Global Market Outlook on Synthetic Food Colorants
Global synthetic F&B colorant market is valued at USD 1.1 billion in FY 2017. Synthetic F&B colorants hold about 45% of the market share out of the total F&B colorant industry. F&B is a small segment compared to global dyes and pigment market of about USD 35–40 billion. However, market growth rate is high at a CAGR of 8% until 2020, driven by regulatory requirements and urbanization.
Oligopolistic Industry Structure
- Synthetic F&B colorant industry is a niche segment with a significant barriers to entry, due to current economies of scale and regulatory needs. Due to the strong hold of the top five companies, in terms of technical knowhow, quality control, and dominant market share, the industry is oligopolistic
- Offering a palette of color solutions and meeting the different regional regulatory requirements has limited the market participation to a fewer players
Cost Sensitivity: Dyes and Raw Materials
Supply and availability of dyes and dyes intermediates were of major concerns in the industry, rather than the supply of crude-based raw materials. Cost and supply impact, due to basic chemicals, like benzene, toluene, and naphthalene, were minimal.
- Impact on the dyes and dye intermediate supply, due to the environmental crackdown, was the major cause for price increase. However, compared to other dyes, impact on food dyes was the minimal
- Right from the intensification of pollution control measures, prices of dye and dyes intermediates have been increasingly sharply
Impact on food dye due to China was minimal
- Though China is a major supplier for reactive, disperse and many other dyes. It is not major player in the food dye arena. Impact on food dye, due to China, was mainly in the form of process chemical and intermediates and not the end product
- Major producers of food colorants are located in India. Domestic production of dye intermediates and few other process chemicals is high in India. This, in turn, has limited the supply impact in the major food dye-producing country
Prices of food colorants are determined mainly based on the criticality of raw materials, H Acid, Vinyl Sulphone, and Dye intermediates. Cost compositions of these chemicals are high, which, in turn, impacts the commodity.
Market Situation of Key Raw Materials and Then Impact on Door Dye Market
- Vinyl Sulphone is very important chemical in the process of food chemicals. Supply of Vinyl Sulphone has impacted the dye market many times
Current Market Situation
- The market is tight with less supply and high demand. China Vinyl Sulphone production is impacted to pollution control. India produces approximately 55,000 MT of Vinyl Sulphone per year. Other major producers are from Korea, Taiwan, Indonesia, and Thailand
- During 2017, shutdown of one of the largest producers of Vinyl Sulphone in China, Hubei Chuyuan, due to environmental issues had resulted in spike in prices
- H Acid is a critical raw material both by value and volume in the dye production
Current Market Situation
- H Acid is one of the most impacted chemical, due to the pollution control measures across the globe. Shortage of H acid was the major reason for the increase of dye prices in the past
- Supply for H acid was very tight until Q1 2018. Though the supply has eased marginally after Q1 2018, the market still remains tight
- The global dye intermediates production is about 17,50,000–18,00,000 MT/year. 70% of the supply comes from China, 15% from India, and the rest by countries, like Korea, Taiwan, and others
Current Market Situation
- Due to pollution control measures, operating rates of dye intermediate producers in China are impacted, which, in turn, has impacted the global supply. Dye producers in the US, Europe were impacted, due to the supply breakdown in China. However, Indian food dye industry had the least impact compared to other regions, due to the integrated production setups and availability of domestic supply
Demand Dynamics: Colorants
China is the single largest consumer and producer of colorants with a mounting share of 42% in the demand. India is the second largest consumer in industry.
Colorants | Demand by Region | 2017 E
- Demand from the plastic colorants segment is expected to increase steadily in the upcoming years, owing to increasing color consumption and consumer preference. Pigments are expected to be positively impacted more when compared to dyes, owing to the technical preferences
- Demand for organic pigments is expected to grow at a steady pace for the next five years. Difficulties in replacing the existing colorants and criticality of commercializing the alternatives can be stated as the major demand drivers of organics pigments
- Inorganic pigments, which are generally made out of minerals, are more aligned to growth in construction and infrastructure industry. However, in case of agrochemical colorants, inorganic pigments, such as titanium dioxide, is used as foundation raw material, after which inorganic pigment additives are added in the process