Oterra to boost production capacity in Asia, push ‘bold innovations’ backed by new data on consumer preferences
Formerly a part of Chr. Hansen, Oterra was born after the natural colours division was sold to one of the largest private equity funds in the world, EQT AB, in Sweden in April 2021.
Since then, the company has made several acquisitions to fortify its position in the industry. These include the acquisition of Akay Group, a prominent Indian ingredients manufacturer, in July 2022.
“All of these acquisitions are essentially for broadening our product range and what we call ‘backward integration’ to ensure that we have full traceability of our raw materials and contract farming programmes. We are one of the very few colour manufacturers that has this end-to-end visibility and traceability.
“Currently, our products are made predominantly in Europe and the US. We supply all over the world, and we are now optimising our supply chains to ensure that we consistently exceed our customers’ expectations. We’re trying to increase production in APAC to shorten lead times and present more provenance, as some customers actually prefer ‘made in Asia’ products,” Beshoy Saad, APAC Commercial Director at Oterra, told FoodNavigator-Asia.
With the acquisition of Akay, the company has begun manufacturing products in India.
According to Andrew Arnold, Head of Communications at Oterra, one of the company’s focus is on strengthening its production capacity in Asia.
“By December, we’ll have the capability to manufacture many of our colours, which we used to bring from outside of APAC, in India. Starting from the new calendar year, Oterra will be making more and more products in the country. Our localisation plan received a lot of interest at the recent Fi India trade show.
“Additionally, our localisation plant in China is pretty much up and running. It’s only a matter of scaling it up. We haven’t talked too much about it publicly yet, but it’s definitely in the works,” Arnold added.
Converting data to innovation
On November 13, Oterra released findings from a survey conducted among consumers in 10 markets (Brazil, China, France, Germany, India, Indonesia, Mexico, Morocco, UK, US), with at least 1,000 respondents in each.
The respondents were asked questions on 10 savoury applications of colours to uncover their preferences and the factors driving their purchase decisions.
The results revealed a number of “surprising” insights, including unconventional combinations of colours and products that tempted consumers.
“Pink and green sauces were surprisingly popular among consumers who found them very appealing, while red and purple were popular in foods such as noodles and burger buns. It was also interesting to learn that the same colours provoked different emotional reactions in consumers, depending on the region and colour intensity.
“Orange was the most appealing shade for seasonings globally, followed closely by yellow and pink. However, yellow was rated more appealing in Brazil, France, and India. Although many felt black seasonings were unappealing, they noted the elegance and air of mystery of the colour,” said Carel Soo, head of regional marketing at Oterra.
These findings will serve as a toolbox to address consumer needs more effectively through “actionable and targeted” R&D.
“Based on these insights, we are able to more precisely understand whether people like their colours bold or intense, and how that changes from product to product. The data also enable food manufacturers to predict products that may do well in Asia but not so in Europe. This opens up great innovation opportunities, such as black and orange noodles for Halloween.
“Aside from our portfolio and expertise, we have application and regulatory centres across the globe to perform testings and support our customers in meeting local regulatory requirements in different markets. The findings will allow us to be more targeted when working with our customers, whether it’s in new product development or enabling them to navigate the regulatory landscape globally,” Arnold added.
Oterra is constantly working on both discovering novel and more sustainable ways of creating pigments, and using new raw materials to make “bold innovations”.
An example is its latest product range called I-Colors Bold, which is a powdered colour series that claims to make the transition from artificial to natural colours easier.
“The same artificial colour can be used across multiple applications. But for natural colours, formulators need to find the right material for each application because the colour is affected by the interaction with acidity level, temperature etc.
“I-Colors Bold shows that natural colours can be just as bright and enticing as artificial ones. Our innovations have enabled us to continuously provide the appropriate technical solutions, and we will remain focused on this.”
Inevitable transition
There has been an increasing uptake of natural colouring, and a main driver is said to be legislation.
“In Asia, there is a gradual shift to mandate natural colours in certain applications, but quite frankly, it’s more advanced in Europe and certain parts of the Middle East. However, Asia is a huge third-party manufacturing hub for these markets. For instance, a lot of seafood products are made in Thailand and Vietnam, and exported all around the world.
“It’s inevitable that we will get to a point where regulations will enforce the use of natural colours. An example is the recent announcement by the California Government that foods cannot be served in all schools unless they are made from natural ingredients,” said Saad.
He added that there have been many studies elucidating the impact of artificial colours on youths, and it is quite evident that they are not “good for you”.
“Artificial colours have also been linked to severe implications, such as cancer and hyperactivity, so it’s going to be even more important [for manufacturers] to start converting to natural colours. I foresee a world where natural colours are going to be a right to operate or a ticket to the game that people need to comply with.”
The challenge, however, lies in the divergent regulations in different countries.
“It is indeed a challenge for any company that wants to export to multiple countries, but there are solutions. One of the key things that differentiates Oterra is that we are not only working with one or two raw materials.
“Taking red colour as example, we have no less than five different raw materials that impart the shade. The reason for this is to allow our customers to pick the right ingredients that would enable them to export to all of their target markets.”
Another trend touted to be fuelling the use of natural colours in APAC is premiumisation.
This is attributed to a combination of factors, including a young demographic, particularly in India, who is keen to try new flavours and colours, rapidly increasing urbanisation, and growing disposable incomes.
“These factors are prompting consumers to be more experimentative in the way they taste food and new flavours. We’re noticing a lot of brands trying new things that they haven’t done before, and also having more premium offerings for consumers who are willing to go up the value chain,” Saad explained.
