Specialty Food Ingredients Market – Insights and Trends

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.

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

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