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May 8, 2002

EUROPE: Central and Eastern European markets hold promise for caramel manufacturers

Caramel colour manufacturers in Europe are operating in an increasingly mature market with average levels of growth of only 1–2% per annum. But if they look to Eastern European markets the picture is very different, according to a recent study. Lyndsey Greig, food market analyst with market consultants Frost & Sullivan, explained: ”Many caramel manufacturers have started to look at these countries to maximise revenues. Whilst the size of the markets might be small and certainly may not be worth developing local production facilities for, companies need a presence in this area either by way of a local distributor or their own sales offices to capitalise on the potential double digit growth.”

Caramel colour manufacturers in Europe are operating in an increasingly mature market with average levels of growth of only 1–2% per annum. But if they look to Eastern European markets the picture is very different, according to a recent study.

Lyndsey Greig, food market analyst with market consultants Frost & Sullivan, explained: ”Many caramel manufacturers have started to look at these countries to maximise revenues. Whilst the size of the markets might be small and certainly may not be worth developing local production facilities for, companies need a presence in this area either by way of a local distributor or their own sales offices to capitalise on the potential double digit growth.”

At the same time, caramel colour manufacturers will have to guard their market position against the threat from burnt sugar manufacturers who are working hard to convince food and beverage manufacturers that it is a viable replacement. Whilst burnt sugar may still have some doubts around its colouring properties, its advantage is that it is manufactured without chemicals and therefore not subject to E number legislation – an appealing trait for food manufacturers trying to meet consumer demand for reduced Es.

The total European caramel market was valued at US$27.6m in 2001, and it is forecast that the market will grow to reach US$29.6m in 2008. Revenues are expected to be higher in the short term as raw materials stabilise and the soft drinks market continues to grow.

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