Chr Hansen is exploring ways of stabilising the supply of cochineal, the raw material used to make natural red colour carmine, as demand for the South American insect is outstripping supply.
Carmine is made from carminic acid, produced from the ground bodies of cochineal insects (Dactylopius coccus), primarily grown on South American Opuntia cacti. It is a popular ingredient for food and beverage applications both for its distinct pink, red or purple colour and for its stability in acid and heat.
The price of cochineal has soared in recent times, however. For Chr Hansen this drove a 25 per cent increase in sales value for the natural colours division in Q3 compared to the prior year period, as the company increased its carmine prices accordingly. This was accompanied by 21 per cent growth in volume sales for natural colours, resulting in a sales value of €43.7m.
CEO Lars Frederiksen told FoodNavigator.com that the shortage of cochineal is due to a combination of increasing consumer-driven demand for natural colours, and decreasing supply. Peruvian farmers reacted to low prices several years ago by switching to other crops than cacti, such as are choosing to growth other crops than cacti, such as asparagus, bell peppers and avocado.
He said that Chr Hansen buys cochineal on the spot market, via farmers or collectors. The current cochineal crisis represents an opportunity for the company to play a role in organising the supply chain.
“It is a major chance for us to be more professional and stabilise the supply chain,” he said.
This may involve finding ways to work with farmers, but the company would not seek total vertical integration by buying up farms or plantations.
It is also exploring other regions where the cactus may grow. It is also unusual for a food ingredient to come from a single geographical source, as big manufacturers prefer diversified supply so there is a back up in case supply is disrupted by climatic or political events.
“It is strange that Peru should be the only place on earth to grow these cacti,” Frederiksen said. Climatically-speaking it should be possible for them to grow in Africa and parts of Asia too.
Other natural ingredient companies have discussed research into alternative natural materials that could yield the same red hue as cochineal, but without the price and supply volatility.
According to US colouring supplier DD Williamson candidates include purple sweet potato, paprika, red beet and black carrot – but while a similar hue may be obtained, it is difficult to match the stability properties, it says.
Figures from the analyst’s global new products database (GNPD) reveal a 76 per cent increase in new European launches listing carmine as an ingredient between 2004 and 2009. The most popular product categories have been dairy and confectionery, followed by processed meats and ready meals.