LONDON (Reuters) - As a slowdown in emerging markets takes the shine off shares in consumer goods makers like Nestle (>> Nestle SA), Unilever (>> Unilever plc), Danone (>> DANONE) and Procter & Gamble (>> The Procter & Gamble Company), hungry investors have been sampling more of the companies that supply them.

Scent and flavor makers such as Symrise (>> Symrise AG), Givaudan (>> Givaudan S.A.) and International Flavors & Fragrances (>> International Flavors & Fragrances Inc), and food ingredient names like Glanbia (>> Glanbia plc) and Kerry Group (>> Kerry Group PLC) are attractive, analysts say, because they're more resistant to weak consumer spending and benefit from health and wellness trends forcing so many brands to modify their products.

"The companies in those segments have exposure to faster growing specialty areas, serve a wide range of customers (from top brands to white label) and constantly invest in new technology," Berenberg analysts said this month. They upgraded Germany's Symrise to "buy" and Switzerland's Givaudan to "hold".

JPMorgan Cazenove estimates the European food ingredients sector on average will see 6 percent earnings growth in 2014, while European food producers will see no growth.

Indeed, consumer staples stocks have been battered by currency devaluations and cooling demand in emerging markets and lingering economic malaise in Europe and the United States. Over the past 12 months, the top 25 global consumer staples stocks are still up 7.5 percent on average, but down 3.5 percent in the year to date, according to Reuters data.

By contrast, 2014 has favored ingredients. At Thursday's close Kerry was up 3 percent, IFF 5 percent, Symrise 6 percent and Givaudan 9 percent.

Still, there are outliers. Lower European sugar prices are squeezing profits at German sugar company Suedzucker (>> Suedzucker Mannheim Ochsenfurt AG), while Britain's Tate & Lyle (>> Tate & Lyle PLC) on Thursday forecast sharply lower prices for its Splenda sweetener due to competition from cheaper Chinese sucralose makers. Both companies' shares are down by double digits.

"There are some very, very good businesses in that space, but I don't think you can just bundle them all together, as you can see with Tate & Lyle," said Exane BNP Paribas analyst Jeff Stent. "If you take a stock like Kerry, we've been buyers of that stock for as long as we've been analysts at Exane."

EQUAL OPPORTUNITY SUPPLIER

In developed markets, makers of everything from beer to bread to bodywash have lost some ground to generic, white-label products. But for the ingredients makers, those brands are customers. And in less mature markets, the growing customer base is local manufacturers.

Kerry Group's deal to supply dairy ingredients to Chinese infant nutrition company Beingmate shows how the sector can benefit from the development of local players who are stepping up their game against multinationals. Companies like Natura Cosmeticos (>> Natura Cosmeticos SA) from Brazil and Grupo Bimbo (>> Grupo Bimbo S.A.B. de C.V.) from Mexico are just two developing market consumer companies actively expanding into new markets.

Analysts at Davy Research who follow the sector say that as local manufacturers get bigger and more savvy, they are turning to internationals for more reliable and high-quality supply.

That is especially true in China, where a 2008 scandal involving tainted milk made consumers wary of local brands.

China's top milk producer, China Mengniu Dairy (>> China Mengniu Dairy Company Limited), this week agreed to sell more of itself to Danone as it tries to win customers. Denmark's Arla Foods , another dairy supplier, also has a stake in Mengniu.

HEALTHY INNOVATION

The average consumer goods maker spends about 8 to 10 percent or more of its sales on advertising and marketing and just 2 percent on research and development. Over time, R&D spending has come down as categories mature and companies cut costs, leaving them to outsource technical development to their suppliers.

"I think they have always been marketing companies," said JPMorgan analyst John Faucher. "As the technologies and categories become more complicated, they simply need to cast a broader net."

By contrast, flavor and fragrance companies often spend more than 7 percent of sales on R&D, and have been buying smaller makers of specialized ingredients for which they can charge higher prices and boost margins.

"They want your M&M to be the right blue and for the melt characteristics to be exactly right," said a banker who has advised on deals in the sector. "They're not trying to sell flour to bakers."

Last year, Tate & Lyle bought a maker of oat beta glucan, and in January IFF bought a maker of complex specialty ingredients, while Symrise is trying to take over Sweden's Probi (>> Probi AB), which makes probiotic ingredients for yoghurt. Israel's Frutarom Industries (>> Frutarom Industries Ltd) has bought 12 companies since 2011.

A technical arsenal is handy as brands yield to more pressure to make their goods healthier or more natural. This month alone, Kraft Foods (>> Kraft Foods Group Inc) removed an artificial preservative from its Singles cheese, and U.S. Subway restaurants removed a chemical from its bread found in rubber yoga mats. A U.S. Senator has since called on regulators to ban the chemical.

In that light, Tom Pirko of Bevmark Consulting said ingredients companies that are entrepreneurial and creative write their own tickets.

"Those who foresee the future, are generally big winners."

(Editing by Will Waterman)

By Martinne Geller