CHEMICAL MARKETS MART GROWTH SEEN FOR FOOD ADDITIVES

CHEMICAL MARKETS MART GROWTH SEEN FOR FOOD ADDITIVES

The U.S. market for food additives is projected to grow at an appetizing 7.6 percent a year through 1992 to $3.5 billion, according to William Weizer, analyst with the Freedonia Group.

While this outlook is based on technological developments and expansion of new applications, Mr. Weizer has also pegged a more conservative expectation of 4 percent a year growth.Among the many varieties of food additives, artificial sweeteners are forecast to show the fastest growth of all additive categories as a result of changing dietary habits and improved sweeteners, the analyst said. Aspartame is expected to remain dominant through the early 1990s due to its entrenched market position and material improvements, he said.

Still, competition is expected from new materials such as alitame, produced by Pfizer Co., and acesulfame K, produced by Hoechst AG. Biocides and flavors also are projected to be strong competitors in the market for food additives.

The favorable outlook for food additives also will hinge on demographic factors, such as increases in the number of single person households and working women, which is expected to increase demand for smaller portioned, more convenient to use prepared foods.

The fastest growing end-use markets through 1992 include soft drinks, processed fruits and vegetables and dairy products.

Although there are hundreds of companies that are active in food additives production, several major U.S. chemical companies have been diversifying into food additives in pursuit of higher profit margins, including: Dow Chemical Co.; Monsanto Chemical Co.; Hercules Inc., and W.R. Grace & Co.

By diversifying operations, these companies are converting to small-batch operations, building technical servicing networks to enhance their specialty business, tailoring distribution channels and marketing operations toward new markets and developing innovative products through extensive research and development programs, Mr. Weizer said.

Large outlays are often necessary to create specialized marketing and technical servicing operations, enhancing sales to niche markets. Pressures

from foreign competitors and eager entrants to higher performance markets are forcing producers to spend more heavily on R&D to create new materials and complete rigorous testing requirements, he said.