The European Market Potential for Seaweed Extracts 1. Product

The European market potential for seaweed extracts

Last updated: 02 June 2021 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.

Contents of this page 1. Product description 2. What makes Europe an interesting market for seaweed extracts? 3. What European countries oﬀer most opportunities for seaweed extracts? 4. What trends oﬀer opportunities on the European food market for seaweed extracts? 1. Product description

Seaweed extracts can be deﬁned as seaweed hydrocolloids, which are used as gelling and thickening agents in diﬀerent food, pharmaceutical and biotechnological applications. 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. Unlike kappa or iota carrageenan, lambda carrageenan 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 Emulsion kappa 0.1-0.3 pudding stabilisation

Syrups Suspension, bodying kappa, lambda 0.3-0.5

BBQ and pizza Bodying kappa 0.2-0.5 sauces

Whopped Emulsion kappa+kappa2 0.1-0.3 toppings stabilisation

Imitation Emulsion lambda 0.1-0.2 coﬀee creams stabilisation

Gelation, fat kappa+locust bean Pet foods 0.5-0.1 stabilisation gum

Salad dressing Suspension iota 0.3

Clarify and reduce Beer and wine kappa chill haze

Cold prepared Thickening, gelation kappa, iota, lambda 0.2-0.3 custards

Puddings Reduce starch kappa, kappa2 0.1-0.2

Ready to eat Syneresis control kappa2+iota 0.1-0.2 desserts

Whipped Stabilise overrun lambda 0.05-0.15 cream

Stabilise Aerosol cream kappa 0.02-0.05 emulsion/overrun Fruit suspension, Yoghurt kappa2 0.2-0.5 mouthfeel

Chocolate Suspension, kappa, kappa2, lambda 0.015-0.030 milk mouthfeel

Suspension, Soy milk iota, kappa 0.03-0.10 mouthfeel

Evaporated Prevent whey kappa 0.005-0.015 milk separation

Processed Improved grating, kappa, kappa2 0.3-2.0 cheese slicing

Gelation, moisture kappa + locust bean Cream cheese 0.3-0.5 binding gum

Source: Phillips, G and P. Williams (2009) Handbook of Hydrocolloids, 2nd 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.

Figure 1: Examples of products containing agar in the European market Source: Various

Figure 2: Examples of products containing carrageenan in the European market

Source: Various

Tips: Familiarise yourself with the beneﬁcial properties and advantages that agar/carrageenan oﬀers the food industry. Examples are carrageenan’s thickening properties, high moisture content and ability to be used in a wide range of applications.

Inform European buyers about your agar’s and/or carrageenan’s beneﬁcial properties and advantages for the food industry, and display this information on your company website and marketing materials. This is likely to increase your chances of entering the European market.

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. The global agar market is expected to reach USD 362 million by 2025, with Europe forecast to experience strong growth. The global carrageenan market is expected to grow at a healthy pace and is projected to be worth USD 1.25 billion by 2024. The European market is the fastest-growing market for carrageenan. It is estimated that around half of what is traded in the European carrageenan market and about 35-40 percent of what is traded in the agar market goes to the food industry.

Europe has one of the biggest food and drink markets in the world. Figure 3 shows the output from the European food and drink industry. It shows that the industry grew every year from 2012 to 2018, generating more than EUR 1.2 trillion in 2018.

In 2018, the European food and drink industry generated EUR 1.20 trillion in revenue. It has the largest manufacturing sector in the EU, with 291,000 companies in the sector. On average, European households spent about 20.7 percent of their total expenditure on food and drink products, an increase of 6.9 percent from 2017.

Table 2: Market growth rates for the European market for conventional food & drink, 2012-2018

European Food and Drink Market % Change

2012 1,062

2013 1,090 2.64%

2014 1,095 0.46%

2015 1,115 1.83% 2016 1,118 0.27%

2017 1,192 6.62%

2018 1,205 1.09%

Source: Food and Drink Europe

European consumers are also increasingly buying packaged foods because of lifestyle changes, a trend expected to continue into the future. Lifestyle changes include busier lives resulting in less time to cook, increasing disposable household income and growing acceptance among consumers towards packaged foods. Figure 4 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. This ﬁgure was ﬁrst published in 2019 and 2020 is a forecast.

European consumers are increasingly demanding organic food and drink products. As a result, Europe has the second-largest market for organic products in the world. The European organic food market grew at a healthy rate from 2014-2018, reaching over EUR 45 billion in 2018. This is shown in Figure 5. This trend is expected to continue in the future (2019 and 2020 are based on a forecast in 2018) because of rising consumer awareness and the growing availability of organic foods. According to Google Trends, interest in ‘veganism’ increased 7-fold between 2014 and 2019. The perceived positive health impacts of a vegan diet as well as ethical and environmental concerns are key reasons why consumers are turning away from meat. For example, meat production has a high environmental impact, as it is resource intensive and requires large amounts of land and water; it is also a signiﬁcant producer of greenhouse gases.

The meat industry has also been receiving negative attention since the outbreak of the coronavirus in countries like Germany. For example, slaughterhouses have become the source of numerous COVID-19 virus outbreaks. The outbreaks have also exposed the poor working conditions in the meat industry.

Europe has a growing vegan population. An estimated 75 million vegans and vegetarians currently live in Europe; a recent consumer study showed that European consumers are willing to change their habits to more plant-based foods. Figure 6 shows the share of adults who are vegan or vegetarian in selected European countries. 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. According to a report by TRansition paths to sUstainable legume based systems in Europe (TRUE), sales of plant-based meat alternatives increased by 451 percent since 2013. Increasing ethical consumerism and rising consumer awareness are driving demand for vegan products in Europe. As a result, food companies are developing many new vegan products. Figures 7 and 8 show the import volume and import value of agar to the EU from 2015-2019. According to Figure 7, total imports of agar reached 3,600 tonnes in 2019. This was an 81.6 percent decrease from 2015. In 2019, the value of total agar imports was EUR 57.1 million. The value decreased by 10.9 percent compared to 2015. In 2019, 46.3 percent of agar imported to Europe was from extra-EU imports, an increase of 36.1 percent. Figures 9 and 10 show the import volume and import value of mucilages and thickeners, whether modiﬁed or not, derived from vegetable products, other than agar, guar or locust beans including carrageenan from 2015-2019. Figure 9 shows that the total imports decreased from 297.7 thousand tonnes in 2015 to 59.7 thousand tonnes in 2019, a decrease of 80 percent. The value of total imports decreased by 3.1 percent to reach EUR 414.3 million in 2019. Extra-EU trade accounted for 54 percent of trade in 2019, an increase of 42.2 percent from 2015.

Imports are declining because of a combination of factors. The seaweed market is being aﬀected by shortages of raw materials, as well as decreasing demand for seaweed extracts from non-food sectors like pet foods. In addition, other items are traded under HS code 130239, under which carrageenan is traded on the European market.

Changes in the production process affect 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 because of a shift from canned pet food towards dry pet food. The market for kappa carrageenan in non-food applications is also declining due to increasing popularity of alternative food additives.

Alternative natural food additives are competing with seaweed extracts and are limiting market growth. For example, alternatives such as guar, gelatin, pectin and xanthan gum which compete with carrageenan can limit growth in the European carrageenan market.

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 international benchmarking 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 also because most trade is done through bilateral contracts.

Demand for carrageenan has also been dampened by negative media stories. 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 (E407) and processed Eucheuma seaweed (E407a) as food additives. The European Food Safety Authority (EFSA), which conducted the re- valuation, found carrageenan to be non-toxic below certain levels of consumption (75mg/kg bw per day). However, the EFSA stated this “should be considered temporary”, thus creating uncertainty for carrageenan in the European market.

The literature creates a lot of confusion due to the use of the name carrageenan when the actual product tested is another material, degraded carrageenan (Poligeenan). This has made some food and drink companies switch to alternative food additives.

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

Tips: Visit trade shows when looking for buyers. Examples include Food Ingredients, Veggie World and Veg Fest.

See the CBI study tips for ﬁnding buyers on the European natural food additives market, which provides valuable information on how to increase your chances when approaching European buyers.

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

Germany, Spain, the UK, France, the Netherlands and Belgium oﬀer the best opportunities for exporters of seaweed extracts in developing countries. These countries are the leading importers of seaweed extracts in Europe. Countries such as Spain, the Netherlands and Belgium also re-export to other countries. Table 3: Leading country markets for seaweed extracts in Europe Organic Food and Food and Drink % Growth Drink % Growth Country Market, 2017-2018 Market, 2017-2018 2018, bn 2018, bn EUR EUR

Germany 211.1 +3.5% 10.9 +5%

Spain 116.9 -2.0% 2.1 +12%

The UK 120 +0.7% 2.5 +5%

France 213.1 -6.6% 10 +15%

The 76.2 +0.7% 1.2 +6% Netherlands

Belgium 54.9 +5.6% 0.698 +11%

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

Germany Table 4: Imports of seaweed extracts to Germany, 2015-2019

% Change % Change 000 m Important 2019 Volume Value Exporters Tonnes EUR Market Players (2015-2019) (2015-2019) China (49.0%), Agar HSC: Morocco 0.7 -31% 12.5 -25% 130231 (16.1%), Italy (14.8%)

Mucilages and Neupert thickeners, Ingredients whether GmbH, modiﬁed India BAK or not, (21.4%), Handelsbetrieb, derived China Roeper from (17.9%), 11.1 -1% 69.6 -8% vegetable France products, (11.0%), other than Spain agar, guar (10.0%) or locust beans HSC: 130239

Source: Eurostat

Agar imports to Germany decreased by 31 percent in volume between 2015 and 2019 to reach nearly 7,000 tonnes in 2019. The value of imports decreased by 25 percent over the same period to reach EUR 12.5 million in 2019. Extra-EU trade accounted for 68 percent of all imports in 2019, a decrease of 17.8 percent from 2015. China was the largest exporter to Germany in 2019.

Imports of HS Code 130239 under which carrageenan is traded to Germany decreased slightly in volume from 2015 to more than 11,100 tonnes in 2019. The value of imports decreased by 8 percent from 2015 to reach almost EUR 69.6 million in 2019. Extra-EU trade accounted for 52.2 percent of all trade in 2019, an increase of 4.6 percent from 2015. India was the largest exporter to Germany in 2019.

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.

According to Food and Drink Europe, Germany had the second-largest food and drink sector in Europe in 2018. Important sectors include meat and meat processing, dairy, confectionery, baked goods and alcoholic beverages. Important market players in the German market include Neupert Ingredients GmbH, BAK Handelsbetrieb and Roeper.

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

This presents an opportunity for exporters of seaweed extracts in developing countries. Exporters of seaweed extracts from developing countries should therefore target German buyers. There is an increasing demand for organic and vegan products in Germany; it is one of the leading countries in Europe for vegan product launches. This trend is likely to continue; therefore, exporters of seaweed extracts from developing countries should target buyers that focus on these products.

Spain Table 5: Imports of seaweed extracts to Spain, 2015-2019

% Change % Change Important 000 m 2019 Volume Value Exporters Market Tonnes EUR (2015-2019) (2015-2019) Players

China (70.1%), Agar HSC: Morocco 0.8 -13% 11 -16% 130231 (11.1%), Indonesia (6.2%)

Mucilages and thickeners, whether Ceamsa, modiﬁed China Hispanagar or not, (34.4%), derived the from 8.5 30% 68.2 40% Philippines vegetable (26.4%), products, Chile other than (7.0%) agar, guar or locust beans HSC: 130239

Source: Eurostat

Spanish imports of agar decreased by 13 percent between 2015 and 2019 to reach almost 8,000 tonnes in 2019. Over the same period, the value of imports decreased by 16 percent to over EUR 11.0 million in 2019. Extra-EU trade accounted for 94.6 percent of all imports, an increase of 27.4 percent from 2015. China was the leading exporter of agar to Spain in 2019.

Spanish imports of HS Code 130239 under which carrageenan is traded increased by double digits in volume and value between 2015 and 2019. The volume of imports increased by 30 percent to over 85,000 tonnes, and the value of imports increased by 40 percent to over EUR 68.2 million in 2019. Extra-EU trade accounted for 75 percent of all imports in 2019, a small increase of 2 percent from 2015. China was the largest exporter to Spain in 2019.

Spain acts as a re-exporter of seaweed extracts to Europe; for example, Spain was the largest exporter of agar to the UK, France, Belgium and the Netherlands in 2019. There is a growing demand for seaweed extracts in the Spanish market, so it oﬀers good opportunities for exporters of seaweed extracts in developing countries. This is because of Spain’s robust food and drink industry, with more than 31,000 companies. The Spanish organic food and drink market is also growing, and the potential for further growth is high.

Ceamsa and Hispanagar are 2 important market players on the Spanish market. 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 opportunities for seaweed extract exporters from developing countries. It is an important re-exporter of seaweed extracts. Thus, exporters of seaweed extracts from developing countries should target Spanish buyers.

The UK Table 6: Imports of seaweed extracts to the UK, 2015-2019

% Change % Change Important 000 m 2019 Volume Value Exporters Market Tonnes EUR (2015-2019) (2015-2019) Players

Spain (53.7%), Agar HSC: Morocco 0.7 39% 10.3 65% 130231 (15.8%), France (9.4%)

Mucilages and thickeners, whether India Chemcolloids, modiﬁed (34.8%), Gutkind or not, the derived Philippines from 6.3 -2% 35 -5% (17.0%), vegetable China products, (13.1%), other than Indonesia agar, guar (12.3%) or locust beans HSC: 130239

Source: Eurostat

Agar imports to the UK increased in volume and value between 2015 and 2019. Over this period, the volume of imports increased by 39 percent to almost 7,000 tonnes in 2019. The value of imports increased by 65% to around EUR 10.3 million. Extra-EU trade accounted for 27.3 percent of all imports in 2019, a decrease of 1.5 percent from 2015. Spain was the largest exporter to the UK in 2019. UK imports of HS Code 130239 under which carrageenan is traded decreased in volume and value between 2015 and 2019.The volume of imports reached nearly 6,300 tonnes in 2019, a decrease of 2 percent from 2015. Between 2015 and 2019, the value of imports decreased by 5 percent to just over EUR 35.0 million. In 2019, extra-EU trade accounted for 88.2 percent of all imports, a decrease of 1.7 percent from 2015. India was the largest exporter to the UK in 2019.

The UK has one of the largest consumer markets in Europe and has a strong food and drink manufacturing sector. This is driving demand for both agar and seaweed extracts with HS code 130239. Chemcolloids and Gutkind are 2 important market players in the UK. The UK also has a growing organic food market, a trend that is expected to continue. In addition, the vegan lifestyle is becoming popular in the UK; the UK has one of the largest shares of vegan product launches in Europe. Exporters of seaweed extracts from developing countries should therefore target UK buyers.

Brexit (Britain’s exit from the European Union) is affecting international supply chains. Re-negotiating trade deals with developing countries may take some time. However, the UK is expected to remain an important market for seaweed extracts for the foreseeable future. For HS codes 130231 and 130239, tariffs on goods imported into the UK may differ from those in European Union (EU) countries. Thus, exporters of seaweed extracts in developing countries should use the International Trade Centre’s (ITC) Market Access Map to see if different tariffs apply when exporting to the UK.

France Table 7: Imports of seaweed extracts to France, 2015-2019

% Change % Change Important 000 m 2019 Volume Value Exporters Market Tonnes EUR (2015-2019) (2015-2019) Players Spain (27.3%), Morocco Agar HSC: (15.6%), 0.4 -4% 8.3 -9% 130231 China (11.6%), Italy (10.6%)

Mucilages and thickeners, whether The modiﬁed Netherlands or not, (18.2%), Firmalis, derived Germany Kalys from (17.5%), 4.6 -27% 29.1 -22% vegetable Spain products, (10.4%), other than the agar, guar Philippines or locust (10.3%) beans HSC: 130239

Source: Eurostat

French imports of agar decreased in both volume and value between 2015 and 2019. The volume of imports reached nearly 4,000 tonnes in 2019, a decrease of 4 percent from 2015. The value of imports decreased by 9 percent from 2015 to over EUR 8.3 million in 2019. Extra-EU trade accounted for 44 percent of all French imports in 2019, a decrease of 8.5 percent from 2015. Spain was the largest exporter to France in 2019.

Imports of HS Code 130239 under which carrageenan is traded to France decreased at a double-digit rate in volume and value between 2015 and 2019. In 2019, the volume of French imports reached over 46,000 tonnes, a decrease of 27 percent from 2015. Over the same period, the value of imports decreased by 22 percent to reach almost EUR 29.1 million in 2019. Extra-EU trade accounted for 35 percent of all imports in 2019, a decrease of 3 percent from 2015. The Netherlands was the largest exporter to France in 2019.

France has the largest food and drink market in Europe, generating a turnover of 213.1 billion in 2018. There were over 54,000 food and drink companies in 2018. The most important sectors are meats, dairy products, beverages and confectionary. Firmalis and Kalys are 2 important market players in the French market. France has the second-largest market for organic food and drinks in Europe; it grew by 15 percent between 2017 and 2018. French demand for organic food is expected to continue to increase in the coming years.

Demand for seaweed extracts is driven by rising demand for food and drink products and growing consumer awareness. The French market oﬀers good opportunities for seaweed extract exporters from developing countries. Therefore, exporters of seaweed extracts from developing countries should target French buyers. The Netherlands Table 8: Imports of seaweed extracts to the Netherlands, 2015-2019

% Change % Change Important 000 m 2019 Volume Value Exporters Market Tonnes EUR (2015-2019) (2015-2019) Players

Spain (39.1%), Agar HSC: China 0.1 -61% 1.7 19% 130231 (16.2%), Germany (7.7%)

Mucilages and thickeners, whether The modiﬁed Philippines or not, Natural (25.5%), derived Spices, Canada from Labshop 4.3 4% 30.7 35% (16.5%), vegetable Indonesia products, (12.4%), other than India agar, guar (12.0%) or locust beans HSC: 130239

Source: Eurostat

The Netherlands is a signiﬁcant entry point of raw materials into Europe. Agar imports to the Netherlands decreased by 61 percent from 2015 to 2019. However, over the same period, the value of imports increased by 19 percent to reach almost EUR 1.7 million in 2019. This is because of increasing imports of agar from Spain. Spain is one of the largest producers of agar in Europe, and the price of seaweed extracts produced in Europe is generally higher than the price of those produced in Asia. Between 2015 and 2019, the share of extra-EU trade to the Netherlands increased by 30.3 percent in terms of volume and by 9.0 percent in terms of value.

Since the Netherlands is an important re-exporter of raw materials to other European countries, imports of HS Code 130239 under which carrageenan is traded to the Netherlands increased in both volume and value between 2015 and 2019. Over this period, the volume of imports increased by 4 percent to reach almost 4,300 tonnes, and the value of imports increased by 35 percent to nearly EUR 30.7 million in 2019.

Extra-EU trade of HS Code 130239 under which carrageenan is traded increased by 9.9 percent from 2015; it accounted for 69.8 percent of all imports to the Netherlands in 2019. The Philippines was the largest exporter to the Netherlands in 2019. Natural Spices and Labshop are 2 important players in the Dutch market. The Netherlands is expected to remain an important entry point of raw material into Europe for the foreseeable future, oﬀering opportunities to exporters in developing countries. Exporters of seaweed extracts should therefore target the Netherlands.

Belgium Table 9: Imports of seaweed extracts to Belgium, 2015-2019

% Change % Change Important 000 m 2019 Volume Value Exporters Market Tonnes EUR (2015-2019) (2015-2019) Players

Spain (38.6%), Agar HSC: Germany 0.4 74% 2.9 -19% 130231 (37.2%), Chile (8.5%)

Mucilages and thickeners, whether modiﬁed The Danisco or not, Philippines Belgium, derived (42.9%), BROES from the United Ingredients 3.4 -47% 31.6 -32% vegetable States products, (19.9%), other than Spain agar, guar (8.2%) or locust beans HSC: 130239

Source: Eurostat

Belgium is a re-exporter of seaweed extracts to other European countries. Between 2015 and 2019, imports of agar to Belgium increased in volume by 74 percent to over 4,000 tonnes. However, over the same period, the value of imports decreased by 19 percent to reach EUR 2.9 million in 2019. Intra-EU trade accounted for 86.5 percent of imports in 2019, an increase of 48.5 percent from 2015. Spain, closely followed by Germany, was the leading exporter to Belgium in 2019.

Belgian imports of HS code 130239 under which carrageenan is traded decreased by double digits in volume and value between 2015 and 2019. The volume of imports decreased by 47 percent to nearly 34,000 tonnes, and the value of imports decreased by 32 percent to over EUR 36.1 million in 2019. Extra-EU trade accounted for 73 percent of all imports in 2019, a decrease of 12 percent from 2015. The Philippines was the largest exporter to Belgium in 2019. Danisco Belgium and BROES Ingredients are 2 important players in the Belgian market. According to Food and Drink Europe, the Belgian food and drink market grew by 5.6 percent between 2017 and 2018. Over the same period, the Belgian organic food and drink market grew by 11 percent. 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. Therefore, exporters of seaweed extracts from developing countries should target Belgian buyers.

The declining imports in terms of volume and value are due to a combination of factors. Seaweed extracts produced in Europe are generally priced higher than those produced in Asia. The seaweed market is being aﬀected by shortages of raw materials and decreasing demand for seaweed extracts from non-food sectors like pet foods. Additionally, other items are traded under HS code 130239 under which carrageenan is traded on the European market.

Tips: Target buyers in Western European countries when supplying seaweed extracts, since they usually have the largest consumer markets because of their robust processing and manufacturing food and beverage industry. In addition, some Western European countries, such as Spain, the Netherlands and Belgium, re-export seaweed extracts to other European countries.

Focus on the beneﬁcial properties of your seaweed extracts when approaching European buyers. Examples are carrageenan’s thickening properties, high moisture content and ability to be used in a wide range of applications.

Ensure that you market your seaweed extract competitively, as there is also some production of seaweed extracts in Europe. For example, agar is produced in Spain.

Use the International Trade Centre’s (ITC) Market Access Map to see if tariffs apply for HS codes 29389090 and 130239 for the European country you are exporting to. Be aware that the UK has left the European Union (EU), so tariffs may differ from those for EU countries.

Focus on creating long-term relationships with buyers. Larger buyers create partnerships with seaweed extract producers. Be open to buyers visiting your facilities on a regular basis.

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. A growing trend towards sustainable production methods in the seaweed sector oﬀers opportunities to exporters of seaweed extracts in developing countries. However, the trend towards processing in countries of origin and negative press of possible harmful eﬀects of seaweed extracts and food additives are hindering demand. In addition, the global COVID-19 pandemic poses challenges to seaweed extract exporters.

Trend towards processing in countries of origin In recent years, there has been a shift towards processing seaweed extracts in countries of origin. This could be a challenge for seaweed exporters in developing countries, as it changes the structure and the ability to move in the seaweed extracts supply chain.

For example, as it enables producing countries to add value to harvested materials, Indonesia is increasingly focusing on the in-country processing of agar and carrageenan as a raw material. This is supported by Switzerland Global Enterprise. This trend is changing the dynamics in the supply chain of seaweed extracts, especially because some countries will not have access to raw materials previously sourced from Indonesia. However, this process requires substantial investments in technology and research & development. Therefore, moving up the supply chain may be an obstacle for suppliers of seaweed extracts in developing countries.

To prepare, exporters of seaweed extracts in developing countries should keep in mind that European buyers are interested in sourcing seaweed extracts. Exporters must also ensure that the quality of their seaweed extracts is high, as there is also substantial production in Europe. Adopting quality management standards and acquiring certiﬁcation helps to demonstrate quality. It also increases the credibility of exporters in developing countries on the European food market.

Examples of quality standards and certification include International Organization (ISO) 22000:2018 and 9001 certification and Food Safety Systems Certification (FSSC 22000). In addition, exporters should inform European buyers of what certification they have and display this on marketing materials and on the company website. This will help them prepare and compete with other suppliers. The Indonesian company Indo Gum offers carrageenan that is FSSC 22000 certified, which it clearly displays on its website.

Figure 11: Examples of standards and certiﬁcations

Tips: Ensure you provide high-quality product samples and always deliver a high-quality consistent product between batches and across all orders. This is because high quality is one of the main requirements of European buyers when sourcing seaweed extracts.

Read the CBI study Entering the European market for seaweed extracts, which provides information about standards and certiﬁcation for seaweed extracts, as well as mandatory requirements to enter the European market.

Adopting sustainability standards oﬀers opportunities Demand for sustainably produced products is increasing across Europe. European consumers and retailers are putting more pressure on companies to ensure their products are made sustainably. As a result, sustainability is becoming an important requirement for European buyers. Sustainable seaweed production is expected to become more important in the coming years. Thus, adopting sustainability standards oﬀers opportunities to exporters of seaweed extracts in developing countries.

Apart from its beneficial properties and advantages for the food industry, seaweed offers several environmental benefits; these include seaweeds absorbing carbon dioxide from the atmosphere and reducing the acidification of water, as well as production being less resource intensive on resources such as agricultural land and water. Seaweed production can also provide an alternative livelihood to coastal communities, and as a majority of fisheries are depleted, seaweed cultivation presents employment opportunities.

The ASC-MSC Seaweed Standard for sustainable seaweed was developed by the Marine Stewardship Council and the Aquaculture Stewardship Council in 2017. It has a number of requirements for seaweed harvesting and farming practices. To capitalise on this opportunity, exporters of seaweed extracts in developing countries should invest in resources to ensure their seaweed is sustainably sourced. This is because European buyers take notice when suppliers put in extra eﬀort to ensure their ingredients are sustainable. In addition, exporters should consider if there is a business case for them to obtain standards such as the ASC-MSC Seaweed Standard, as this can increase credibility on the European market.

To further capitalise on this opportunity, exporters should create marketing stories highlighting the sustainable production of their product, which can then be displayed on their company website and marketing materials. European buyers should also be informed. By using marketing stories, exporters can set themselves apart from their competition.

Tips: Promote the sustainable and ethical aspects of your production process if your seaweed is not certiﬁed. Doing so makes you more appealing to European buyers.

Use scientific data and certifications to back up your claims. The most relevant certification for sustainable seaweed is the ASC-MSC Seaweed Standard.

Create a marketing story about the sustainable production of your seaweed extract and ensure you clearly communicate it, as this will make you more attractive to buyers.

Be prepared to provide documents and marketing materials about how sustainable and traceable your seaweed extracts are before approaching buyers. Buyers may require this because they can use this information as a selling point when approaching manufacturers.

Negative media about food additives hindering demand In recent years, food additives such as carrageen have come under the spotlight because of safety concerns. This poses a challenge for exporters of seaweed extracts in developing countries.

Some studies have indicated that carrageenan may cause ulceration in the large intestine, ulcerative colitis, colorectal and liver cancer, inflammation, as well as foetal toxicity and birth defects. In addition, carrageenan is banned in baby food products, such as baby formula. Alternatives, such as gum arabic, guar gum, agar and gelatine are considered healthier. Research has shown that degraded carrageen or poligeenan has dangerous, inflammatory effects. Evidence of side effects of food-grade carrageen is limited to animal and cell studies.

However, in 2018, the European Food Safety Authority (EFSA) found carrageenan to be non-toxic below certain levels of consumption (75mg/kg bw per day). As a result, despite the negative publicity, carrageenan is allowed as a food additive by EU regulations in food products within its prescribed limits. However, the EFSA stated this “should be considered temporary”, thereby creating uncertainty for carrageenan in the European market. This may dampen demand until the matter is resolved.

To mitigate this challenge, exporters of seaweed extracts in developing countries should reassure European buyers that their product is safe because it is allowed on the European market. For example, focus on carrageenan being allowed on the European market within its prescribed limits.

To further mitigate this challenge, exporters should familiarise themselves with the beneﬁcial properties and advantages of their seaweed extract for the food industry. Examples are carrageenan’s thickening properties, high moisture content and ability to be used in a wide range of applications. This should be clearly communicated to buyers. Tips: Spend time educating yourself about the beneﬁcial properties and advantages of your seaweed extract for the food industry. Doing so will allow you to reassure European buyers that may have concerns.

See the CBI study What trends create opportunities or risks in the European market for natural food additives? Here, you can ﬁnd more information on what trends are present in the European food market, how to take advantage of them and how to prepare for the risks.

COVID-19 creates challenges for exporters of seaweed extracts The global coronavirus pandemic is creating a number of challenges for exporters of seaweed extracts in developing countries. Challenges facing exporters are likely to remain for the foreseeable future, as diﬀerent states and governments around the world work to tackle COVID-19 with diﬀerent measures.

Lockdown and quarantine measures and import and export restrictions imposed by states and governments are key challenges facing exporters, as they disrupt supply chains. Delays in receiving orders and increasing delivery costs have been cited by European buyers of seaweed extracts as the challenges they face. One European buyer of seaweed extract stated in an interview that “transport times were longer” and that the “transportation cost has of course increased because of the surcharge”.

There are a number of ways exporters of seaweed extracts in developing countries can prepare for the challenges posed by COVID-19 and its associated risks.

One way is to regularly check government websites and/or contact government/trade ministries to request information on emergency measures in place because of COVID-19 and get guidance on exporting. Exporters should also look at the government websites of countries they are exporting to and check their latest rules as well as guidance on imports.

Exporters can also contact freight and logistics companies to ﬁnd out about the latest transportation and freight procedures and prepare for them. Exporters need to adjust their businesses to meet the challenges presented by the COVID-19 pandemic. Keeping existing customers informed about their orders as well as informing them of any possible delay is also advisable.

Tips: Visit and review the information on the ITC Market Access Map’s COVID-19 Temporary Trade Measures, which provides the latest information on trade measures imposed by states and governments globally. Doing so will give you the latest information on restrictions in your country and the country you are exporting to.

Carefully assess and factor in likely eﬀects of COVID-19 before agreeing terms with European buyers. Factors to consider include longer delivery times, unexpected waits and higher transport costs.

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

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