Sensient to prioritise the development of natural food colours
This move is in response to recent actions taken by federal officials against synthetic dyes in food and beverages.
USA – Sensient Technologies Corp., a manufacturer of food colours and flavours, will accelerate its investments in naturally sourced colours while reducing its focus on synthetic colours.
In the United States and parts of Latin America, synthetic colour revenue for foods and beverages amounts to approximately US$110M, according to Paul Manning, president and CEO, during an earnings call on April 25 to discuss first-quarter results.
Manning noted that the conversion from synthetic to natural colours requires a revenue increase of about 10 to 1 to maintain the same colour shade, presenting Sensient with a significant opportunity to exceed its mid-term outlook for naturally sourced colours in the years ahead.
Milwaukee-based Sensient Technologies Corp. reported net earnings of US$34.5M, or 82 cents per share, for the quarter ended March 31.
This represents an 11% increase from US$30.9M, or 73 cents per share, in the same quarter the previous year.
The company’s revenue rose by 2%, reaching US$392M, compared to US$385M in the first quarter of the previous year.
Within the Colours business, revenue grew by 4.8% to US$168M from US$160M, with operating income climbing 10% to US$34.9M from US$31.7M.
“Given the sudden legislative changes regarding natural colour conversions in the United States, we anticipate our capital expenditures will remain elevated for the next several years as we continue to invest in our natural colour capabilities,” Manning added.
On April 22, the U.S. Food and Drug Administration announced a goal to phase out synthetic dyes, including Green No. 3, Blue No. 1 and No. 2, Yellow No. 5 and No. 6, and Red No. 3 and No. 40, by the end of 2026. Additionally, some states have begun to ban synthetic dyes in school meals.
“Ultimately, we believe that a ban in one state will lead to a ban across the U.S., as it is unlikely that consumer packaged goods (CPGs) companies will manufacture products for a specific state,” Manning stated.
Sensient is investing in botanical development, expanding its supply chain to diversify crops and growing regions, and enhancing processing capabilities.
“The impact of tariffs on imported Chinese dehydrated products that compete with our U.S.-grown products could improve demand as companies reassess their purchasing activities,” Manning explained.
He also noted that Sensient Technologies expects the global implementation of tariffs in the U.S. to have an annual negative impact of US$10M, but the company plans to address this through pricing adjustments.
Sensient Technologies is a global manufacturer and marketer of colours, flavours, and fragrances used in various industries, including food and beverages, pharmaceuticals, cosmetics, and home and personal care products.
Its subdivisions include Sensient Flavours & Fragrances Group and Sensient Colour Group, with Sensient Natural Ingredients included within the Flavours & Fragrances Group.
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