SIC 2087
FLAVORING EXTRACTS AND FLAVORING SYRUPS, NOT ELSEWHERE CLASSIFIED



This category includes establishments primarily engaged in manufacturing flavoring extracts, syrups, powders, and related products, not elsewhere classified. The products are generally used at soda fountains or during the manufacture of soft drinks, as well as for adding color to baked products and confectioneries. Establishments primarily engaged in manufacturing chocolate syrup are classified in SIC 2066: Chocolate and Cocoa Products.

NAICS Code(s)

311930 (Flavoring Syrup and Concentrate Manufacturing)

311942 (Spice and Extract Manufacturing)

311999 (All Other Miscellaneous Food Manufacturing)

Industry Snapshot

While most foods have some flavor, certain agents can enhance the taste of these foods. These products encompass a wide range of materials that can be used alone or mixed into a blend. Flavorings and syrups saw steady growth throughout the late 1990s and early 2000s. U.S. shipments of flavorings syrups and concentrate products were valued at $8.1 billion in 2001, compared to $6.64 billion in 1997.

In the late 1990s and early 2000s consumer trends continued to focus on natural ingredients and products that were perceived as "healthy." Medicinal ingredients such as ginseng and garlic became more commonplace. Tropical and exotic flavors also regained popularity and were often paired with more established fruit flavors. The results were such flavors as kiwi-strawberry and cranberry-mango.

Approximately 175 U.S. companies were involved in the production of flavoring extracts and syrups under the flavoring syrup and concentrate manufacturing umbrella, according to the figures published in 1997 by the U.S. Census Bureau. More than 6,000 workers were employed in the flavoring extracts and syrups industry, and roughly 10 companies accounted for almost two-thirds of the flavor industry's sales to beverage and food processors.

Colorants continue to be one of the smallest segments of the food additives industry. The natural colorants (mainly caramel color used in cola drinks) dominate the industry. Synthetic colorants also are used largely by the beverage industry, followed by use in pet food, confections and gums, and dry mixes. However, consumer concerns over the safety of colorants in food products led many firms in the late 1990s and early 2000s to pursue natural colorant options. Reflecting the strength of this industry segment, between 1997 and 2000 industry leader Universal Foods, later renamed Sensient Technologies Corp., acquired nine colorants businesses.

Organization and Structure

Flavoring manufacturers, sometimes called "flavor houses," create extracts, syrups, powders, and other forms of flavoring materials. These manufacturers work with natural base ingredients purchased from suppliers throughout the world. The manufacturers' dependence on natural sources leaves the flavor chemicals open to price fluctuation due to the availability and cost of the raw materials. Once processed, flavoring ingredients are sold to soft drink companies and other makers of processed foods.

Flavor manufacturers and food producers cooperate increasingly in research and development efforts to create new food products. Flavor producers also provide technical support on flavor issues, especially with the beverage industry. Flavor houses custom tailor flavors, relying heavily on work in application laboratories. Flavor companies and product developers work in conjunction with flavor chemists to achieve desired results.

Although the starting materials may be of natural origin, all flavoring materials are processed in some manner. The distillation process uses hot water or steam to extract the aromatic materials from the flavoring materials. The quality of the flavor depends on the raw materials and the process. The product derived from this process is called a volatile or essential oil.

Extraction is used to obtain characteristic flavoring attributes provided by nonvolatiles. Organic solvents are used to dissolve volatile and nonvolatile compounds from the natural starting material. After removing the solvent, usually with a high vacuum process, the flavoring compounds remain. An extracted flavor often is fractionated into many parts and only certain ones are selected for the final flavor.

Extraction and distillation remain important methods for obtaining natural flavor components. Types of extracted/distilled flavor components are essential oils, aromatic fractions of the plant, oleoresins (which are extracts without volatiles), standardized oleoresins (which are added with extra essential oils), and concentrated oils (which are essential oils fractionated to a specific degree of concentration).

The flavoring industry works closely with the Food and Drug Administration (FDA), primarily through the efforts of industry trade association Flavor Extract Manufacturers Association (FEMA). FEMA participated in the development of the Nutritional Labeling and Education Act of 1990. This legislation mandated that producers detail the ingredients used in processed food formulations. The act was implemented in May 1993.

Background and Development

Development of the modern flavor industry occurred when some of the earliest flavors were manufactured by extraction during the 1940s. By the 1950s and 1960s the industry moved toward the use of synthetic flavor compounds as flavoring agents. By the 1970s "natural" began to be a selling point, and methods were sought to develop pure, natural chemicals. One problem with these natural extracts was that the raw materials varied in taste and intensity. However, the modern flavor industry resolved this issue by compounding natural flavor chemicals rather than using the extracts as final flavors. This procedure provided food manufacturers with consistent flavors.

Though the flavors market grew steadily throughout the 1980s and 1990s, the industry experienced flat growth in the late 1990s, particularly in 1998. North America and Europe accounted for the majority of sales in the international flavors market, with sales of about $2.7 billion out of a total of $4.8 billion in 1997. The market experienced signs of recovery in 1999, though several major flavors manufacturers continued to suffer from slumping revenues.

According to the 1999 Flavor Usage Survey conducted by Beverage Industry, which polled individuals in nearly every segment of the beverage industry, including soft drinks, juices, flavored waters, and specialty drinks, the cola was considered to be the top flavor of 1999. Cola was selected by 31 percent of those surveyed. Second most popular was orange, with 15 percent of the vote. The top flavors used by beverage makers, according to the respondents, were orange, lemon, grape, strawberry, lime, cherry, apple, cola, cranberry, and grapefruit, respectively. Almost half of those polled indicated that they would be using and introducing new flavors in the late 1990s and early 2000s. Many named such flavors as grapefruit, lemon-lime, and orange as the flavors that would be used in new drinks.

Exotic flavors, including passion fruit, mango, and guarana, enjoyed increasing popularity in the late 1990s, as well as flavored coffee and tea drinks. Coffeehouses around the world began adding flavors, such as hazelnut, raspberry, Irish cream, and vanilla to espresso drinks, regular coffee, hot chocolate, and tea. Health drinks and energy drinks, which relied heavily on natural and fruit flavors, also enjoyed increased consumption.

Current Conditions

Coffee and tea flavors continued to gain in popularity in the early 2000s. In fact, flavoring syrups accounted for 30 percent of sales for the specialty coffee market by 2003, according to Tea and Coffee Trade Journal . "Even coffee and tea purists have to give the flavoring industry credit for driving consumption in traditionally non-coffee drinking consumers. And it's not just beverages that allow consumers to have a coffee or tea experience. Flavor companies even manufacture a wide variety of coffee and tea flavorings for products such as ice cream and candy."

Ethnic flavors such as Dulce de Leche gained in popularity in the early 2000s, as did less common flavors like pomegranate and ginger. However, the top five coffee flavors in 2003 remained traditional ones like French vanilla, hazelnut, Irish creme, cinnamon nut, and vanilla nut. The top five tea flavors were cinnamon, apricot, peach, passion fruit, and bergamot.

Industry Leaders

The flavor producing companies became larger and were based more multinationally in the late 1990s. The trend was toward continued globalization, and flavors companies carried on with expansion plans. The top ten flavors and fragrance companies in terms of 1998 sales, according to Chemical Market Reporter, were International Flavors & Fragrances Inc. (IFF) with total sales of $1.9 billion in 2003; Sensient Technologies Corporation; Givaudan-Roure Corporation; R. Torre and Company; Firmenich; and Takasago. German leaders Dragoco and Haarmann & Reimer merged to form Symrise Dragoco GmbH and Co., which held an 11 percent share of the global flavorings market in 2003.

IFF's flavors are marketed primarily to manufacturers of prepared foods, beverages, confections, dairy foods, and pharmaceuticals. International sales account for about 70 percent of revenues. The company's flavors division accounts for more than 40 percent of its total sales. IFF planned to expand its Latin American presence and had a flavor manufacturing plant under construction in Brazil in the late 1990s. The company also updated facilities in the United Kingdom, Holland, and France, and constructed a new powder production facility in Australia. IFF acquired competitor Bush Boake Allen Inc. in the early 2000s.

Sensient Technologies Corp., formerly known as Universal Foods, manufactures flavors and aromas, as well as colors, cosmetics, yeasts, and pharmaceuticals. Sensient, which had 2003 sales of $987 million, had grown its flavors and colors businesses in the 1990s through acquisitions such as Sundi GmbH, a German-based flavors maker; DC Flavours Ltd. of England; and Arancia Ingredientes Especiales SA de CV of Mexico. The firm's food coloring facility in St. Louis, Missouri, is the largest such plant in the world.

A growing company was Danish firm Danisco A/S. Danisco bought Borthwicks, a British flavors manufacturer, Cultor, and the U.S. company Beck Flavors, a natural extracts maker. Beck made more than 2,000 flavorings and was the third largest producer of vanilla in the United States in the late 1990s. Beck was also the largest manufacturer of coffee flavors in the nation. The acquisition of Beck doubled Danisco's flavorings revenues in the United States.

America and the World

Despite the economic crises affecting Asia, Asian countries continue to be targets for flavors manufacturers. Studies showed that consumption of flavored products is directly proportional to per capita income. As the middle class grows in Asian countries, demand for Western-style beverages is likely to gain ground. Growth in Asia is projected to have the ability to drive flavor growth higher well into the next century. Expansion into Asia also would allow companies easier access to newer, more exotic flavors.

Other global markets that appeal to the flavors industry include Latin America and Germany, which represent the largest flavors market in Europe. Most of the leading flavors companies, including IFF and Givaudan Roure, have operations in Latin America.

Research and Technology

New technologies, particularly in extraction techniques and applications of biotechnology, are being applied in the flavors industry, which is expected to post dramatic results in the coming years. Biotechnology is the most advanced of the new flavor technologies and will be used to create "natural flavors of the future."

The flavors industry claims that commercially growing an entire plant for a single flavor molecule is unnecessary and wasteful. Plant cell culture technology allows scientists to grow only the part of the plant that contains the desired flavor molecule. Cost advantages of this type of cell manufacture are numerous. According to Decision Resources, yields would be increased per unit mass of plant tissue; processing costs would be reduced since very little plant tissue needs to be removed; and the quality of the extracted oil would be higher. This technology should also save time because it should be possible to grow or generate exotic plants in a short time span compared with traditional plant growing methods.

Further Reading

"12th Annual Flavor Survey." Tea and Coffee Trade Journal, 20 January 2003.

Brown, Suzanne. "New Flavors and Uses." Tea and Coffee Trade Journal, 20 January 2002.

Carroll, Susan. "Flavors Market is Poised for Recovery This Year." Chemical Market Reporter, 19 July 1999.

Holleran, Joan. "1999 Flavor Survey Reveals Many Facets of Flavors." Beverage Industry, 1 February 1999.

U.S. Census Bureau. "Flavoring Syrup and Concentrate Manufacturing." 1997 Economic Census. Washington, DC: 6 December 1999. Available from http://www.census.gov .



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