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Fast-Growing Food Additives Market Puts 3 Stocks in Focus

Zacks Equity Research

The rising demand for processed and packaged food has increased applications for food additives worldwide, largely driven by the rapidly-changing lifestyle of health-conscious consumers. This demand has made food additives an integral part of the food production and packaging industry.

Factors Boosting the Global Food Additives Market

According to a Global Market Insights report, the global food additives market is set to grow at a compounded annual rate of 7.5% and cross $115 billion by 2024.

Further, Europe has already led the global food additives market in 2014 with a 30.1% share, seconded by Asia-Pacific, per Transparency Market Research data. But the increasing consumption of food additives in developing countries could have Asia-Pacific surpass Europe by 2021. Growing urbanization in developing countries and higher lifestyles are major factors pushing this shift.

In North America alone, the food additives market is estimated to surpass $13.6 billion by 2023, Mordor Intelligence cited. As more customers are able to lead a better lifestyle boosted by higher disposable income, the demand for processed food products is likely to increase further. This should propel the food additives market higher.

Overall, the rising number of health-conscious consumers is a major factor fueling this increase of food additive applications. Needless to say, inclination toward processed and packaged food items is driven by consumers’ busy schedules.

Stocks to Benefit

Given the growing demand for food additives, one could track a few companies that are key players in this segment. Archer-Daniels-Midland CompanyADM, International Flavors & Fragrances Inc. IFF and McCormick & Company, Incorporated MKC are expected to gain from the market boom.

Archer-Daniels-Midland recently purchased Florida Chemical for $175 million. This deal strengthens the agricultural giant’s foothold in the food additive market, given that Florida Chemical is a manufacturer of citrus oils and flavors. Archer-Daniels-Midland carries a Zacks Rank #3 (Hold) and has an expected earnings growth rate of 4.4% for the next year.

International Flavors & Fragrances’ Frutarom division recently acquired a 70% stake in Italy-based Leagel. The latter is a producer of ice cream and gelato components in Europe. The company had earlier acquired SDFLC Brasil Indústria E Comércio, a Brazil-based producer of taste enhancers of desserts and ice creams.

International Flavors & Fragrances is expected to build a distinct global space for ice cream ingredients through its acquisitions across continents. The company carries a Zacks Rank #3 and has an expected earnings growth rate of 1.6% for the current year.

McCormick & Company is a leading manufacturer of garlic salt, which is a seasoned salt constituting table salt, dried ground garlic and an anti-caking agent. The company carries a Zacks Rank #3 and has an expected earnings growth rate of 5.6% for the current year.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Internationa Flavors & Fragrances, Inc. (IFF) : Free Stock Analysis Report
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