CBI Trends:

Natural Flavours

CBI | Market Intelligence

Product Factsheet Cloves in Germany | 1

Introduction
The natural flavours market is a very dynamic market. Food and beverage manufacturers must continuously innovate in
order to respond to consumer demand for natural, healthy, new and sustainable products. Suppliers of flavours must adapt
to benefit from the opportunities in the market. They may consider technological solutions or improve their own supply
chain amongst other responses. At the same time, suppliers must also remain aware of threats coming mainly from
economic crises and increasingly strict legislation.

Consumers want healthy, natural flavourings

Clean labelling
Currently, you may benefit from widespread misunderstanding by European consumers that natural ingredients are, by
definition, healthier, safer and more sustainable than synthetic ingredients. In the next few years, food and beverage
manufacturers will continue to reformulate their products and substitute synthetic ingredients to clean up product labels.
They will also remain interested in organic flavours. CBI experts have indicated that the trend to use more natural flavours
has already been visible for decades. Based on this, it is safe to assume that demand for natural flavours, as opposed to
synthetic flavours, will remain strong.
Tip:

your product has colouring properties, include these in your product documentation.

Consumer want authenticity

Suppliers of natural flavours also benefit from consumer demand for natural and authentic tastes. According to the article
DSM: Natural and authentic flavour desires hit global mainstream, consumers with too little time to prepare food
increasingly search for processed foods which taste as if they were made at home. Although synthetic and especially
nature-identical flavours can often create the same effect in terms of taste, the use of natural flavours will support food
manufacturers authenticity claims. It is easier to sell a natural product as home-made than to sell a synthetic product as
home-made.
Tip:

Marketing your product using an authenticity story will attract European buyers.

Less salt and sugar

Many European food and beverage manufacturers use salt and sugar to improve the taste of their products. However, due
to health concerns, consumers want a reduction in the use of these ingredients. This poses food and beverage
manufacturers for a challenge. They will have to reformulate their products to reduce salt and sugar content without
changing the taste too much. This offers excellent opportunities for flavours which can mask the reduction of salt and
sugar. Additionally, food and beverage manufacturers will use certain flavours, mainly oleoresins, to substitute colours.
Consumer perception of colours is still negative and manufacturers consequently reformulate by using flavours with
colouring properties as substitutes.
Tip:

Avoid adulteration of your product by carefully sorting the raw materials.

Sustainability
Corporate Social Responsibility
European companies are increasingly taking responsibility for the social conditions under which their products have been
produced. Consumers expect fair social conditions in the entire value chain. In the long-term, such arguments will have a
much stronger influence on purchasing behaviour. European food and beverage manufacturers respond to this trend by

CBI | Market Intelligence

Trends Flavours | 2

sourcing more directly from origin and cooperating more closely together with their suppliers. Some manufacturers invest
in the communities of the suppliers by building schools for example. Other manufacturers invest in their suppliers by
providing technical assistance.
Tips:

Make your products traceable for European buyers by marking them.

Ensure and demonstrate fair labour conditions with a code of conduct or certification scheme.
Organise suppliers into groups or cooperatives to facilitate direct relationships between suppliers and buyers.

Branding
Strong brands require integrity and a responsibility by the brand owners, such as manufacturers and, increasingly,
retailers. Without integrity and responsibility, they risk severe damage to their brand value by negative press.
Consequently, brand owners will require fair labour conditions in their supply chains and care for the environment.
Suppliers will increasingly have to provide information on these issues to their buyers in order to make the supply chain
transparent. This trend will become particularly relevant for suppliers to brand owners which attach a story about the
origin of the ingredients to their brand.
Tips:

If you supply directly to a brand owner, make sure to get some background information on the brand, to
understand your buyers requirements.
Disclose product content to gain buyer trust.

Waste stream valourisation

Crop cultivation for the production of raw materials for flavours often produces waste. The use of waste for production of
value-added by-products not only improves yields and production system efficacy, but also generates positive interest
from buyers with a focus on sustainable sourcing. Biotechnology can serve as an instrument to turn waste into valuable
by-products.
Tips:

Map waste streams in your supply chain and work on reducing them, if you cannot use the actual waste.
Analyse the potential for waste stream valourisation

Resource utilisation
High energy prices and a realisation that most of the worlds energy sources are not renewable will drive a reduction in
energy use for production in the coming years. Importers will appreciate energy reduction, efficient water use, recycling
and other sustainability initiatives in their audits.
Tips:

Consider increasing the efficiency of your processing equipment or use renewable energy sources by reducing
energy consumption.
Demonstrate your sustainability initiatives in your company information and promotional material.

Sustainable supplies
Suppliers to the European food industry must increasingly ensure the environmental sustainability of production systems.
They will have to cooperate closely with their own suppliers to secure supplies of a consistent quality, as consumers expect
their favourite products to be available year-round and to always have the same quality.
Most commodities are already produced under strictly controlled conditions according to strict standards. However, in the
short-term, many speciality flavours will also be standardised.

CBI | Market Intelligence

Trends Flavours | 3

In the long run, European buyers will become much more involved in the sustainable management of natural resources to
secure supplies. Exporters will have to make their supply chains more transparent and take more responsibility for the
sustainability of raw material production.
Tips:

Facilitate cooperation between your suppliers.

Develop standards and ensure that your suppliers can adhere to these standards.
If you produce your own raw materials, implement a quality and resource management system.
Reduce pesticides use by implementing improved production methods, such as Integrated Pest Management
(IPM).
If you have access to products from farmers which produce organic by default or which can easily convert to
organic production, then obtain organic certification.

European buyers want more for less

Stricter specifications
European buyers are leading the global industry in terms of technical science-based requirements. They are ahead of most
of the competition in terms of technology and regulations. Strict regulations in Europe have forced the industry to find
other solutions which in turn enhances their technological advantages. Consequently, the approach of European buyers to
quality improvement is to set a high standard and then force suppliers to follow. In practice, suppliers deal with these
requirements pragmatically.
Tips:

Develop knowledge on product specifications. If necessary, cooperate with other actors in your sector to establish
or capacitate existing laboratories for identification and understanding of your product specifications, and to
research methods to alter those specifications.
Cooperate with other sector actors to improve your knowledge on different practices in your business operations
to influence product specifications.

Scarcity
Rapid increase in consumption in growing economies, such as China and India, will put more pressure on the long-term
availability of land for the production of non-essential products, such as flavours. Additionally, concentration of production
increases the impact of natural disasters on global availability of flavours. The European food industry will increasingly
manage the risk of supply insecurity by diversifying sources. Producers located outside traditional production areas will
benefit from this trend.
Tips:

Secure supplies of your raw materials by providing incentives to your suppliers to continue producing the crop you
require.
Secure supplies of your raw materials by sustainable resource management.

Supply security
Long-term supply security for European importers will also require price increases to support sustainable production. Until
recently, European manufacturers managed to use their buyer power to push prices down to very low levels. Since other
markets, particularly emerging economies in Southeast Asia, are providing alternatives to suppliers, they are slowly losing
interest in the European market. European manufacturers increasingly realise that they need to invest more in their
suppliers to secure supplies. This implies higher prices which are more sustainable, but also a better understanding of the
needs of their suppliers and taking more responsibility for their well-being. For example, international flavour manufacturer
Firmenich invested in the health of vanilla farmers to gain their loyalty

CBI | Market Intelligence

Trends Flavours | 4

Tips:

Show potential European buyers that you are interested in long-term relationships and that you value loyalty.
Build strong relationships with your buyers to increase their switching costs:
o Show understanding of your buyers needs
o Cooperate with your buyer on product development
o Offer your trusted buyers benefits, such as softer payment terms
Stress the need for sustainable prices to increase supply security.
If stability of your raw material supplies is affected by side-selling by your suppliers, pay them (partly) in
advance.

Stricter legislation
The European Food Safety Authority (http://www.efsa.europa.eu/) will only allow health claims to be made on product
labels if they are substantiated with scientific research results. In the short-term, only very few health claims will be
available to put on product labels. In the long-term, social media are expected to become an interesting platform for food
and beverage manufacturers to point out potential health benefits of their products. However, social media do not offer
significant opportunities for suppliers of ingredients. Consumers are not (yet) interested to communicate with ingredients
suppliers directly.
Stricter legislation (i.e. (EC) 1333/2008) will also make it more difficult to use speciality flavours in the European market.
Especially small suppliers of new ingredients encounter high legislative barriers to approval of their ingredients.
Furthermore, requirements regarding food safety put an increasingly higher administrative and financial burden on
companies. In order to ensure food safety, they must put in place systems for analysis, registration and other checks and
controls. Companies which can achieve economies of scale are in a better position to cope with these burdens than small
companies.
Tips:

Identify health benefits of your products.

Analyse labelling possibilities for food and beverage manufacturers which use your flavour.
If you have a novel ingredient, cooperate with other companies for introduction to the European market.

New product development

More variety
European manufacturers continuously look for new formulas to achieve higher quality standard flavours, such as orange
and more unique and complex fantasy flavours (e.g. apple pie), to respond to expanded variety in food consumption.
Moreover, there is an increased demand in the EU for diverse natural food products which have complex and authentic
flavours, as well as for ethnic foods. Flavour manufacturers can use both synthetic and natural raw materials to realise this
diversification of flavours.

Biotechnology
Biotechnology is an environmental friendly method to produce flavours. Simple fermentations may yield new or alternative
flavours. These new food flavours and additives will need to be approved before used in foods commercially, but in the
long term the environmental and economic advantages may outweigh the high costs of pre-market authorisation.

R&D for natural flavours stability

Increasing knowledge on natural flavour stability in different applications will support the use of natural flavours in the
long-term. In response to strong demand for natural products, the European food industry continues to invest heavily in
research and development of food and beverages made with natural ingredients. The results lead to more and better
application of natural flavours. Additionally, European food and beverage manufacturers will increasingly demand flavours
without or less of certain constituents. Suppliers with the required knowledge on processing to obtain these products may
benefit from this trend.

CBI | Market Intelligence

Trends Flavours | 5

CBI Market Intelligence

P.O. Box 93144
2509 AC The Hague
The Netherlands
www.cbi.eu/market-information
marketintel@cbi.eu

This survey was compiled for CBI by ProFound Adivsers in Development

in collaboration with CBI sector expert Franz-Peter Meschede
Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer
June 2015