The global specialty food ingredient market size is estimated to be valued at USD 134.7 billion in 2020 and projected to reach USD 178.3 billion by 2025, recording a CAGR of 5.8%.
The global specialty food ingredient market size is estimated to be valued at USD 134.7 billion in 2020 and projected to reach USD 178.3 billion by 2025, recording a CAGR of 5.8% during the forecast period. The demand for specialty food ingredient is increasing significantly, as they have various functional benefits and the awareness regarding clean label products have been increased in recent times.
Key Market Players in the Market:
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Market Dynamics
Drivers: Growth in demand for fortified food owing to rising health awareness
The global demand for fortified food is expanding at a robust pace. Functional food ingredients such as vitamins, minerals, antioxidants, hydrocolloids, prebiotics, amino acids, plant extracts, and carotenoids are the key ingredients of fortified food. The health-conscious population is rapidly expanding in emerging markets, which will drive the demand for the fortification of food. The nutritional consumption differences across regions contribute greatly to the apparent differences in the health of populations across the countries. Various factors such as increasing instances of chronic diseases and micronutrient deficiencies, growth of the middle class in emerging economies, new government fortification programs, growth of the world’s older population in regions such as Europe, and growing interest in health and wellness, owing to COVID-19, is expected to drive the sales of fortified foods, further driving the demand for functional and specialty food ingredients.
Restraints: High cost and limited availability of raw materials
Price is one of the major restraining factors in the specialty food ingredients market. Functional foods and premium products are comparatively uneconomical, owing to the ingredients used in them, which is likely to impact its growth in price-sensitive markets such as India, China, and South Africa. Specialty food ingredients are relatively expensive, owing to their superior quality. There are various fluctuations in raw material prices such as the prices of starch and sugar for sweetener ingredients. According to a report published by the FAO, in 2018, the starch price was quoted at nearly USD 507/ton, 44% higher than in October 2017. In addition, the quotations have exhibited considerable volatility throughout 2018. The price of sugar across the world keeps on fluctuating. According to FAO, the sugar price index has increased by 5.5% from December 2019 to January 2020, making the fourth consecutive monthly increase. The latest increase was propelled by a 17% drop in India’s sugar output, a 66% production fall in Brazil, one of the largest sugar-producing countries, and a 25% contraction in Mexico’s harvest.
Opportunities: Rise in number of end-use applications
The rising number of end-use applications, owing to the multifunctional attributes of various ingredients, is projected to create opportunities for growth within the specialty food ingredients market. Food processing ingredients such as emulsifiers are mostly utilized in bakery & confectionery, convenience foods, dairy & frozen desserts, and meat products. Flavors and colors are also mostly used for bakery and beverage applications.
Challenges: Lack of consistency in regulations pertaining to various ingredients
The food ingredient industry faces a legal obligation to abide by the norms and standards of various regulatory standards. International bodies such as the National Food Safety and Quality Service (SENASA), Argentina; Canadian Food Inspection Agency (CFIA), Canada; Food and Drug Administration (FDA); World Health Organization (WHO); and Committee on the Environment; Public Health and Food Safety (EU) are associated with food safety and quality regulations. These organizations have control over the usage of different ingredients and chemicals, including bitterness, used in food processing, directly or indirectly.
Target Audience:
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The food & beverages segment is projected to witness significant growth during the forecast period.
Based on type, the specialty food ingredient market is dominated by the food & beverage segment. The consumer trends such as easy-to-use, health & wellness, and clean label trends influence the overall market. The easy-to-use trend is due to the rapid urbanization in emergent markets. Consumers demand healthier ingredients in their food products. The growing obesity and diabetes incidences compel the consumers in emerging and developed economies to focus on an improved lifestyle.
The European region/ North American dominates the specialty food ingredients market with the largest share in 2019, whereas the Asia Pacific is expected to witness the highest growth rate.
In North America, the US dominated the specialty food ingredient market due to the high production and demand for clean label food & beverages. The global specialty food ingredients market is primarily driven by the rising demand for safe and plant-based products. The specialty food ingredients industry functions with legislators and regulators to deliver qualitative products to its end users. In the major markets.
The increase in the developed economy and per capita income has enabled the consumers to invest in more health and health-related services, in the Asia Pacific region. This is one of the major drivers for specialty food ingredients in the region. Apart from that, the millennial consumers are more health-conscious and open to experimenting with various ingredients, this is also thriving the market in the Asia Pacific.
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