Annatto, sometimes called Roucou, is a derivative of the achiote trees of tropical regions of the Americas, used to produce a red food coloring and also as a flavoring. Its scent is described as "slightly peppery with a hint of nutmeg" and flavor as "slightly sweet and peppery".

Annatto is produced from the reddish pulp which surrounds the seed of the achiote (Bixa orellana L.). It is used in many cheeses (e.g., Cheddar, Red Leicester, and Brie), margarine, butter, rice, smoked fish, and custard powder.

Annatto is commonly found in Latin America and Caribbean cuisines as both a coloring agent and for flavoring. Central and South American natives use the seeds to make a body paint, and lipstick. For this reason, the achiote is sometimes called the lipstick-tree. Achiote originated in South America and has spread in popularity to many parts of Asia.
The heart-shaped fruits are brown or reddish brown at maturity, and are covered with short, stiff hairs. When fully mature, the fruits split open exposing the numerous dark red seeds. While the fruit itself is not edible, the orange-red pulp that covers the seed is used as a commercial food coloring and dye (similar to turmeric). The achiote dye is prepared by stirring the seeds in water or oil.

History
Annatto has long been used by indigenous Caribbean and South American cultures. It is believed to originate in Brazil. It was probably not initially used as a food additive but for other reasons, such as body painting, to ward off evil, and as an insect repellent. The ancient Aztecs called it achiotl, and it was used for Mexican manuscript painting in the sixteenth century.

Uses
Many Latin American cuisines traditionally use anatto in recipes of Spanish origin that originally call for saffron; for example, in Arroz con Pollo, to give the rice a yellow color.
In Venezuela, annatto (called locally onoto is used in the preparation of hallacas, perico, and other traditional dishes. In Brazil, both annatto (the product) and the tree (Bixa orellana L.) are called urucum and the product itself may also be called colorau. In the Caribbean islands, both fruit and tree are popularly called achiote or bija (pronounced "bee-ha") instead of Bixa.

In Jamaica, annatto has had many uses over the centuries, including as a food dye, body paint, treatment for heartburn and stomach distress, sunscreen and insect repellent. In the Philippines, it is called atsuete and is used as food coloring in traditional dishes.
It is a major ingredient in the popular spice blend "Sazón" made by Goya Foods.

As a food coloring
As a food additive, annatto has the E number E160b. The fat soluble part of the crude extract is called bixin, the water soluble part is called norbixin, and both share the same E number as annatto. Annatto seed contains 4.5-5.5% pigments, which consists of 70-80% bixin.

In the United States, annatto extract is listed as a color additive “exempt from certification” and is commonly considered to be a natural color. The yellowish orange color is produced by the chemical compounds bixin and norbixin, which are classified as xanthophylls, a type of carotenoid. However, unlike beta-carotene, another well-known carotenoid, they do not have the correct chemical structures to be vitamin A precursors.
The more norbixin in an annatto color, the more yellow it is; a higher level of bixin gives it a more reddish shade. Unless an acid-proof version is used, it takes on a pink shade at low pH.

Cheddar cheese is often colored and even as early as 1860 the real reason for this was unclear: English cheesemaker Joseph Harding stated "to the cheese consumers of London who prefer an adulterated food to that which is pure I have to announce an improvement in the annatto with which they compel the cheesemakers to colour the cheese".

One theory is that cheeses that were excessively fatty or rich turned a somewhat yellow color, and annatto was added to make cheaper cheeses appear to have more fat content, which would bring a higher price.

As an allergen
Annatto has been linked with many cases of food-related allergies, and is the only natural food coloring believed to cause as many allergic-type reactions as artificial food coloring. Because it is a natural colorant, companies using annatto may label their products "all natural" or "no artificial colors".

It is well known that synthetic food colours especially some azo dyes can provoke hypersensitivity reactions such as urticaria, angioneurotic oedema, and asthma (Michaelsson and Juhlin, 1973, Granholt and Thune, 1975). Natural food colours are scarcely investigated with respect to potential allergic properties. Annatto extract, a commonly used food colour in edible fats e.g. butter, has been tested in patients.
Among 61 consecutive patients suffering from chronic urticaria and/or angioneurotic oedema 56 patients were orally provoked by annatto extract during elimination diet.
Challenge was performed with a dose equivalent to the amount used in 25 grammes of butter.
Twenty six per cent of the patients reacted to this colour 4 hours (SD: 2,6) after intake. Similar challenges with synthetic dyes showed the following results: Tartrazine 11%, Sunset Yellow FCF 17%, Food Red 17 16%, Amaranth 9%, Ponceau 4 R 15%, Erythrosine 12% and Brillant Blue FCF 14%. The present study indicates that natural food colours may induce hypersensitivity reactions as frequent as synthetic dyes.