Dive Brief:

• Ingredients supplier Sensient Technologies is investing up to $250 million to expand natural color production as it races to capitalize on a surge in reformulation demand from food companies shifting away from artificial dyes.
• The company plans to add 28,800 square feet of production capacity at its largest natural color plant in St. Louis, which is currently 500,000 square feet.
• The plant expansion is “one of the many capital investments planned,” in response to the turn away from artificial colors, the company said. Sensient intends to grow manufacturing capacity, supply chain and personnel in the coming years.

Dive Insight:

Sensient’s natural color business has seen soaring growth within the past year, and the company is quickly increasing its capabilities as it targets $1 billion in sales within the segment, per its most recent earnings call.

As consumers become more skeptical of highly processed foods with artificial ingredients, companies have moved to reformulate products by removing sugar and sodium, while repositioning other ingredients as clean label. Transitioning to natural colors has become one of the top reformulation priorities for food companies, as U.S. Secretary of Health and Human Services Robert F. Kennedy Jr. and the “Make America Healthy Again” movement put pressure on the industry to voluntarily ditch artificial dyes by the end of this year.

Sensient CEO Paul Manning said in a February earnings call that natural color conversion activity is still in the early stages, but food companies are starting to move “aggressively,” which creates an opportunity for the ingredients provider.

“This conversion to natural colors is the single largest opportunity in the company’s history, and we continue our preparations to capture a substantial portion of the commercial opportunities,” he said.

The company is making a big bet on natural colors, as Manning expects a significant ramp-up in conversion activity in the latter half of 2026. Manning acknowledged the company’s profit leverage will be compromised as it heavily invests in expanding production capacity and research and development to “position us to maximize our natural color conversion opportunities.”

The company said it has $100 million of synthetic color revenue that could potentially be converted to natural colors. Converting to natural colors results in revenue multiples of approximately 10:1 on average for Sensient, Manning said, because companies need to use more of a product to achieve the desired color shade.

“We are going to invest very, very strongly. We are not going to be late,” he said. “We are going to capture the vast majority of these conversion activities.”