The Natural Color Revolution: Investing in the Future of Food Reformulation

The global food industry is undergoing a seismic shift. By 2027, The Hershey Company aims to eliminate synthetic dyes from its products—a bold move that reflects a broader industry-wide pivot toward natural ingredients and clean-label transparency. This transition, driven by consumer demand for healthier products and regulatory pressures like the FDA's ban on Red No. 3, is creating significant opportunities for investors in natural color ingredient suppliers and companies leading the reformulation race.

The Catalyst: Consumer Demand and Regulatory Scrutiny

Consumers are no longer satisfied with artificial additives. Over 60% now prioritize health and sustainability, with a willingness to pay a premium for products using natural ingredients. Regulatory bodies are responding: the FDA's 2025 ban on Red No. 3, linked to carcinogenic risks, has accelerated the shift. Companies like Hershey are not just complying—they're positioning themselves as pioneers.

This trend is not temporary. The 2025 Dietary Guidelines for Americans emphasize reduced salt and sugar intake, while the “Food is Medicine” movement gains traction. Investors should note that this is a structural shift, not a fad.

The Leaders to Watch: Natural Ingredient Suppliers and Reformulation Experts

The companies best placed to profit are those already capitalizing on this shift. Here are the key players and their financial trajectories:

1. Archer-Daniels-Midland (ADM)

ADM's nutrition segment saw a 13% revenue increase in Q1 2025 due to soaring demand for natural colors and flavors. CEO Juan Luciano highlighted surging requests for ADM's natural color solutions, which include beet juice and anthocyanin extracts. ADM's scale and global supply chain give it an edge in meeting the growing demand for scalable, cost-effective natural alternatives.

2. McCormick & Company

McCormick's expertise in flavor systems positions it uniquely to support reformulation. The company reported heightened “reformulation activity across its customer base,” including partnerships to eliminate artificial dyes and enhance nutritional profiles. Its 2025 Q1 results showed strong growth in custom solutions for clean-label products, with CEO Brendan Foley emphasizing a focus on functional foods like high-protein and hydration-driven offerings.

3. Ingredion

Ingredion's texture and healthful solutions unit saw a 34% rise in operating income in early 2025, fueled by demand for clean-label ingredients. The company's portfolio includes plant-based thickeners and natural colorants derived from fruits and vegetables. This aligns perfectly with the industry's push for transparency and reduced artificial additives.

4. PepsiCo and Tyson Foods

While these are downstream players, their reformulation efforts signal the industry's urgency. PepsiCo aims to remove artificial dyes from Lay's by year-end . Tyson Foods is phasing out petroleum-based additives. Their actions validate the market's appetite for natural alternatives, indirectly boosting suppliers like ADM and McCormick.

Market Growth and Investment Opportunities

The global food and beverage market is projected to grow at a 6.2% CAGR, reaching $942 billion by 2029. Within this, natural colorants and clean-label solutions are the fastest-growing segments. Startups like Phyllome (automated plant factories) and Chef Robotics (AI-driven food tech) are innovating, but public companies like ADM and McCormick offer scalability and lower risk.

Investors should consider:
- Equity stakes in ADM, McCormick, and Ingredion for direct exposure to natural ingredient demand.
- ETFs tracking food and agribusiness stocks, such as the iShares Global Agriculture ETF (Agriculture) or the Invesco Global Agriculture ETF (PGAV).
- Long-term plays in sustainable packaging and traceability tech (e.g., DTech4U), which complement reformulation efforts.

Risks and Considerations

• Supply Chain Volatility: Natural ingredients like turmeric or spirulina may face price swings due to weather or geopolitical risks.
• Regulatory Lag: While the FDA is proactive, other regions may delay bans on synthetic additives, slowing demand.
• Consumer Fatigue: The “clean label” trend could plateau if perceived as oversaturated.

Conclusion: Betting on Necessity, Not a Trend

The shift to natural colorants is not optional—it's a necessity. With over 2,000 startups and established firms like ADM racing to meet demand, the winners will be those with scale, innovation, and a focus on sustainability.

For investors, the path is clear: allocate to ADM, McCormick, and Ingredion now. Their financials and strategic positioning align with a multiyear growth trajectory. The Hershey timeline is a milestone, but the real prize is the $942 billion market that's redefining what we eat—and how we invest.

The natural color revolution is here. Investors who act swiftly will reap the rewards.