New enzyme technologies to fight downward price trend in saturated market
driven by biotechnology, that provide food and beverage makers with
the right tools to meet consumer trends, claims a new report.
In 2004, the European food enzymes market was worth €200 million. According to Frost & Sullivan, starch and sugar processing, bakery, and dairy enzymes constituted the largest share of the market: but the highest growth rates were witnessed in the nutrition and dietary supplements market.
"Firms that develop enzymes to meet the requirements of current consumer trends- for example, low carb, GI index, health - will gain from the opportunities," says Kathy Brownlie, programme manager at Frost & Sullivan.
From 2005 to 2011 the market is expected to trundle along at about 3.5 per cent, with revenues hitting about €240 million by 2011.
Both the nutrition and dietary supplement enzymes markets have remained steady and have not followed the general downward trend in prices experienced in other application sectors. This is a developing market sector with relatively small volumes that have helped keep prices stable but Frost & Sullivan warns that prices may start to fall as the competition increases.
The market is currently dominated by four major players: Novozymes, Danisco, Chr Hansen and DSM.
Challenges Faced with a saturated market, the report underlines a set of challenges set to have a "significant impact" on the European food enzymes market in the short term.
Product development Research continues to focus on improving product performance of existing products and on the development of novel enzymes for specific niche applications.
Product development has become a key factor in maintaining a competitive edge in the enzymes market. At a time of increasing price sensitivity and increasing market competition, on-going product development is crucial to survival.
But, warns the report, despite advances in the technology used to identify and develop new enzymes, a plethora of testing and trials needs to be carried out before an enzyme solution is ready for market.
"A substantial new product pipeline will remain a key challenge to those active in the enzymes market. Research focusing on improving product performance of existing products and on developing novel enzymes for specific applications should be on-going," says the report.
Pledgingsubstantial annual investment in research and development, maintaining close contact with leading universities and research institutions worldwide, and patenting and licensing of new products is of paramount importance.
Market drivers The emergence of new EU markets due to enlargement, an increase in the number of available enzymes - thanks to genetic and protein engineering - and changing consumer trends are all set to push the market forward.
In addition, better process economics and the replacement of "undesired chemicals and processes" will feed growth.
Market restraints According to Frost & Sullivan, uncertainty over regulations is likely to be a barrier to growth, as is the extremely sensitive debate on genetic modification.
Uncertainty in the legislative environment governing the use and labelling of GMO derived enzymes has restricted the growth of the European market for enzymes.
By law, food labels must identify the ingredients used in the product. Across Europe, regulations categorising industrial enzymes for use in food applications as additives or process aids vary between countries.
Reclassification of these enzymes will, therefore, change end-user preference and is likely to reduce their usage and consequently their demand.
GM debate Despite the benefits associated with the use of enzymes to improve product quality and process economics, there is the continual debate as to how safe GMO-derived enzymes are.
The debate is proving to be a major hurdle for new enzymes produced by recombinant gene technology, as a lack of public awareness on the issue and the negative attention from the media has hindered growth in all food enzyme sectors, claims the report.
As a result, there is a lower investment in biotechnology and bioengineering by enzyme manufacturers to develop better enzyme solutions.
"Consequently, the focus may shift to an improvement of existing enzymes rather than the development of new ones," writes Frost & Sullivan.
Prices Prices for bulk and commodity products have decreased since 2000 due to consolidation activity in the markets and technological advances in production methods. Many enzyme products are considered commodity ingredients. The dairy market is a prime example where prices of dairy enzymes have decreased, a trend that is expected to continue.
Likewise the prices of wine-making enzymes have dropped since 2000. Prices are now in parallel with enzymes used in other food applications. European wine-makers are continuing to put pressure on enzyme suppliers to reduce prices further.
In general, each supplier offers different products in different concentrations. Enzymes are usually quantified by their activity, not their concentration in terms of protein.
Their activity is measured by measuring the rate of the loss of the substrate or by the rate of production of a product. A common and useful way of expressing enzyme activity is by units. However, many unit definitions exist and there is no international standard. A comparison is made impossible because of the different assays used to determine enzyme activity.
An amylase sold into brewing applications will be priced differently to the same product sold to a flour mill or to bakery manufacturer.
Even within the same application or end-user sector, prices can vary considerably for the same product depending on the quantities sold.
Depending on the conditions during the fermentation process and the degree of purification, enzymes will usually have varying side activities-which can positively or negatively influence the value of a product for a certain application.
Prices can also vary depending on the microorganism used. For example, animal rennet would cost more than pectinases.
Conventional enzymes are usually higher priced due to the higher effort required to make them. Genetic engineering greatly improves productivity and cost-effectiveness in existing processes, and these enzymes are typically lower in price.
Dry enzymes can be more expensive due to the extra manufacturing steps required in processing. Immobilised enzymes are higher priced due to the larger amount of enzyme material attached to the enzyme column.
Further details about the report European markets for enzymes in food applications can be obtained from Frost & Sullivan.