The European market potential for seaweed extracts

There is an increasing demand for seaweed extracts on the European food market. Seaweed extracts have a wide range of applications in the food sector. Growth is driven by increasing consumer demand for high quality health products. It is expected that demand for seaweed extracts will continue to rise in Europe.

1. Product description

Seaweed extracts are cultivated from an extensive variety of seaweed species from around the world, with Indonesia and China being the largest producers. Approximately 80 percent of agar is extracted from the seaweed species gracilaria. Meanwhile, approximately 80 percent of carrageenan is extracted from the seaweed species eucheuma and kappaphycus.

Agar (or agar-agar) is a gelatinous substance derived from the cell walls of red seaweed, notably the gracilaria kind. Nutritionally agar is a good source of iron and magnesium. Nutritional benefits of agar include digestive, bone and brain health benefits. Additionally, agar is helpful in weight loss.

Carrageenan is derived from red edible seaweeds. The nutritional benefits of carrageenan include it promoting gut health, having high level of antioxidants, and having a positive effect on treating cholesterol, flu and colds.

The food industry uses carrageenan as an ingredient because it helps to thicken products. There are three main structures of carrageen which have distinctive functionalities for a range of food applications. Carrageenan’s three main structures are kappa, iota and lambda.

Kappa carrageenan provides a firm gel, making it ideal for use in the dairy industry. A reason for this is because kappa can be dissolved in both hot water and cold water depending what it will be used in. Chocolate flavoured milk drink manufacturers use kappa because it allows cocoa particles to remain suspended, with the same also applicable for dairy products containing whey. The European processed cheese industry uses kappa as it reduces the amount of natural cheese needed without affecting the final texture and changing the manufacturing process. The European ice-cream industry uses kappa to stabilise air bubbles in its products.

The European meat processing industry frequently uses kappa carrageenan because it provides high moisture content. Such is the case for sausage and cooked ham producers, because kappa carrageenan results in a greater yield of sausage being produced, as well as improving its slicing. Low-fat meat product manufacturers use kappa carrageenan because it replicates positive qualities of full fat meat products despite being low-fat.

Iota carrageenan provides an elastic gel ideal for use in cold-filled products. The European food industry uses low levels of iota-carrageenan in food products where particles must be suspended. Examples of its use include salad dressings and soya milk. On the other hand, when used at higher levels iota creates a stronger gel which provides opportunities to create gravy in pet foods.

Lambda carrageenan is mainly used in the European food industry as a thickener. This is because, unlike kappa or iota, lambda does not form a helical structure. Producers of beverages, syrups, tomato sauce and salad dressings use lambda in their products. This is because lambda carrageenan provides a creamy and full-bodied texture.

Table 1: Application of carrageenan

Application	Function	Carrageenan type	Use level (%)
Dessert gels	Gelation	kappa+kappa2+iota	0.5-1.0
Non-dairy pudding	Emulsion stabilisation	kappa	0.1-0.3
Syrups	Suspension, bodying	kappa, lambda	0.3-0.5
BBQ and pizza sauces	Bodying	kappa	0.2-0.5
Whopped toppings	Emulsion stabilisation	kappa+kappa2	0.1-0.3
Imitation coffee creams	Emulsion stabilisation	lambda	0.1-0.2
Pet foods	Gelation, fat stabilisation	kappa+locust bean gum	0.5-0.1
Salad dressing	Suspension	iota	0.3
Beer and wine	Clarify and reduce chill haze	kappa
Cold prepared custards	Thickening, gelation	kappa, iota, lambda	0.2-0.3
Puddings	Reduce starch	kappa, kappa2	0.1-0.2
Ready to eat desserts	Syneresis control	kappa2+iota	0.1-0.2
Whipped cream	Stabilise overrun	lambda	0.05-0.15
Aerosol cream	Stabilise emulsion/overrun	kappa	0.02-0.05
Yoghurt	Fruit suspension, mouthfeel	kappa2	0.2-0.5
Chocolate milk	Suspension, mouthfeel	kappa, kappa2, lambda	0.015-0.030
Soy milk	Suspension, mouthfeel	iota, kappa	0.03-0.10
Evaporated milk	Prevent whey separation	kappa	0.005-0.015
Processed cheese	Improved grating, slicing	kappa, kappa2	0.3-2.0
Cream cheese	Gelation, moisture binding	kappa + locust bean gum	0.3-0.5

Source: Phillips, G and P. Williams (2009) Handbook of Hydrocolloids, 2^nd Ed: CRC Press. Adapted from Table 7.2 and 7.3

The type of carrageenan depends on the quality of seaweed and type of production. The main types of seaweed cultivated for the production of carrageenan are kappa alvarezzi, eucheuma denticulatum, gigartina skottsbergii and chondrus crispus.

Kappa alvarezzi accounts for majority of carrageenan production. However, its cultivation is threatened by disease outbreaks in the Asian region, such as the ice-ice disease. This disease leads to a significant decrease in carrageenan yield of about 20 to 45 percent compared to healthy crop. It also affects the quality of carrageenan. Outbreaks of ice-ice disease are becoming more common because of climate change. Changes in water temperature and salinity make seaweeds more susceptible to disease.

There are four major extraction processes that are used to produce carrageenan:

• Alcohol Precipitation Process
• Gel press/KCI Precipitation
• Danisco Process (PES)
• Alkali Modified Seaweed Flour Process (AMF)

The PES and AMF processes are the most cost-effective, as they require lower capital and produce high quality kappa carrageenan.

The seaweed extracts agar and carrageenan are traded under separate HS Codes. Agar is traded under HS Code 130231. Meanwhile, carrageenan is traded under HS Code 130239, referred to as mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans. This report examines agar and carrageenan application in the European food industry.

2. What makes Europe an interesting market for seaweed extracts?

Demand for seaweed extracts in the European food market is driven by increasing consumer demand for health foods, as well as lifestyle changes. This includes a consumer shift towards plant-based products. Seaweed extracts have unique properties and can be used as a plant-based alternative to gelatine.

In 2017, the European food and drink sector generated EUR 1,192 billion in revenue. It is the largest manufacturing sector in the EU with about 294,000 companies present in the sector. European households spent on average about 13.8 percent of their total expenditure on food and drink products.

Table 2: The European Market for Conventional and Organic Food & Drink: Market Growth Rates, 2012-2017

	European Food and Drink Market  mEUR	% Change	European Organic Food and Drink Market mEUR	% Change
2012	1,062		20.9
2013	1,090	2.64%	22.1	5.74%
2014	1,095	0.46%	24	8.60%
2015	1,115	1.83%	27.4	14.17%
2016	1,118	0.27%	30.9	12.77%
2017	1,192	6.62%	34.3	11.00%

Source: Food and Drink Europe/FIBL
Note: All figures are rounded

European consumers are also increasingly buying packaged foods because of lifestyle changes. With busy lifestyles, European consumers cook less. Figure 1 illustrates the sales of packaged foods in Western European countries from 2015 to 2020. Seaweed extracts, such as carrageenan and agar are used in packaged foods.

The European organic food and drink sector is the second largest in the world. The market has grown from EUR 20.9 billion in 2012 to EUR 34.3 billion in 2017. The EU regulation includes carrageenan and agar on its list of allowed food additives for organic food and drink products.

Seaweed extracts such as carrageenan and agar are also used as a gelatine substitute in vegan products. Carrageenan is mostly used in plant-based milks. There is a growing vegan population in Europe. According to a report by Transition paths to sustainable legume based systems in Europe (TRUE), plant-based meat alternatives sales increased by 451 percent since 2013. The increase in ethical consumerism and rising consumer awareness is driving demand for vegan products in Europe. As a result, food companies are developing many new vegan products.

Figure 2: Imports of agar to the EU, 2014-2018

Source: Eurostat

Figure 2 shows imports of agar to the EU. It is shown that the total imports of agar reached 3.5 thousand tonnes in 2018. This was a 6 percent increase from 2014. In 2018, the value of total agar imports was EUR 65.1 million. The value increased by 10.8 percent compared to 2014. Around 54 percent of agar imported to Europe is from Extra-EU imports.

Figure 3: Imports of mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans to the EU, 2014-2018

Source: Eurostat

Figure 3 shows imports of mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans including carrageenan. It is shown that total imports decreased from 67.1 thousand tonnes in 2014 to 59.1 thousand tonnes in 2018. However, the imports increased in value by 2 percent during the same period. In 2018, the value of imports reached EUR 378.2 million.

Changes in the production process affected the market for carrageenan in Europe. The gel-press method increased in popularity as demand for alcohol pressed carrageenan declined due to high production costs. However, the market for gel-pressed kappa carrageenan is negatively affected by cheap semi-refined kappa carrageenan from the PES process. The semi-refined carrageenan is mainly used in pet-food applications. The demand for carrageenan is decreasing as there is a shift from canned pet food towards dry pet food. The market for kappa carrageenan in non-food applications is also in decline due to increasing popularity of alternative food additives.

The seaweed extracts market is also affected by the high volatility of prices. Seaweed farming has a large number of stakeholders that affect price movement. There are also no organised markets to provide benchmarking international prices for seaweed. Pricing decisions are often made based on misinformation. There are also substantial differences in prices between regions because of the absence of a world market and the fact that most trade is established through bilateral contracts.

Demand for carrageenan has also been dampened by negative stories in the media. Based on some studies, activist groups believe that carrageenan is linked to health problems. A number of studies suggest that consumption of carrageenan may have harmful effects. In 2018, the European Commission launched a re‐evaluation of carrageenan (E 407) and processed Eucheuma seaweed (E 407a) as food additives. There is a lot of confusion created in the literature due to using the name carrageenan when the actual product tested is another material, degraded carrageenan (Poligeenan). This made some food and drink companies switch to alternative food additives.

The European food market presents a lot of opportunities for seaweed extract suppliers in developing countries. The demand is driven by increasing sales of processed and packaged foods, as well as vegan products. It is expected that this trend will continue in the foreseeable future because of lifestyle changes, such as urbanisation and the shift towards plant-based diets.

3. What European countries offer most opportunities for seaweed extracts?

The countries that offer the best prospects for seaweed extracts exporters are Germany, Spain, the UK, France, the Netherlands and Belgium. These countries are the leading importers of seaweed extracts in Europe. Countries such as Spain, the Netherlands and Belgium act as re-exporters to other European countries.

The decline in imports is due to a combination of factors. The value of agar imports has decreased as the level of extra-EU imports of agar increased compared to the intra-EU trade. The market is affected by shortages of raw materials, as well as decreasing demand for seaweed extracts from non-food sectors like pet foods.

Table 3: Leading country markets for seaweed extracts in Europe

Country	Food and Drink Market bnEUR	% Growth	Organic Food and Drink Market bnEUR	% Growth
Germany	203.9	+19%	10	+5.9%
Spain	118.8	+16.4%	1.9	+12.9%
The UK	118.7	+3.8%	2.3	+5.3%
France	228.1	+26.8%	7.9	+17.6%
The Netherlands	76.7	+4.2%	1.2	+2.9%
Belgium	51.8	+1.9%	0.6	+7.8%

Source: Various

Germany

Table 4: Imports of seaweed extracts to Germany, 2014-2018

2018	000 Tonnes	% Change Volume (2014-2018)	m EUR	% Change Value (2014-2018)	Exporters	Important Market Players
Agar HSC: 130231	0.8	-6%	16.9	18%	China (44.3%), Morocco (26%), Spain (11.7%)	Neupert Ingredients GmbH, BAK Handelsbetrieb, Roeper
Mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans HSC: 130239	9.7	-51%	62.4	-30%	India (19%), China (18.7%), France (13.6%)

Source: Eurostat

The imports of agar to Germany decreased by 6 percent in volume between 2014 and 2018. The value of imports decreased at a double-digit rate over the same period. The imports of seaweed extracts with an HS code 130239 also decreased by double-digit growth rates. Despite decreasing imports, Germany is the leading importer of seaweed extracts. However, demand for seaweed extracts is decreasing in Germany because of a shift towards alternative food additives and lower demand from the non-food sector. The value of agar imports increased because of increasing imports of agar produced in Spain.

Germany has one of the largest food and drink sectors in Europe. Important sectors include meat and meat processing, dairy, confectionery, baked goods and alcoholic beverages.

The German organic food and drink market is the largest organic products market in Europe. German consumers have a high awareness and are willing to pay extra for organic products. The vegan population is also on the rise in Germany.

Suppliers of seaweed extracts from developing countries should target German buyers. There is an increasing demand for organic and vegan products in Germany and this trend is expected to continue. Suppliers of seaweed extracts should target buyers that focus on these products. Veganism is on the rise in Germany which is one of the leading countries in Europe for vegan product launches.

Spain

Table 5: Imports of seaweed extracts to Spain, 2014-2018

2018	000 Tonnes	% Change Volume (2014-2018)	m EUR	% Change Value (2014-2018)	Exporters	Important Market Players
Agar HSC: 130231	0.9	15%	1.4	4%	China (71.9%), Morocco (8%), Germany (5%)	Ceamsa Hispanagar
Mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans HSC: 130239	8.2	66%	59.7	60%	China (37.2%), the Philippines (22%), the Netherlands (8.8%)

Source: Eurostat

Spain acts as a re-exporter of seaweed extracts to Europe. The volume of agar exported to Spain increased by 15 percent. The imports of seaweed extracts with an HS code 130239 increased in volume and value between 2014 and 2018. There is growing demand for seaweed extracts in the Spanish market, meaning it offers good prospects for suppliers of seaweed extracts in developing countries. This is because of Spain’s robust food and drink industry; there are more than 28,000 food and beverage companies. The organic food and drink market is also growing and the potential for further growth is high.

Spain is also a producer of seaweed extracts such as agar. However, seaweed extracts produced in Asia are cheaper compared to seaweed extracts produced in Europe.

The Spanish market offers good prospects for seaweed extracts exporters from developing countries. It is an important re-exporter of seaweed extracts. Suppliers of seaweed extracts should target Spanish buyers.

The UK

Table 6: Imports of seaweed extracts to the UK, 2014-2018

2018	000 Tonnes	% Change Volume (2014-2018)	m EUR	% Change Value (2014-2018)	Exporters	Important Market Players
Agar HSC: 130231	0.5	72%	9.2	28%	Spain (40.6%), Morocco (27%), China (7.6%)	Chemcolloids Gutkind
Mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans HSC: 130239	6.5	23%	31.5	15%	India (37.6%), Philippines (17.6%), China (14.8%)

Source: Eurostat

Imports of other agar to the UK have been increasing in volume since 2014. There is a growing demand for both agar and seaweed extracts with an HS Code 130239. This is due to a strong food and drink manufacturing sector. The UK has one of the largest consumer markets in Europe. It also has a growing organic food market. The vegan lifestyle is also becoming popular; the UK has the largest share of vegan product launches in Europe.

It is expected that the UK will remain an important market for seaweed extracts in the foreseeable future. However, Brexit may disrupt international supply chains. Especially in the case of a no-deal scenario, it may take some time to re-negotiate trade deals with developing countries.

Suppliers of seaweed extracts in developing countries should target UK buyers. It is expected that the demand for seaweed extracts will continue to rise in the near future.

France

Table 7: Imports of seaweed extracts to France, 2014-2018

2018	000 Tonnes	% Change Volume (2014-2018)	m EUR	% Change Value (2014-2018)	Exporters	Important Market Players
Agar HSC: 130231	0.4	-3%	10	37%	Spain (30.3%), Morocco (26.1%), China (10.1%)	Roeper Kalys
mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans HSC: 130239	5.4	-21%	30.7	-5%	India (19.8%), Germany (13.9%), the Netherlands (12.8%)

Source: Eurostat

France is one of the leading importers of seaweed extracts with HS code 130231 and 130239. The level of imports has decreased between 2014 and 2018. In 2018, the volume of imports reached 400 tonnes for agar. The value of agar imports to France increased because of increased imports from Spain. Spain is one of the main agar producers in Europe, and seaweed produced in Spain is more expensive. The imports of seaweed extracts with an HS Code 130239 have decreased. This is because of growing decreasing demand for seaweed extracts in non-food sectors and the shift to alternative food additives.

France has a very important food industry. The most important sectors are meats, dairy products, beverages and confectionary. France has the second largest market for organic food and drink products in Europe. Demand for organic food in France is expected to continue to increase in the coming years.

The demand for seaweed extracts is driven by rising demand for packaged food and drink products and growing consumer awareness. Suppliers of seaweed extracts in developing countries should target the French market as it offers a lot of opportunities.

The Netherlands

Table 8: Imports of seaweed extracts to the Netherlands, 2014-2018

2018	000 Tonnes	% Change Volume (2014-2018)	m EUR	% Change Value (2014-2018)	Exporters	Important Market Players
Agar HSC: 130231	0.1	-49%	2.4	45%	Spain (66.6%), China (8.5%), Germany (7.3%)	Jacob Hooy            Labshop
Mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans HSC: 130239	4.5	6%	25.5	6%	Indonesia (21.2%), Canada (20%), India (19.8%)

Source: Eurostat

The Netherlands is a significant entry point of raw materials into Europe. The volume of agar imports decreased by 49 percent, but the value increased by 45 percent between 2014 and 2018. This is because of increasing imports of agar from Spain. Spain is one of the biggest producers of agar in Europe and the price of seaweed extracts produced in Europe is generally higher than those produced in Asia. Between 2014 and 2018, the share of intra-EU imports in value to the Netherlands increased from 50 percent to 87 percent.

The imports of seaweed extracts with an HS code 130239 increased both in volume and value. This is because the Netherlands is an important re-exporter of raw materials to other European countries. Seaweed extract suppliers in developing countries should target the Netherlands as it is expected to remain an important entry point of raw materials into Europe.

Belgium

Table 9: Imports of seaweed extracts to Belgium, 2014-2018

2018	000 Tonnes	% Change Volume (2014-2018)	m EUR	% Change Value (2014-2018)	Exporters	Important Market Players
Agar HSC: 130231	0.3	106%	2.8	-19%	Germany (70.8%), Chile (10.2%), France (6%)	Danisco Belgium, BROES Ingredients
mucilages and thickeners, whether modified or not, derived from vegetable products, other than agar, guar or locust beans HSC: 130239	3.9	-29%	29.7	-15%	the Philippines  (42.6%), USA (20.3%, the Netherlands (8.1%)

Source: Eurostat

Belgium is a re-exporter of seaweed extracts to other European countries. Imports of agar to Belgium have been increasing since 2014. Volumes increased by 106 percent to 300 tonnes in 2018. The value of imports decreased by a double-digit rate from 2014 to 2018. This is because of a rising share of imports from outside of the EU. Seaweed extracts produced outside the EU are cheaper than the ones produced in Europe.

Demand for natural ingredients such as seaweed extracts is forecast to grow. Growing demand for packaged food and vegan products is generating demand for seaweed extracts in the Belgian market.

4. What trends offer opportunities on the European food market for seaweed extracts?

Growing demand for high-quality food products is stimulating demand for seaweed extracts in Europe. There is an increasing trend towards sustainable production methods in the seaweed sector. Media coverage of possible harmful effects of seaweed extracts and food additives is hindering demand.

Trend towards processing in countries of origin

In recent years, there has been a shift in processing of seaweed extracts in countries of origin. For example, Indonesia is planning to process half of its seaweeds by 2020 instead of exporting raw materials to China and the Philippines. This enables producing countries to add value to the materials they harvest. This project is supported by Switzerland Global Enterprise.

This trend will change the dynamics in the seaweed extracts supply chain, especially as some countries will not have access to raw materials previously sourced from Indonesia. However, this process requires substantial investments in technology and research and development. This may be an obstacle to suppliers of seaweeds in developing countries to move up the supply chain.

Suppliers of seaweed extracts in developing countries should keep in mind that European buyers are interested in sourcing seaweed extracts. However, it is important that the quality of seaweed extracts is high, as there is also substantial production in Europe. For example, the Indonesian company Indo Gum offers domestically produced agar. The company also complies with quality management certification FSSC 22000.

Increasing importance of sustainability standards

Sustainability is becoming an important requirement for European buyers. There is a lack of organic certified seaweed on the market. Although many organisations like Soil Association and Ecocert certify organic seaweed, few companies are adopting such schemes. The Cornish Seaweed Company in the UK is one such company, offering kelp, dulse, and a range of seaweed-related products.

The ASC-MSC Seaweed Standard for sustainable seaweed was developed by the Marine Stewardship Council and Aquaculture Stewardship Council in 2017. It has a number of requirements for seaweed harvesting and farming practices. By adopting this standard, suppliers of seaweed extracts from developing countries can increase their credibility.

Marketing stories that make reference to sustainable production methods and practices are also becoming common. By using marketing stories and certification schemes, suppliers of seaweed extracts can set themselves apart from the competition.

Exporters of seaweed extracts should invest in resources to ensure their seaweed is sustainably sourced. European buyers take notice when their suppliers go the extra mile when ensuring their ingredients are sustainable. It is expected that sustainable seaweed production will become more important in the coming years.

Negative press for food additives hindering demand

Food additives like carrageenan and agar have come under the spotlight in recent years because of safety concerns. There have some studies published that indicate carrageenan may cause ulceration in the large intestine and ulcerative colitis, Colorectal and liver cancer, inflammation, as well as fetal toxicity and birth defects. Carrageenan is also banned in baby food products, such as baby formula.

Alternatives, such as gum arabic, guar gum agar ad gelatine are considered healthier. Research has shown that degraded carrageen or poligeenan has dangerous, inflammatory effects. However, the evidence on food grade carrageen side effects is limited to animal and cell studies.

Despite the negative publicity, seaweed extracts are allowed as a food additive by EU regulations in food products. Suppliers of seaweed extracts in developing countries should be aware there is a trend towards additive-free products in the European market. This may dampen demand for seaweed extracts in the future.

This study has been carried out on behalf of CBI by Ecovia Intelligence.

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