Adding up: The booming business of food additives

Food and drink additives have gotten something of a bad rap in recent times.

Countless influencers and pseudo-nutritionists have built careers casting a cold eye on various ingredients lists' unpronounceables.

But adding ingredients to what we consumer has been done for thousands of years – whether it’s to make what we eat and drink more appealing, or ensure it doesn’t spoil as quickly.

But if we take a broader definition of food additive, you can also include the ingredients that are used to create fortified or enriched foods and drinks.

They are two similar-but-slightly-different approaches to the same thing, where some form of nutrition is added under the guise of making it better for the people who consume it.

With enriched foods, the term refers to returning the nutrients that are lost or removed in the process of making the product. You might enrich white flour, for example, by putting back the B vitamins and iron that are lost when you separate out the bran and the germ from the wheat.

When it comes to fortified foods, that’s where nutrients are added that weren’t there in the first place – or were there at very low levels.

Today, that’s quite a common practice when it comes to protein – with many of the products boasting about being high in protein able to do so because they have been fortified with that particular macronutrient.

Aside from this, you also tend to see breakfast cereals fortified with various vitamins and minerals, while certain brands of milk are sold on the nutrients that have been added. Alternative milks like oat milk, meanwhile, often have lots of vitamins added to help make them as beneficial as dairy.

So not only are additives a long-standing part of the food and drink industry – they’re now massive industries in their own right.

And Irish firms are major global players.

Addition multiplying

Civilisations have been adding preservatives and flavour enhancement to food for centuries - but as food production became industrialised, so too did the additives business.

Depending on how you define it, some estimates put the value of the global additives market at around €75 billion at the moment – with predictions that it could grow to more than €120 billion in the next decade.

But the fortification and enrichment business is already much bigger than that.

It is estimated to be worth anywhere between €130 billion and €175bn globally this year. It is expected to nearly double in the next decade, to somewhere in the region of €350bn.

That difference in value is likely down to the fact that the additives market is often – but not always – about adding things for practical but basic reasons. Like adding salt to improve the product’s shelf-life, or make it taste a bit better – or adding colour to make it look a little bit nicer.

These kinds of additives are essentially commoditised at this stage.

But the fortification and enrichment side is often more focused on adding things that promise health benefits – like protein. As a result they command more of a premium for the consumer.

Adding fortifications

There is a general, now long-running trend towards functional foods – food and drink with more of a health and wellness focused. Think healthy snacks, energy drinks, and protein bars.

They are all reliant on various additives in order to make them work.

But one of the big drivers in this market lately has been the advent of GLP-1 weight-loss drugs.

Their use has grown dramatically in the past few years – particularly in the US - and the expectation is that their userbase will only grow further as more options come on market. Tablet-based versions are now coming on-stream, while some variants are not far from coming off patent – making them much cheaper and more accessible to customers.

And while drugs that supress appetite may be bad news for parts of the food and drink industry – snacking is seen as a big victim in this trend, for example – it’s a good time to be in the additives business.

Because while the people who are taking these drugs are eating far less than before, they’re seeking out – possibly being encouraged by their doctor to seek out – products that are nutritionally rich to ensure they are properly fuelling their bodies.

Two key areas in this are protein and fibre.

There’s a concern that as users are losing weight, they’re losing lots of muscle too. So extra protein will help to mitigate that, Meanwhile GLP1s can cause constipation, so extra fibre is a helpful counter (though fibre is also very in-trend because of a broader, shifting focus towards gut health and digestion).

All that means that, if you’re a company that’s selling the likes of protein or fibre - or other things that allow companies to pack lots of nutrients into a small product - then you’re well positioned for the current market.

Leading the Whey

And it turns out that a number of Irish companies are suitably well-positioned. Some, in fact, are at the top of the global table when it comes to food additives.

There are a number of Irish operators in this market – including Ornua, the maker of Kerrygold, for example, though butter remains its main business.

But for Glanbia and Kerry Group, who sit in the top ten suppliers in the world when it comes to these kinds of add-ins, additives are at the core of their respective fortunes.

Glanbia would once have been the company behind brands like Avonmore and Premier Dairies, but they sold that consumer business off to its co-op around four years ago. (That separate business is what is now known as Tirlán).

Glanbia made that sale to allow it to focus on its 'performance nutrition’ business – selling protein and other fitness supplements under brands like Optimum Nutrition – and what are called its ‘health and nutrition’ and ‘dairy nutrition’ businesses.

A portion of these segments include cheese production in the US, but primarily those divisions are about making additives – like protein, but also vitamins and minerals, and flavourings – which Glanbia then sells on to other food and drink companies.

They’re not exclusively focused on supplying health and wellness products – but that does tend to be the way the business leans. Last year those two divisions generated more than $2.1bn in revenues.

Kerry Group, meanwhile, would once have been the company behind the likes of Dairygold and Charleville Cheese, until it sold a majority stake to its own co-op two years ago. (That consumer business now trades under the Kinisla brand).

Kerry Group now focuses on taste and nutrition – producing flavourings and colourings, preservatives, but also nutrients like protein, vitamins and minerals.

And Kerry would probably have a broader scope than Glanbia – its products would cover everything from sweet to savoury - and wouldn’t necessarily be targeted only at health foods.

Last year it had revenues of almost €6.8bn.

Making it up

At a very basic level, Kerry Group and Glanbia would make a considerable amount of their money by providing nutrients or vitamins or flavours to other food companies – which they would want to add to their products.

But often that isn’t as simple as just throwing a load of protein powder into the pot – because obviously when you add anything to food or drink it’s going to affect taste, texture, and it’s potentially going to impact its calorie content too.

So these companies will sit down with their clients to find a formula that works – so they can get what’s desired into the product, while also making something that’s going to sell.

And that can often see them work on a product from the ground up.

So, say, a breakfast cereal producer might come with a broad outline of a new product they’re trying to develop - they want it to be high in protein and fibre; but they also want it to be low in sugar so they can keep a lid on the calories. And they want it to be chocolate flavour, and to be crunchy.

The likes of Glanbia and Kerry Group would work with this – using the additives they produce and the techniques they’ve developed over the years – to land at an end-product that the client is happy to put into mass production.

And this kind of process has come a long way in a fairly short space of time.

That’s obvious to anyone who remembers what a protein bar was like 10 or 15 years ago compared to today. You wouldn’t feel too hard done by if you had one as a treat now, where as they used to be about as enjoyable as eating artificially-sweetened Styrofoam.

That’s in large part down to companies like Glanbia and Kerry working to find new ways to formulate products to make them taste better, have a better texture, and a better nutritional profile.

But this process is not just the health and wellness space – it can be about adding all kinds of flavours to products, including novelty flavours which have become increasingly popular lately.

Masking less pleasant tastes is also an important job.

And achieving this it’s not all about adding things to the end product – it can be about the process too.

Can you develop a way of speeding up the production of baked goods, for example, or improve the shelf life of a snack food without impacting its taste?

It is worth remembering too that all of this is happening at a time when there’s been a very big push back against artificial additives, which has also forced companies involved in this space to develop and refine their processes.

There are obviously still plenty of old-fashioned additives in food, but companies are also trying to lean more on natural food colourings or the use of traditional fermentation processes for food preservation.

Meanwhile consumer demand for healthier foods across the board – as well as a push at European-level for the reformulation of foods – has also been a big driver of innovation. That’s seen a push to reduce the amount of sugar and salt in processed foods.

While some companies take a shortcut to this by simply shrinking the portion size, others have actually tried to find ways to make their products less unhealthy. But, of course, if you reduce the salt and the sugar, you impact the taste - so you have to find a way around that.

And if your company can make a product more nutrient-rich, reduce the calories, or even reduce the production cost – all while keeping the flavour the same - that’s a very valuable asset for food firms to have access to.

Smoke on the water

The ever-changing landscape of food additives was highlighted recently by a change relating to liquid smoke.

This is an additive that’s popular in everything from barbeque sauce to snack foods, to processed meats and cheeses that want to replicate the flavour of them being smoked the old-fashioned way.

Traditionally it’s produced how the same suggests – different types of wood are burned, the smoke from that is then caught, condensed and cooled into a liquid.

And while it was previously available here, two years ago the European Food Safety Authority decided that it could no longer be deemed safe for consumption.

That set the clock ticking for any products using liquid smoke to find an alternative – or get off the supermarket shelves altogether – by the middle of this year.

And that in turn led to a scramble among food additive companies (including Kerry Group, which previously warned about the economic harm a liquid smoke ban could do) to develop a range of alternatives that would comply with EU rules.

Crucially, though, that needed to taste like the thing it’s designed to replace.

Despite the concerns, that seems to have been achieved.

The deadline passed at the start of July, and while there had been fears of a snackpocalypse, it seems as though most smoky foods out there are still available to buy.

So your favourite smoky bacon crisps look to be safe – for now at least.