Annatto Market

Annatto Market Size and Forecast (2023-2028):

The Global Annatto Market size value is expected to grow at a CAGR of 5.2% during the forecast period 2023-2028 to reach USD 285.6 million by 2028 from USD 210.7 million in 2022.

Market Overview:

Annatto is a natural color extract that is obtained from the seeds of achiote, scientifically known as Bixa Orellana. This color extract acts as a food coloring and flavoring extract, and it is used in various food products, such as cheese, butter, margarine, etc. The achiote tree is native to the tropical regions of America, and it has been since centuries for various cosmetics and culinary applications. The annatto is extracted from the seeds of the achiote tree, where the color comes from the carotenoid pigments called bixin and norbixin, from the reddish waxy coating of the seeds. Bixin is the more water-soluble form, and norbixin is oil-soluble, which suggests this extract can be used in both water-based and oil-based products. It produces yellow to orange color, which gives appealing color to food products with subtle flavor. Along with food, it has also been in the textile and clothing industry as a dye.

Recent Developments in Annatto Industry:

• In November 2022, Sun Chemical, a global leader in manufacturing pigments, coatings, and other chemical products, expanded its range of natural colorants by introducing two new products, SunPuro Natural Annatto O and SunPuro Natural Annatto A.

REPORT COVERAGE:

Drivers:

One of the factors that are driving the annatto market is the food industry. Annatto color extract, which is obtained from the achiote tree seeds, acts as a food coloring agent. That enhances the food's texture and look. This extract has been used in various food products such as cheese, margarine, etc.; also, most processed food uses annatto as an additive. And therefore, the growing demand for processed food products led to the market demand for the annatto market.

Additionally, the growing emphasis on natural and clean-label ingredients also created a major driving factor that propelled the annatto market as consumers are becoming more and more aware and conscious of the ill effects of chemical and synthetic food colorants. This led to the rise in the market share of the annatto market. And with the increasing number of consumers seeking to avoid artificial synthetic additives gave rise to the market share of the annatto market.

Also, with changing diet preferences, many consumers are adopting veganism, and annatto is derived from a natural plant source and is, therefore, a popular choice for those following a plant-based diet. The vegan or vegetarian lifestyle is becoming increasingly popular, which is driving the demand for the annatto market.

Apart from this, Annatto extract has also gained significant usage in the textile and fashion industry; the natural color of annatto extract is used for dyeing fabrics, instead of chemical color whose production and use affects the environment. In addition to this, it is also used in the cosmetics industry for lipsticks, lotions, and dreams, as many of the synthetic and chemical additives harm sensitive skin and cause rashes and allergic reactions. Therefore, this fear of chemicals further expanded the annatto market growth.

Restraints:

The seasonal nature of annatto seeds is one of the restraining factors which affects the market demand; annatto seeds are derived from the achiote tree, which is native to American regions. The Seasonal nature of the production, therefore, created a significant challenge in the annatto market. Achiote trees have a specific flowering and fruiting season, which results in the limited harvesting of seeds. This seasonality leads to fluctuations in the supply of annatto seeds.

Another major factor that affects the demand of the annatto market is color stability. Annatto seed extracts produce red to orange color, which creates attractive natural food colorants. However, maintaining the color stability is a challenging factor, as the annatto seed extracted color is sensitive to light, heat, and pH. Therefore, its use in the fabrics, food, and beverage industry becomes problematic when it is stored or processed, as exposure to light causes the degradation of pigments present in annatto extracts, which leads to fading. Furthermore, variation in pH levels also impacts the color. Hence, the annatto extract offers various advantages as a natural colorant; the seasonal nature of production and the sensitivity of the color negatively impacts the annatto market size.

Opportunities:

The pharmaceutical industry is creating opportunities for the annatto market. There is a growing demand for natural alternatives, and the pharmaceutical industry and manufacturers are seeking alternatives that can substitute synthetic chemicals. And one such application of the annatto extract is its use in coloring and coating of pills and capsules. These extracts offer a natural and vibrant coloring solution that aids in identification and also enhances the overall appearance of the products. Furthermore, nutraceuticals and dietary supplements also adopt the annatto extract to visually enhance the products. Also, the pharmaceutical industry is expanding its reach to functional foods, which is contributing to the market growth of the annatto market. Another opportunity lies in the use of annatto extract as an excipient, an excipient that acts as a delivering agent and ensures proper solubility of the tablet. By using natural color extract, one can reduce the potential side effects.

Hence as the pharmaceutical industry is growing and flourishing due to increasing ailments and diseases, the annatto market holds a significant opportunity as a natural color extract for enhancing the visual, functional, and branding aspects. This, therefore, can increase the size of the annatto market.

COVID-19 Impact on Annatto Market:

COVID-19 had a significant impact on the annatto market demand. The implementation of lockdown and restrictions, as also the travel ban, created a shortage of labor which impacted the extraction process of annatto. Moreover, it also caused a significant impact on the supply chain that further created challenges for the key players. As annatto is a tropical crop that is grown in South America, Central America, and Southeast Asia, due to restriction ban led to disruption in transportation and trade, making it difficult and expensive to export annatto from these regions. Another major challenge that further impacted the market share was the decline in the consumption of processed food. As annatto extract has been used in various food items, the decreased consumption of processed food caused a direct impact on the annatto market demand. Further to this, as there was a decrease in the purchasing power of the consumers, many textiles and clothing industries suffered loss, which directly impacted the annatto market since annatto is used as a coloring agent in dyeing fabrics. Hence the pandemic had a negative impact on the size of the annatto market.

Annatto Market Segmentation Analysis:

By Type:

• Oil-Soluble
• Water-Soluble
• Emulsified

Based on the type, the annatto market is divided into oil-soluble, water-soluble, and emulsified. The emulsified segment has the highest market share due to its use in both fat- and water-soluble products. It easily disperses in both phases providing consistent color dispersion. Whereas both oil-soluble and water-soluble dissolves in specific products. Fat-soluble is mostly used in margarine, butter, cheese, and some baked goods. The oil-soluble form is well-suited for these products, and it is easily dispersed into the fat phase. Water-soluble beverages, sauces, and some dairy products.

By Application:

• Food & Beverage Industry
• Natural Fabric Industry
• Cosmetic Industry

Based on the application, the annatto market is classified into the food, beverage, natural fabric, and cosmetic industry. They are used to provide an orange-to-red color in various products such as cheeses, butter, margarine, snacks, and processed meats. Enhance the visual appeal of food products. The natural and fabric segment is set to reach the highest CAGR in the forecasted period. Annatto extract from the seeds is used in dyeing; the natural color derived from annatto seeds can be used to dye fabrics and yarns to create shades from yellow to reddish-brown. This creates an alternative to synthetic color. The cosmetic industry uses annatto extracts to provide natural color to various cosmetic and personal care products, such as lipsticks, eyeshadows, and body lotions.

By Region Analysis:

North America has the highest market shares as the growing number of food and beverages industries. Increasing per capita income in developed countries like US and Canada is also leveraging the market growth rate. Asia Pacific has the largest market share and CAGR, as annatto extract has been used in dyeing fabrics. Europe has seen to have significant growth in the forecasted period due to its use in cosmetic products. Latin America has steady market growth.

Key Players in the Market:

Major Key Players in the Global Annatto Market are

• Aarkay Food Products Ltd.
• Aicacolor S.A.C.
• Amerilure, Inc.
• Biocon Del Peru S.A.
• DDW, Inc.
• Frutarom Natural Solutions Ltd.
• Kalsec, Inc.
• Wild Flavors, Inc.
• Chr. Hansen Holding A/S
• Sensient Technologies Corporation