Functional Protein Market

Functional protein market had a value of USD 5.24 billion in 2022. It is expected to expand from USD 6.20 billion in 2023 to USD 15.98 billion by 2030, with a Compound Annual Growth Rate (CAGR) of 14.48% between 2023 and 2030. The global COVID-19 impact has been remarkable, with functional proteins experiencing below-average demand fluctuations worldwide during the pandemic. Our analysis reveals that the market's growth in 2020 was only 8.54%, significantly lower than the average year-on-year growth between 2017 and 2019. This increased CAGR can be attributed to the growing trend of consuming plant-based proteins and increased consumer expenditure on healthy food products.

COVID-19 Impact

In the second quarter of 2020, the global supply of commodities was severely constrained due to the COVID-19 pandemic. This led to significant disruptions in supply chains, causing numerous products to remain unavailable in the market. Consequently, there was a reduced availability of both raw materials and finished goods, impacting the overall revenue of this industry, which experienced subpar growth in 2020.

Despite the overall decline in the functional proteins market, there was a notable increase in the consumption of plant-based proteins during and after the COVID-19 pandemic. The shift towards plant protein and protein concentrates was already underway in the industry, but the pandemic accelerated this trend. Consumers who became more health-conscious due to the pandemic began to prefer plant-based protein products. This preference can be attributed to consumers seeking products designed for wellness, health, and sustainability.

Latest Trends

Over the past decade, there has been a gradual rise in consumer interest in alternative proteins, particularly plant-based options. Consequently, there has been a notable increase in the purchase of plant-based protein alternatives for meat and dairy products. Meat alternatives, in particular, have experienced rapid growth in recent years. Additionally, plant-based products like soy, oat, rice, and nut beverages have gained popularity as protein sources.

Several factors contribute to this shift, including heightened consumer focus on health, ethical considerations, and concerns for animal welfare. Some consumers are drawn to plant-based proteins due to the perceived health benefits, while others are motivated by a desire to reduce their consumption of meat-based products. Embracing this trend, both in developed and developing nations, presents promising growth opportunities for the functional protein industry in the forthcoming years.

Driving Factors

Increasing Demand for Plant-Based Proteins Boosts Market Growth

Plant-based products have gained popularity as healthier and more sustainable alternatives to meat products, leading to an increasing shift among consumers towards plant proteins in recent years. Among these, pea protein and soy protein stand out as the major plant-based protein products poised for substantial growth in the forecast period. In the realm of alternative proteins, plants take the lead due to their minimal environmental footprint and significant health advantages. While other alternative proteins like insect proteins, lab-grown meat proteins, and algae proteins exist, the demand for plant-based proteins plays a pivotal role in driving overall growth in the protein market. With the ready availability of plants and the advent of new environmentally-friendly technologies, this factor is expected to further stimulate market expansion.

Increased Spending On Healthy Supplements to Drive Market Growth

In recent years, there has been a significant global demand for health-focused supplements, notably dietary supplements. Functional proteins and dietary supplements have found extensive use in competitive sports, body sculpting, and muscle-building endeavors, with millennials being prominent users of these protein types. Furthermore, consumers are increasingly turning to various health-oriented functional supplements as meal replacements in the management of conditions such as diabetes, chronic diseases, and underweight concerns. Additionally, dietary supplements are widely embraced by cancer patients seeking to bolster their immune systems against the disease. Given the diverse applications of functional proteins, their market share in the global market is expected to rise in the coming years.

Restraining Factors

In recent years, there has been a noticeable surge in consumer interest in plant-based products, primarily driven by concerns about animal welfare and safety. While some individuals abstain from meat products to mitigate health risks and environmental impacts, animal welfare remains a compelling motivation for others to explore meal alternatives.

Furthermore, the conventional meat production process, involving animal rearing, is closely linked to pressing global issues such as greenhouse gas emissions, deforestation, and freshwater depletion. Despite recent attempts to develop alternative methods for meat production, consumer attitudes towards animal cruelty are evolving. As more consumers shift towards plant-based diets, it is anticipated that the market share of the animal protein segment will decrease in the coming years. This shift poses a significant challenge to the growth of the animal and dairy protein sector.

Segmentation

By Source Analysis

Regarding the protein source, the market is categorized into two segments: plant-based and animal-based. Currently, animal sources dominate the global market, boasting the largest market share. This is largely due to the widespread popularity of milk-based protein supplements, their associated benefits, and the demand for meat and seafood products, such as pork, fish, and other animal-derived meats.

However, there is a noticeable shift in consumer buying patterns towards plant-based proteins in developed countries. Conversely, consumers in developing countries, where spending power is on the rise, tend to allocate more of their budgets to meat-based products. In these regions, particularly in tier 2 and tier 3 cities, animal and milk protein powders enjoy strong demand, often surpassing the preference for plant-based alternatives.

Given that major countries in Asia Pacific, Africa, South America, and the Middle East are in a developmental phase, the animal-based protein segment is expected to maintain dominance in these regions. Nevertheless, its market share is anticipated to decline as plant-based proteins gain popularity.

By Application Analysis

Functional proteins find diverse applications in the food and beverage sector, including baked goods, bars, beverages, culinary preparations, frozen desserts, infant foods, meat products, sauces, snacks, and more. These proteins play a pivotal role in enhancing food texture and elevating taste and flavor.

The food and beverage industry is among the world's fastest-growing sectors, with functional food and beverages as integral components. Consequently, the expansion of the food and beverage industry is poised to propel the market for functional enzymes and proteins in food and beverage applications.

In addition to their use in the food and beverage sector, functional enzymes and proteins also contribute to animal feed products, augmenting their nutritional value and overall health benefits. This trend is particularly prominent due to the rapid growth of the poultry and livestock industry. With the increasing commercialization of livestock farming, the application of functional enzymes and proteins in animal feed is expected to exhibit steady growth with a consistent Compound Annual Growth Rate (CAGR) in the foreseeable future.

The dietary supplements industry is a rapidly expanding segment within the nutraceuticals sector, driven by consumers' growing health consciousness. Furthermore, heightened awareness among baby boomers regarding the consumption of health supplements positions dietary supplements as an appealing application segment within this industry.

Regional Insights

The Asia Pacific region commands the largest share of the functional protein market. This growth can be attributed to the region's robust economic development, notably driven by the rapid expansion of countries like China, India, Australia, and Japan. Population growth also plays a pivotal role in propelling the protein market in Asia Pacific.

Furthermore, the market's expansion in this region is spurred by various socio-economic factors, including rising incomes, increased purchasing power, aging populations, and urbanization. An emerging trend in the region is the growing recognition of the importance of protein in maintaining a healthy diet. The economic progress of Asia Pacific is evident in the changing dietary habits of lower- and middle-income families in developing nations within the region. With Asia Pacific expected to continue evolving rapidly in the forecast period, it is anticipated to maintain its dominant position and capture the largest market share.

North America and Europe, being developed regions, are experiencing shifts and transformations in consumption patterns. These regions are witnessing an uptick in the consumption of protein supplements as part of daily diets. Europe and North America exhibit the highest per capita consumption of functional enzymes and proteins. Over the past decade, there has been a noticeable increase in the daily per capita supply of fats and proteins, with North America and European countries leading the way.

South America and the Middle East & Africa regions are gradually emerging players in the functional protein industry. South America features countries like Argentina, Brazil, Chile, and Peru, where economic growth among lower- and middle-income families is driving increased expenditure on health supplements. As income groups transition from lower to middle and middle to upper-middle brackets, sustained spending on health supplements is expected, which will contribute to the market's growth in these regions in the long term.

Key Industry Players

The market's notable growth is primarily centered around plant-based proteins, prompting numerous market players to implement various strategies to expand into different regional markets and bolster their presence in new ones. Across multiple regions, there is a proliferation of startup companies vying with established global players in terms of innovation. The influx of these startups has prompted many established companies to compete fiercely for market share in the functional protein industry.

For instance, Maple Leaf Foods, a renowned North American company, has introduced its line of functional plant proteins in North America and made substantial investments in plant protein products. They recently allocated a significant investment of USD 100 million to their Indianapolis plant in the United States. Baby boomers are increasingly viewed as a pivotal demographic for the plant-based protein market, which offers a wide array of innovative products, including options like pea protein and microalgae. Companies are also actively working on enhancing the taste of plant protein products to attract a broader consumer base.

List Of Key Companies Profiled:

• DuPont Nutrition (Delaware, U.S.)
• Essentia Protein Solutions (Iowa, U.S.)
• Glanbia, Plc (Kilkenny, Ireland)
• ProtiFarm (Ermelo, Netherlands)
• ADM (Illinois, U.S.)
• AMCO Proteins (New Jersey, U.S.)
• DSM (Heerlen, Netherlands)
• Merit Functional Foods (Manitoba, Canada)
• Plantible Foods (San Marcos, U.S.)
• Roquette Frères (Lestrem, France)

Key Industry Developments:

• In September 2021, Farmers Edge Inc. and Merit Functional Foods (Merit) initiated a pilot program primarily aimed at enhancing the production, quality, and market potential of protein crops. This program is anticipated to enhance the effectiveness and sustainability of Merit's ingredient production.
• In January 2020, Nestlé entered into a partnership with Burcon and Merit with the goal of creating and manufacturing plant-based proteins. This collaboration is poised to expedite Nestlé's efforts in developing plant-based alternatives for meat and dairy products.

Functional Protein Market Segmentation:

By Source

• Animal
• Plant

By Application

• Functional Food & Beverages
• Animal Feed
• Dietary Supplements

By Geography

• North America
• Europe
• Asia Pacific
• South America
• Middle East and Africa