26 June 2008 - Ralph Waldo Emerson once commented that "God made yeast, as well as dough, and loves fermentation just as dearly as he loves vegetation". Indeed, the art of fermentation and use of fermentative products in commercial applications has long been an established process in human food use.
Yeast holds the distinction of being the first micro-organism in this inventory, as its use extends back over 3000 years, and this tiny organism has given rise to the modern day industry sectors of bakery and brewing. More recently, yeast has been used as an ingredient to establish new avenues in savoury flavour enhancement and in salt reduction. The European market for yeast products is witnessing renewed growth from the increased sales of processed foods, hotter summers raising human alcohol consumption and the mounting awareness of yeast's favourable nutritive profile. Recently, the European market for yeast was estimated to be worth $559.6 million (Frost & Sullivan, 2007).
History of Yeast
Yeast has been harnessed since the earliest times by various civilisations, to produce both breads and brews. The ancient Egyptians dedicated whole baking chambers to the production of yeasted bread. The scientific community first became aware of yeast through the observations of Dutch naturalist Anton van Leeuwenhoek in 1680. In 1857, the French microbiologist Louis Pasteur reported in the paper "Mémoire sur la fermentation alcoolique" that alcoholic fermentation was conducted by living yeasts and not by a chemical catalyst. This observation gave rise to the much acclaimed "Pasteur effect". Yeast has been traditionally used in both the bakery and brewing sectors to change and improve the quality of the final product. While the brewing sector used yeast as a fermentation aid, the bakery sector utilised the yeast to raise the dough giving it a fluffy look. This was accomplished via the yeasts ability to supply carbon dioxide gas through its metabolism, which aerates the dough by producing tiny bubbles of gas. These bubbles result in the dough rising to form a loaf of bread. Additionally, the emergence of the new specialty yeast sector has added a much needed revenue boost to this sector.
Current Market Scenario
The current market for yeast products is a flourishing scene, with demand driving increased production and revenues. However, lurking at the fringes of such prosperity is the looming crisis of global shortage of yeast raw materials. Both LeSaffre and Lallemand have recently established Health & Nutrition divisions within their company operations, to take into account the general drive within the market and exploit the nutritional and functional properties of yeast and yeast extracts.
The Molasses Mire
The bakers yeast products in particular are dependent on the sugar by-product molasses for their growth, although the shortage of molasses is a major concern for the European yeast market. Such a shortage has arisen due to the restriction of sugar trade in Europe and the ongoing implications of the EU sugar regime. This has led to molasses prices rising by 50 per cent and a corresponding 10 per cent increase in yeast prices. In a bid to find an alternative raw material source, industrial sugar was used. However, the process of yeast from industrial sugar production needs investment in the operating process to increase process efficiency and is also more expensive. The EU allocates a production quota of sugar to each of its member states, who each then divide this quota between the processing companies in that country. The sugar processors have contracts with individual growers for a certain tonnage of sugar beet, to enable them to fulfill their quota. This allows for producers to sell their sugar at comparatively higher prices than the world price, although it is expected that market prices for sugar production will eventually become more competitive.
Biofuels Beckoning
While the threat of molasses shortage is a pertinent dilemma to the bakers yeast producers, there is another equally large threat to the yeast market as a whole. The competition from the Biofuels sector is threatening the yeast market, as it operates on extremely high price margins and is developing rapidly. The biofuels industry is competing with the yeast market for the same raw material sources, providing a significant challenge for yeast producers. The already scarcely-available molasses is in high demand from bioethanol producers, who can pay farmers twice the price that yeast manufacturers can afford, which has greatly aggravated price pressures in the European yeast market. Moreover, the bioethanol producers can avail of subsidies. For example, beetroot producers can plant 'out of quota' beet for supply to bioethanol applications. The use of molasses as a feedstock for bioethanol production, further adds to the scarcity of this raw material which has been traditionally used by the yeast industry. Additionally, these biofuels also affect the brewers yeast application segments, primarily through the shortage of malt as a primary raw material, as biofuels manufacturers represent a more attractive market for the farmers selling sugar products.
Spotlight on Specialty Yeast
The yeast market is fighting back to maintain revenues, by focusing on the emerging market of specialty yeast products. The European market for commercial traditional yeast is approaching maturity and commoditisation. Out of the core of this market has emerged a new sector catering for value-added and premium applications. Applying modern science to the traditional process of fermentation has given rise to the sector of Specialty yeast products. According to the European Association for Specialty yeast producers (EURASYP), specialty yeast products include all products derived from inactivated, plasmolysed, autolysed or hydrolysed food yeasts. These extracts and compounds can be promoted for either their nutritional or flavouring profiles in the sector of food and agriculture.
The sector of "Specialty Yeast Products" is broadly classified into products which include:
Food & feed yeasts
Autolysed yeasts
High nucleotide yeasts
Yeast extracts
Yeast cell walls
Yeast Beta-glucans
The market for specialty yeast is comparatively nascent and is seeing increased growth rates. Constant innovation and application profiling is occurring amongst manufacturers, in order for them to remain competitive. These yeast products are seen as hot investment opportunities in the otherwise commoditised European yeast market, such as those of traditional yeast due to their wider profit margins and value-added premium image.
Opportunities for Ingredient Manufacturers
As a consequence of the growth of specialty yeast products, the European yeast market is in one of its most dynamic phases since its inception. Ingredient manufacturers need to make full use of the expanding EU boundaries and the increased demand for bakery and brewery products that these countries will bring. For instance, the Czech Republic is a country accounting for approximately 2 per cent of the total EU population, and accounts for the largest per capita consumption of beer. Moreover, the European industry is facing an increasing demand for "clean label food". Yeast and yeast extract manufacturers must capitalise on this demand by providing customer centric products. Application profiling is the new buzz word where formulations are being customised for use in particular applications. Such profiling is predicted to be one of the highlights in the success of this market. By developing into new application sectors, the credibility of this industry and its viability will increase two-fold. Most of the global manufacturers are looking into developing customer specific solutions as an opportunity to expand their product and business portfolio, by introducing a range of newer applications for existing products. For instance, the British yeast extract manufacturing company Synergy introduced Saporesse Plus in 2008, utilising yeast extracts in non-dairy applications such as confectionery. Backward integration is another key factor facilitating easy raw material access, which helps in balancing the rising yeast prices. Industry associations such as the Comite des fabricants de levure de panification de union Europeenne (COFALEC), and the European Association of Specialty Yeast Products (EURASYP), play a significant role in endorsing and making public the overall concerns in the yeast market. Moreover, the promotion of yeasts nutritive profile and its validation through awareness campaigns and research has a weighty influence within the market.
Conclusion
The European yeast market is in a stage of change and developmental growth. With the mounting demand for natural ingredients, there is scope for considerable market development, but until price inflation and raw material instability are removed, the market will predominantly remain a commodity market. The major share of profits to be made will be through value-addition by the promotion of specialty yeast products. If advances can be made in promoting the efficacy, reliability and quality of specialty yeasts, this will continue to drive expansion in the market. Bakers yeast is currently the largest sector in terms of volume, and is a key raw material for the specialty sector, although it grows aerobically and is dependent on sugar molasses. In contrast, although currently a small market, the market for brewers yeast is finding increased usage due to its non-dependence on molasses. Therefore, brewers yeast manufacturers stand to gain most by the shortage of molasses, as they can raise their prices higher than those of baker's yeast. This will augur well for this otherwise extremely price sensitive market. The market for yeast is currently in a growth stage, and the frequency of mergers and acquisitions are high. For instance, in 2007 Lallemand acquired the V&S distillers yeast plant to ensure constant supply. In 2008, it may be concluded that the European yeast market is in a dynamic stage of growth spurred by the new concept aiming to add value to basic yeast products. Additionally, a targeted focus on nutrition, health and ease of product application of these ingredients will ensure the future success of the yeast ingredient industry.