Flavouring additives are used in Ready-to-eat, Ready-to-cook products and beverages to enhance or modify their taste. Broadly, there are two types of flavouring agents:
Powdered flavouring additives that are extracted from vegetables, fruits and meat. These are used across a number of products such as instant noodles, pizza, snacks, etc. They are low in moisture and thus are more stable and have greater shelf life. The common process of manufacturing these additives involves roasting, extracting, blending, drying, pulverizing, and sieving followed by packaging. Some of the examples of powdered flavours include noodle masala mix, dried vegetable powder, chicken extract powder.
Liquid flavouring additives that are typically extracted from plants and herbs. The process of extraction involves solvent extraction, distillation, filtration, sterilization, and concentration followed by packaging. Oleoresins, Aloe Vera extract etc. come under this category.
Products that typically use flavouring additives include bakery, dairy, fruit juices & other fruit based beverages, soups, salads and dressings (see Figure 1).
The Indian food flavour market is estimated at around INR 15.5 billion and has been growing at around 10 per cent per annum . The market has about 100 players , including large international and domestic players as well as many small and medium enterprises. Top international players and large domestic players account for around 70 % of the market share – these comprise Givaudan (Switzerland), International Flavours & Fragrances (IFF, US), Firmenich (Switzerland), Symrise (Germany), Takasago International Corporation (Japan) and MANE (France) and SH Kelkar (Pune), Sachee Aromatics (New Delhi), Oriental Flavours & Fragrances (Valsad, Gujarat). The main customers of these are large FMCG companies, tobacco manufacturers, ice cream manufacturers and pharmaceutical companies.
Why is flavour manufacturing an attractive opportunity?
The expenditure on food accounts for 43 per cent of house hold expenditure and is growing at an annual rate of 12-13 per cent . A steady rise in consumer spend on eating out and groceries is helping packaged food (ready to eat products, biscuits, and beverages) and the food service market (quick service restaurants, home delivery of food) , which are also experiencing growth in double digits . All these factors point to a growing demand for flavour additives.
Also, flavour manufacturing is a niche business, with entry barriers such as sustained R&D efforts, long customer acquisition time and access to raw materials.
Such businesses are likely to enjoy higher profitability vis-à-vis typical food processing businesses (juice extraction, snacks manufacturing etc), where bulk volumes are needed to generate profits.
Where are the domestic flavour manufacturers located?
Most of the flavour manufacturing units are located in Maharashtra, Gujarat and Kerala as these states offer proximity to end users and easy access to raw materials such as aroma chemicals and spices/herbs.
Down south, Post bifurcation, both Andhra Pradesh and Telangana have been focussing on developing food processing sector by offering financial incentives to food processing industry and developing industrial infrastructure. Although, these two states together account for almost 20 per cent of food processing factories in the country, they don’t have many flavour manufacturing units (see Table 1), thus making it an attractive opportunity to set up a flavour manufacturing units here.
|Table 1: Flavour Manufacturers from South India|
|S. No.||Company Name||Product Range||Location|
|1||Aromatic Chemical & Oil Company||Flavours, Powder & Liquid Colours, Fragrances, Emulsions, Essential Oils.||Visakhapatnam, A.P|
|2||BOS Natural Flavours.||Crystals, Dehydrated Products, Essential Oils, Floral Extracts, Fruit Extracts, Spice extracts.||Kochi, Kerala|
|3||Flavours India||Flavours for Beverages, Dairy & Tea, Ice Creams, Pharmaceuticals||Pondicherry|
|4||Florale (India)||Food Flavours & Additives, Fragrances||Bangalore, Karnataka|
|5||Food Ingredient Specialities||Flavouring essences & essential oils for biscuits & other bakery products, Ice Creams, Aerated Water, Liquors & Beverages, Flavours for pharmaceutical Products.||Chennai, Tamilnadu|
|6||Kancor Ingredients||Oleo Resins, Essential Oils & Isolates, Mint, Menthol & Isolates, Floral Extracts, Speciality Ingredients, Organic Ingredients.||Ernakulam, Kerala|
|7||Lux Flavours||Flavours for Dairy & Bakery products, Essential Oils, Beverages and Flavoured Water, Confectionery, Savoury, Pharmaceuticals, Alcohol, Animal Feed and Meat Industry.||Chennai, Tamilnadu|
|8||Oror Flavours & Chemicals||Flavours & Seasonings in Bakery, Confectionery, Pharma, Milk & Milk products, Beverages & Snack Foods.||Madurai, Tamilnadu|
|9||Symega Flavours India||Flavours for Dairy and Bakery, Beverages, Confectionery, Pharmaceuticals & Savoury.||Cochin, Kerala|
|10||Plant Lipids.||Spices and other Essential Oils.||Cochin, Kerala|
|Source: From Fragrance and Flavour Association of India|
Typical operating requirements
The cost of machinery and working capital needs for an entry level capacity of around 1 tonne per day would be around INR 2 crore. The machinery depends on whether the extract is in powder or liquid form. For extracting a powder, solvent extraction method is used, whereas for extracting a liquid (oil), apart from solvent extraction, distillation or super critical fluid extraction methods are also used. Table 2 shows the typical machinery required for an entry level plant.
Key success factors
Critical success factors for this business include:
- Nimbleness in identifying new segments such as ready-to-eat foods, branded snacks, fruit-based/energy drinks for growth
- Good relationships with exiting suppliers and customers
- Building up a niche segment
- A strong R&D team that can develop new products
- Compliance with any changing regulatory requirements
|Table 2: Typical machinery needs for a Flavour Manufacturing Plant|
|S. No.||Machinery||Capacity||Value (Lakh INR)|
|1||Solvent extractor / distillation unit/super critical fluid extraction unit||5 ton/ day||30|
|2||Extract mixing tank||2 ton||3.5|
|3||Automatic filling and packaging machine for powder||3.2|
|4||Pulveriser||1 ton per hour||1.5|
|6||Recovery Unit||5 ton per day||5|
|8||Shaking sieve||1 ton per day||0.8|
|9||Powder mixer||2 ton per day||5|
|10||Automatic filling & packaging machine for liquids||5.5|
How we can help you
If you are interested in setting up a flavour manufacturing unit, we can assist you in the following:
- Competitive landscape
- Financial viability
- Location analysis
- Market entry strategy
- Regulatory issues and government incentives
- Detailed project report preparation
- Support in project execution
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