Hydrocolloid market reaches ‘better equilibrium,’ but threats loom on horizon

“Moving into 2024, it feels like we are hopefully going to hit a little bit better equilibrium and there will not be the wild swings we saw during the pandemic, which was a black swan event,” Nesha Zalesny, technical consultant with IMR International, told FoodNavigator-USA.

She explained that for most hydrocolloids, “supply has balanced out,” which is bringing back a buyer’s market.

This shift is a double-edged sword for the hydrocolloids industry. On one side, Zalesny said, lower prices could cause a painful recalibration for companies hoping to merge or sell based on their 2022 sales and earnings because their numbers are not going to look nearly as good in 2023 and 2024. On the other side, she said, lower and more stable prices could help demand for hydrocolloids rebound and bring back food manufacturers that pulled away during the worst of the pandemic supply challenges.

While Zalesny is overall optimistic for the segment in 2024, she cautioned, “making predictions for the hydrocolloid market is still not really easy to do right now” because new challenges and opportunities are emerging that could impact supply, demand and pricing.

Zalesny and others will explore these facets and the future of the hydrocolloid market at IMR International’s upcoming 2024 Food Hydrocolloid Conference​ in Savannah, Ga., April 28-30.

Shipping challenges could compromise supply​

Among the top challenges sowing uncertainty into the hydrocolloid market are worsening shipping conditions in the Red Sea where Iranian-backed Houthi militants have been attacking vessels since November – prompting many shipping companies to take different routes that add upwards of two weeks to their voyages between Asia and Europe.

This is compounding disruptions in the Black Sea caused by the Russian-Ukrainian war and in the Panama Canal where climate-induced droughts are causing challenges. Last month’s collapse of the Francis Scott Key Bridge in Baltimore is further complicating shipping by delaying transportation along the East Coast. 

“These delays are adding shipping costs as shipment spend more time on the water, and the last I heard is with the collapse of the Baltimore bridge we are seeing a shipping container shortage again,” Zalesny said.

She noted the shipping container shortage and related price hikes are not as “horrific” as they were during the pandemic when the price of container reached upwards of €20,000, but “they have come up a lot” from about €800 to €4,000 per container.

Considering the Baltimore bridge collapse in isolation, Xeneta released data April 8 that suggested the disruption may not translate to significant ocean freight container shipping rate hikes. Rather, spot rates have fallen about 1% since the bridge collapse on March 26 to $5,421 per 40 foot shipping container.  Containers are, however, docking in unexpected places, including New York and New Jersey.

‘Misinformation’ threatens reputations of some hydrocolloids​

At the same time, demand for some hydrocolloids could drop as rising consumer concern about their clean label status and other social concerns push some manufacturers to reformulate – a move that Zalesny says is short sighted.

She explained that some “misinformation” and “faulty science” about the health and social impact of some hydrocolloids have caused some consumers to avoid hydrocolloids that she says are safe and highly effective.

For example, in 2013, The Cornucopia Institute published a report based on animal studies that suggested food-grade carrageenan, a seaweed-derived hydrocolloid, was associated with gastrointestinal inflammation and ailments in animals. Despite FDA and the Whole Health Organization concluding food-grade carrageenan does not pose a cancer threat, several high-profile brands removed the ingredient under consumer pressure.

As a food-scientist, Zalesny said she wants to counter messages based on “faulty science” with science-based facts, but she has come to realize a more effective strategy is to “battle misinformation with stories that make it more personal. So, getting out there and telling the story about how some of these ingredients are incredibly important” to local economies and cultures or are more environmentally sustainable than alternatives.

For carrageenan, this includes highlighting how it is sourced from seaweed, which has environmental sustainability benefits and a lower carbon footprint than some alternatives as it requires no land or fertilizers.

Highlighting social benefits could bolster hydrocolloids’ reputation​

Calling out other social benefits, including worker welfare and economic benefits, also could help elevate the reputation and use of some hydrocolloids that are threatened by geo-political pressure, IMR International Founder Dennis Seisun told FoodNavigator-USA.

“Certain categories of these products employ tens if not hundreds of thousands of people,” many of whom may be at a “basic level of survival,” he said.

To help consumers and industry players understand the economic and social benefits of hydrocolloids, IMR International created an “employment factor” for the ingredients.

Seisum explained the concept is based on how many people benefit from each dollar spent on a hydrocolloid. So, a hydrocolloid made in a highly automated factory with very few people may have a lower employment factor because while the price may be lower it supports fewer employees. Whereas, each dollar spent on some hydrocolloids could “employ literally 200, 300 or sometimes 400 times more people – and that would earn a high employment factor.”

Hydrocolloids ‘in situ’ could sidestep clean label concerns​

Another emerging solution to counter hydrocolloids with bad reputations based on consumer “misperceptions” is to use the ingredients “in situ,” meaning choosing other ingredients with a favorable reputation which also include the hydrocolloid.

For example, citrus fiber and kelp flour may meet consumers’ clean-label standards while still delivering texturizing benefits from pectin or carrageenan that is included within the whole ingredient, Seisun said.

“The non-refined versions of some of these hydrocolloids also have different functionality – so you may use them in different ways to offer unique textures” that consumers want, added Zalesny.

The future of hydrocolloids​

These and other challenges and opportunities impacting the future of the hydrocolloid market will be explored in more detail at IMR International’s upcoming 2024 Food Hydrocolloid Conference ​in Savannah, Ga, April 28-30.

The long-running event draws attendees from around the globe, including 21 countries this year, and high level stakeholders from across the value chain at companies large and small, notes Seisun and Zalesny.

Speakers also include rising stars and established players who are making an impact and guiding the future of the hydrocolloid market.

For example, Sowmya Balendiran, the co-founder and chief business officer at Sea6 Energy who was recognized by Forbes 30 under 30 and has won other international awards, will present on ocean farming innovation and sourcing sustainable, traceable raw materials.

Another session led by Scott Shoemaker of Scott Brothers Dairy will offer solutions for “separation anxiety” in dairy, a playfully named session that will explore how hydrocolloids can help dairy and plant-based alternatives deliver on the taste, texture and mouthfeel consumers expect by reducing the risk ingredients will separate on shelf.

Mintel’s Lynn Dornblaser will also present on the role hydrocolloids can play in improving the taste and texture of plant-based foods.

Check out the full line-up of speakers and more details about the conference HERE​​.