A research report indicates that the US HHS and FDA announced plans to gradually phase out petroleum-based synthetic food dyes, with natural color demand in the US market expected to surge. Domestic natural color companies are positioned to benefit from the US synthetic dye elimination plan, with particular attention recommended for Chenguang Biotech Group Co.,Ltd. (300138.SZ). The company is actively promoting market applications of paprika extract, lycopene, lutein and other products in the natural color segment, and is expected to benefit from the US synthetic dye phase-out plan.
Key points from the analysis:
Event: US HHS and FDA announced plans to gradually phase out petroleum-based synthetic food dyes, with natural color demand in the US expected to surge.
On April 22, 2025, the US Food and Drug Administration (FDA) and the US Department of Health and Human Services (HHS) announced a series of measures aimed at eliminating all petroleum-based synthetic colors from the US food supply by the end of 2026. Specific measures include: 1) FDA will establish national standards and timelines encouraging voluntary industry transition from synthetic to natural colors. 2) FDA will revoke authorization for two synthetic colors and eliminate use of six major synthetic colors in "voluntary" form by end of 2026. 3) FDA will accelerate review of natural colors. 4) FDA plans to collaborate with NIH on comprehensive research to understand how food additives may affect children's health and development.
Natural colors expected to fully replace synthetic colors in US market
On one hand, referencing European precedent, in 2008 the EU required disclosure of six synthetic color usage information on food packaging, virtually eliminating their use in food and beverage products. On the other hand, US food retail networks typically span multiple states, so synthetic color bans in individual states would lead companies to switch to natural colors across the entire US market as quickly as possible.
US natural color company Sensient Technologies stated that the US synthetic-to-natural color conversion represents "the largest opportunity in company history." Over half of US states have initiated legislative activities targeting synthetic colors in food, with numerous leading brand food companies announcing plans to complete the transition to natural colors by the end of 2027.
Currently, natural color penetration rates exceed 80% in Europe, dominate in Japan, approach one-third in the US, represent about 25-30% in Latin America, and are at or below US levels in China. The replacement opportunity in China, the US, and Latin America remains quite substantial.
Natural color usage increases 4-12 times compared to synthetic colors, with natural color demand expected to surge
According to Sensient Technologies, due to natural colors having lower color concentration than synthetic colors, achieving the same color tone would require 4-12 times more color usage. Taking sunset yellow as an example, US sunset yellow color demand in 2025 is approximately 2,500 tons; if replaced with natural colors, this would generate at least 10,000 tons of new natural color demand.
According to Mordor Intelligence, global yellow color demand accounts for only 34% (sunset yellow and tartrazine colors), making the replacement market for allure red colors, which account for over 56%, even more substantial. Currently, natural color alternatives for synthetic colors like allure red, sunset yellow, and tartrazine include beetroot red, carmine red, paprika extract, lycopene, lutein and other products.
Risk factors: US natural color policy falling short of expectations; food safety risks; upstream agricultural product price volatility and supply risks; trade policy risks.
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