India leads as global supply hub for food flavors, research reveals

INDIA – McKinsey & Company, a global management consulting firm, in association with the Indian Chemical Council, has reported that India’s flavours, fragrances and food industry could secure the first position as a global supply hub.

The flavours, fragrances and food industry’s revenues grew at a CAGR of about 10.5% between fiscal years 2018 and 2024, demonstrating a strong cost competitiveness and market.

The McKinsey report stated that factors such as AI adoption, sustainable practices, and technological innovation within India’s chemical sector, projected the industry’s growth to US$1 trillion by 2040.

It highlighted India’s major contribution to 16 speciality chemical sub-segments, including flavours, fragrances, food, and nutrition-based chemicals, stating that despite dropped industry margins and the impact of macroeconomic pressures, revenue growth remained encouraging.

The report added, “Strong macroeconomic fundamentals, abundant talent, and India’s low-cost manufacturing advantage position the industry for future growth.”

“Despite increased competition, moderating industry demand, and geopolitical uncertainties, Indian chemicals companies have substantial long-term value creation potential.“

The food and nutrition section performed well, with strong revenue and EBITDA growth driven by rising consumer demand for premium and organic food ingredients in the past five to six years.

The country is expected to become the world’s third-largest consumer market by 2026.

The research comes after Oterra, a global leader in natural colours for the food and beverage industry, inaugurated a new colour-blending and application centre in Kochi, Kerala, India. 

The facility is set to cater to the growing demand for natural colours in India, the Asia Pacific, and the Middle East.

The new centre is located within Oterra’s subsidiary, Akay Natural Ingredients, and features state-of-the-art laboratories designed to help customers transition from artificial to natural colours.

Martin Sonntag, CEO of Oterra, said: “India and the wider Asia Pacific region are becoming increasingly important markets for us, as consumers are favouring products made with natural ingredients.”

He added that India’s strategic location provides easy access to emerging markets, including the Middle East, making it a key hub for Oterra’s expansion strategy. 

Previously, Oterra exported raw materials to its European factories for processing before importing finished blends back into India. With this new facility, the company can supply natural colours directly to its customers, significantly reducing lead times and streamlining the supply chain. 

The Kochi facility will manufacture some of the most commonly used colour shades in the food and beverage industry, including yellow, orange, red, and pink, using turmeric, paprika, annatto, and red beet as key raw materials. 

The company has 120 workers in production and laboratory operations at the site. The raw materials undergo spray drying and mixing before being integrated into food and beverage products. 

The facility also includes an innovation and application laboratory with cutting-edge equipment for research and product development. 

According to Innova Market Insights, Indian consumers increasingly opt for food and beverages made with natural ingredients, avoiding artificial additives, preservatives, and highly processed ingredients.

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