hydrocolloids being discovered is limited. The key areas of innovation for ingredient manufacturers is
coming from developing new formulations either to meet current applications or looking for new opportunities. However,
with the cost of many hydrocolloids increasing, it may be cost effective for companies to look into new sources. Research
into new ingredients has seen some potential new sources of hydrocolloids. Recent research has discovered that an
extract of the mulberry leaf may be a new source. Galactoglucomannan from spruce trees found in the waste water of
timber mills has been found to be a better stabiliser for beverage emulsions than other hydrocolloids, such as guar gum.
New formulations
The leading hydrocolloid manufacturers have added value to their businesses and secured demand by supplying end-use
manufacturers with ready-made formulations specific for particular applications, rather than offering just the raw
ingredients. Rousselot has developed a product called Rousselot ACPE, which is a combination of gelatin and pectin. It
allows confectionery manufacturers to develop citrus-flavoured marshmallows, which would otherwise have collapsed due
to the low pH. Cargill Texturizing Solutions has developed two ingredients as alternatives to gelatin. C*ClearSet75505 is
a cost-effective alternative that provides a strong chewy texture, while SatiagelPG450 carrageenan offers enhanced
elasticity. Used together, these ingredients closely match the texture of gelatin, but with a lower cost.
New applications
Health foods have been some of the newest applications for hydrocolloids in recent years, and are set to continue to offer
good opportunities for suppliers. Hydrocolloid use in low-fat foods has seen the most activity, but hydrocolloids are also
key in many gluten-free products. Within these products, hydrocolloids help to combine the ingredients and provide texture
lost through the lack of gluten. Gluten-free products have tended to suffer from poor appearance and texture, but with
volume sales of gluten-free bakery products at 174,000 tonnes (US$941 mn) in 2007, up by 74% since 2002, this is a
potentially lucrative market for hydrocolloid manufacturers. Some of the most recent research has seen guar gum used
with buckwheat flour to produce gluten-free French baguettes. New applications will also come to light, as the health
benefits of certain hydrocolloids are researched further. Already, their use as a prebiotic ingredient is increasing the market
for some ingredients, and other functional benefits will undoubtedly follow.
Where Next?
Competitive Landscape Innovation
Innovation is key, through new technologies leading ingredient supplier
65
Euromonitor International > Industry - Sector Where Next?
Future Remains Strong for Hydrocolloids
Continued
demand
Hydrocolloids are key to the success of many food
and drink products. Brand manufacturers will always
require a ready supply.
Increased
competition
Asian companies are likely to look to market their
products on a global scale. Many companies from
outside Asia can remain competitive by trading on
quality rather than quantity and price.
R&D
To maintain their positions in the marketplace,
suppliers need to work closely with end-use
manufacturers. They must understand what the
consumer wants and develop products that meet
these desires.
Natural
opportunities
The demand for natural ingredients looks like it is
here to stay, securing future demand for
hydrocolloids. Obtaining quality raw materials will be
important to remain competitive.
66
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