June 17, 2025 - Due to various health concerns and food safety, in 2022, the Food and Drug Administration (FDA) announced it is going to ban the use of Red Dye 3, a petroleum-based synthetic color additive, from food and beverages as well as certain medication. The ban will go into effect in January 2027 for food and beverages and January 2028 for medication.

Most recently, in April 2025, the FDA announced its plans to phase out more dyes, specifically eight petroleum-based synthetic dyes. Manufacturing and distribution companies, specifically food and beverage businesses, need to prepare for the upcoming regulations and the potential cost increases associated with this transition.

The transition to researching new substitutes for the existing dyes and developing specific recipes, combined with the surge in tariffs, may increase the price of food and beverage products containing these dyes. This shift could also create new market opportunities among the health-conscious consumer.

How to Prepare for the New Regulations

To gain a competitive advantage in the market, manufacturers should initiate the process of finding alternatives for banned dyes immediately. Being proactive will also demonstrate the company’s commitment to the health and safety of its consumers. A few immediate items to consider are:

• Research and develop (R&D) the best alternative for Red Dye 3 and other petroleum based synthetic dyes.
• Update packaging and labels showing ingredients listing.
• Add a warning label on products containing these dyes.
• Update production processes to include the new ingredients.
• Promote products that do not include harmful dyes and ingredients to consumers.
• Assess if there is a necessity for financing assistance to create new products.
• Begin to phase out inventory containing these dyes.

How to Develop a Long-Term Approach for the New Guidelines

When developing your company’s long-term solution to the implementation of the new FDA regulation, manufacturers should consider three key factors.

• Establish clear communication and collaboration to understand the company’s objectives and expectations to implement and comply with new regulations.
• Evaluate the need for financial planning, forecasting, budgeting, and other reporting. If considered beneficial for the business, engaging a third-party provider logistics company can aid with new compliance with specific industry best practices and standards, regulations, and mandatory licenses and certifications. Moreover, sourcing new and natural ingredients can cause a disruption in the company’s relationship with its existing supply chains. This might result in the company having to find new suppliers and increased costs for the company.
• Company leaders should consider exploring the R&D tax credits available to help with any potential additional expenses. There are several R&D credits available for food and beverage companies related to the development of new or improved products such as: ingredients and/or formulations, production process for new food products, and testing products to meet certain federal, state, and local health regulations.

How Citrin Cooperman Can Help

In today’s competitive and unpredictable market environment, it is beneficial for food and beverage manufacturing companies to understand the potential impact these new FDA regulations may have on their business. Marketing for products containing new ingredients, adhering to new laws and regulations, and investing in R&D can lead to additional cost.

Citrin Cooperman’s Food and Beverage Industry Practice is comprised of professionals who understand the challenges facing the industry. If you would like guidance regarding R&D credit opportunities and your company’s strategy to transition away from Red Dye 3 and other petroleum-based dyes, contact your Citrin Cooperman representative today.