Fundamental changes in product portfolios are hitting the food enzyme market, a result of market players shifting their attention away from traditional food enzyme products. As manufacturers move towards speciality products and emerging applications, standard bulk products are seeing their market share dwindle. A new study by Frost & Sullivan, the international marketing consulting company, illustrates how lucrative speciality enzymes are providing excellent development opportunities.

Frost & Sullivan report that market revenues will rise from US$226.7 million in 1999 to US$281.7 million by 2006, growing at an annual compound growth rate of 3.2 per cent. The major share of the food enzymes market is for starch processing, accounting for 26.7 per cent of the total market, followed by the dairy sector with 25.8 per cent and baking segment with 20.5 per cent.

The commercial benefits of high specificity enzymatic products are seen as a major driver of growth within the market. This is coupled with an expected rise in the number of end-user applications and continued growth of the food ingredients markets. Legislative measures on both a national and European scale continue to impact the overall market. The debate surrounding G.M. foods and organisms has an obvious impact on the development of novel enzymes, the extent to which this will affect the industry has yet to be determined.

The market is highly competitive and characterised by high price sensitivity. The rise in popularity of speciality enzymes can be seen as a result of their resistance to negative pricing pressures. Frost & Sullivan Research Manager, Louise Earnshaw, comments: "Price competition and increased purchasing power of large customers have eroded margins for commodity enzymes. Price increases within the market can only really be achieved in relation to specialty or novel enzymes."

Genetic and protein engineering are major technological trends impacting the market, coupled with developments in conventional enzyme technology. Research & development are providing manufacturers with not only an expanding number of enzymes, but also further possible applications for existing products. Louise Earnshaw comments: "Product development is an ongoing feature of the European market and a key to maintaining market share. New product ranges are being marketed as cost effective solutions, with improved performance and more environmentally friendly characteristics."

The largest food enzyme manufacturers in the market are Novo Nordisk, DSM/Gist-brocades and Genencor International, together accounting for 59.7 per cent of revenues. Most players focus on only one or two related end-user segments, such as baking, brewing or juice processing. Smaller enzyme companies can often be characterized as serving emerging and niche markets with high-value speciality enzymes.

The marketplace has been the subject of extensive merger/acquisition dealings in recent years, as well as significant corporate restructuring activities. Notable examples include the acquisition of biotechnology company Gist-brocades by DSM in 1998, historically DSM had been regarded purely as a basic chemicals player. Recent acquisitions have included Rhodia Food purchasing Imperial Biotechnology Ltd (UK), and Chr. Hansen acquiring all SKW Biosystems? European activities in the coagulant area.

The European food enzyme market is witnessing a period of significant change. Change that is taking place as a result of transformations in product portfolios and the overall market structure. As consolidation accelerates the number of players active in the market will further decrease, with only a few large bulk enzyme suppliers existing in the foreseeable future. Focus on product development, particularly for speciality enzymes, will provide manufacturers with a firm basis on which they can remain competitive. A comprehensive enzyme portfolio and the development of close end-user relationships are two key areas that are expected to generate success over the forecast period.

Frost & Sullivan is an international marketing consulting company headquartered in Silicon Valley, California. The Frost & Sullivan Chemicals business unit monitors the Chemicals market for trends, measurements and growth rates. This study is utilised to update a series of online research such as Strategic Review of the Impact of the European Biocidal Products Directive - #3877-39 and U.S. Crop Protection Chemical Markets - #7228-39. This is complemented by support for industry participants with custom consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.

Report Code: 3830-39, Publication Date: August 2000, Price: 3,95 Euros

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