Paste food color comes in a "tub" that looks very similar to the container that the powder food color comes in. CK as well as Wilton and other companies make the paste food color. A lot of times you will notice that the packaging on these colors does say "gel food color". For some reason, they changed the name after all these years. Back when I started decorating cakes these were all called paste food color. They do still have a different consistency and better color than a gel or even a liquid food color.
I recommend using paste food color to color your icing. It works very well to color buttercream or fondant. You can achieve a nice color with paste food coloring in most cases. The exception is when you need a dark color like red, black, or something of that nature. The paste colors will color the icing quickly so you do not have to add a lot of it, and it will not change the consistency of your icing. Again, the exception being with dark colors of icing.
For instance, the fuchsia paste color will give you a really nice hot pink color. The lemon yellow will give you a nice vivid yellow color. The paste colors come in lots of different colors too.
Here is where the powdered food color comes in. To make colors that you are having a hard time getting like dark colors and such I use a combination of paste food color and powdered food color. This cuts back on the amount of each that you need to use. Keep in mind though, that I only do this for the buttercream icing.
Read how I make dark colored icing.
The powdered food color does not have a taste to it either. So, adding a larger amount of it will not change the flavor of your icing. This is another great thing about the powder. By using a small amount of paste color first, then adding the powdered color the taste and the consistency of the icing will not be effected.
However, with fondant icing I have never had any luck using the powder color. It does not blend well with the fondant. I always use the paste food color in fondant. It does make it difficult to get some darker colors with fondant. The fondant does hold up better to more color than the buttercream though. I have used the spray color a lot with fondant when i need a darker shade. I just build up several layers with the spray. It works well for that.
Also note powdered food color is a little hard to find. The best place I have found it is online at candylandcrafts.com
See more about using powdered food color on our making dark icing page.
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