Specialty Food Ingredients Market

In 2023, the global market for specialty food ingredients was valued at USD 148.2 billion, and it is expected to reach USD 196.2 billion by 2030, with a compound annual growth rate (CAGR) of 5.8% during the forecast period. According to EU Specialty Food Ingredients, these specialized ingredients play a vital role in food production by preserving texture, enhancing color, aiding processing, and providing additional health benefits. They encompass a wide range of components, from micro-ingredients like vitamins, minerals, and enzymes, to macro-ingredients such as specific proteins, fats, carbohydrates, fibers, and other substances. With their technological advancements and nutritional properties, these ingredients contribute to making food delicious, enjoyable, safe, sustainable, healthy, and affordable for consumers.

The market for specialty food ingredients is gradually expanding worldwide, both in terms of value and volume. This growth can be attributed to the extensive use of these ingredients in food and beverages, pharmaceuticals, cosmetics, and personal care products. Various regulatory bodies oversee this industry, including the US Food and Drug Administration (FDA), Enzyme Technical Association (ETA), the European Food Safety Authority (EFSA), the Association of Manufacturers, the Canadian Food Inspection Agency (CFIA), the Food Standards Australia New Zealand (FSANZ), and the Department of Agriculture, Fisheries, and Forestry in different regions.

Specialty Food Ingredients Market Growth Dynamics

Drivers: Due to rising health awareness there is increasing trend in consumption of fortified food.

Food fortification is a cost-effective strategy that offers proven health, economic, and social benefits. The global demand for fortified food is growing rapidly. In 2008 and 2012, the Copenhagen Consensus identified food fortification as one of the most cost-effective development priorities. The COVID-19 pandemic has further increased consumer awareness of food ingredients and nutrition, driving the growth of the specialty food ingredients market. In 2019, the International Food Information Council Foundation (IFICF) conducted surveys to understand consumer preferences for food and beverage labeling requirements.

To address nutritional deficiencies in the Asia Pacific and global markets, multinational food companies are implementing various measures for food fortification. Companies like Nestlé and Unilever have adopted a partnership approach to add both micro and macronutrients to their food products. For example, Nestlé partnered with the HarvestPlus program and agricultural research partners in India to fortify its products, such as cereals, and address nutrient deficiencies.

Restraints: Use of artificial/ synthetic ingredients in various applications resulting in health hazards.

However, the use of artificial and synthetic ingredients in various applications poses health risks and serves as a restraint. Some of these synthetic ingredients contain chemicals that can have significant health effects. For instance, benzaldehyde, found in flavors, contains hydrogen cyanide, which can lead to central nervous system depression and convulsions. Synthetic flavors made with amyl acetate, such as pear and banana flavors, may cause indigestion, chest pain, headaches, fatigue, and irritation of mucus membranes. Benzyl acetate can also cause gastrointestinal, bronchial, skin, and eye irritation. Furthermore, certain toxins like monosodium glutamate (MSG), diacetyl, and castoreum can be present in natural ingredients extracted from fruits or plants.

Mounting scientific evidence suggests potential adverse effects of synthetic and artificial ingredients on children's health. These ingredients are used as food additives or are indirectly involved in packaging or manufacturing processes. Synthetic artificial food colors (AFCs), known for their bright and appealing appearance, are often added to foods and beverages, particularly targeting young children. In some cases, AFCs act as substitutes for nutritious ingredients. Studies conducted over the past few decades have raised concerns about the impact of AFCs on child behavior and their potential role in exacerbating symptoms of attention-deficit/hyperactivity disorder.

Opportunities: Product-based and technological innovations in the ingredient industry

Key players in the specialty food ingredients market are adopting new product launches and technological innovations as key strategies, which in turn offer numerous growth opportunities for the market. These advancements in technology will help meet the increasing demand for health-related foods, as well as sensory food flavors and colors. Additionally, the entry of start-ups into the market contributes to the drive for technological innovations. For example, the USDA's National Center for Agricultural Utilization Research developed a new general cloning method that enables the production of beta-carotene and lycopene by recombinant fungal strains, boosting the functional carotenoids market. Food ingredient manufacturers are rapidly adopting various technologies to optimize functional and aromatic ingredients, enabling the formulation of customized food products that align with the growing culinary demand.

Companies like Brightseed are collaborating with food and beverage formulators to streamline the discovery process. This San Francisco-based biotechnology startup utilizes an artificial intelligence platform to analyze millions of bioactive compounds and identify their potential applications.

However, the industry faces challenges in the form of substitutes for specialty food ingredients. Ingredients offering similar functionalities face fierce competition due to cost efficiency and technological advancements. For instance, the use of enzymes in the dairy and baking segments restricts the growth of emulsifiers in these application areas. Moreover, various ingredients have low-cost alternatives, such as protein ingredients that can be sourced from both animal and plant sources, or specialty starches and fats & oils that can be obtained from different sources. The competition from these low-cost alternatives poses a significant challenge for the growth of value-added, tailor-made, and application-specific ingredients. In the case of fish oil, manufacturers are exploring alternative sources like new algae, zooplanktons (krill), and genetically modified (GM) plants to meet the increasing demand for EPA & DHA. Research is also focusing on large-scale cultivation of microalgae and studying different strains to develop viable and cost-effective omega-3 ingredients. However, this presents challenges for traditional sources of omega-3.

The growth of economies, particularly in the Asia Pacific region, is expected to drive the demand for specialty food ingredient distribution. Factors such as disposable income, which influences changes in eating habits, and the purchasing power parity of the population, play a crucial role in the increased consumption of processed food products in developing economies.

The growth of emerging markets such as China and India in terms of GDP (PPP) is expected to drive the demand for value-added products and their distribution. These markets are witnessing a shift in consumer preferences towards functional foods and processed foods, which are readily available in modern retail formats like supermarkets and hypermarkets.

The North American Specialty Food Ingredient Market is Fairly Matured; Hence the Growth is Moderate Compared to Other Region.

The North American specialty food ingredient market has reached a fairly mature stage, resulting in moderate growth compared to other regions. This market encompasses various segments including acidulants, colors, food flavors, enzymes, emulsifiers, starter cultures, preservatives, functional food ingredients, specialty starch, and sugar substitutes. The sugar substitutes market in North America is consolidated, with a few dominant companies such as Tate & Lyle (UK) and Cargill Inc. (US). Given the high prevalence of obesity and diabetes in North America, individuals are increasingly conscious of their dietary choices, leading to a moderate growth in the sugar substitutes market.

In the United States, the consumption of soft drinks, energy drinks, and juice drinks drives the demand for acidulants in the beverage industry. Citric acid, commonly used in soft drink production, is one of the most prominent acidulants purchased by food manufacturers in the US. Synthetic food colors are subject to strict regulations in North America, with the US and Canadian governments implementing a batch certification system to ensure compliance with stringent quality standards.

The North American market holds significant potential for food flavors, driven by the increasing demand for processed and functional food products. Busy lifestyles and changing eating habits among consumers contribute to this trend. In the US, enzymes are widely used by food manufacturers to maintain the freshness, appearance, texture, taste, and safety of processed and packaged foods, making it the largest market for enzymes in North America.

Food emulsifiers in the North American region find extensive use for various functionalities such as processing, protein interaction, aeration, and stabilization crystal modification. Manufacturers are focused on developing low-fat products to cater to consumer preferences. The growing production of fermented dairy products has a positive impact on the starter cultures market. North American companies have strengthened their research and development capabilities to meet the growing demand in the region, aiming to develop new strains that offer different tastes, flavors, textures, and high-quality output.

Manufacturers are exploring alternative technologies and additives in response to consumers' growing concerns about chemical methods and additives used to extend shelf life. The trend in the food preservatives market in North America is being driven by the widely held belief that natural additives are a healthier option. North America has significant growth potential for manufacturers of functional food ingredients and is expected to play a crucial role in the global market. This market dominance is a result of the prevalence of chronic diseases due to busy lifestyles and increased consumer awareness of the health benefits offered by functional foods. The growth of the North American market is primarily fueled by the rising demand for cornstarch in the United States. The introduction of the bioethanol policy has reduced the availability of corn for ethanol production, thereby affecting the global supply chain of corn for starch extraction and resulting in price trends.

The Specialty Food Ingredients Market is categorized into various applications, including Meat, Poultry, and Seafood Products; Beverages; Bakery Products; Confectionery Products; Snacks; Dairy & Frozen Products; Oils & Fats; and Other Applications.

The choice of a preservative for specialty food ingredients depends on factors such as the food product's processing, water activity, acidity, and the type of organism present. Nitrites are highly effective in meat products, while sorbates are suitable for controlling yeasts and molds in cheese and sausages. Nisin, a natural preservative, is naturally found in cheese due to the fermentation process. Benzoic acid and its salts work well in acidic foods like beverages, while propionates are effective against yeasts and molds in bakery products. Sulfur dioxide, an antimicrobial with antioxidant properties, has been used for centuries to prevent food browning. Food standards regulations typically limit the use of one class II preservative per food item.

Natural Origin Specialty Food Ingredient is Projected to Witness High Demand

The demand for natural origin specialty food ingredients is expected to rise. Food flavors are classified as natural, artificial/synthetic, or nature identical based on their origin. Natural flavors are made from natural ingredients, artificial flavors are created using a combination of chemical compounds to mimic natural flavors, and nature-identical flavors are chemically identical to natural flavors. Natural food flavors are sought after due to increased consumer awareness and health concerns, driving the demand for natural flavors.

Consumers' awareness of clean-label products, the health risks associated with synthetic colors, and the perceived health benefits of natural food colors have led to a growing preference for natural food colors in specialty food ingredients. Natural food colors are considered safe to use and reduce the risk of allergies and intolerances among consumers. These factors contribute to the increasing demand for natural colors in the specialty food ingredients market.

Key Players in Specialty Food Ingredients Market

The key players in this market include Cargill Incorporated (US), ADM (US), DuPont (US), Ingredion (US), Kerry Group (Ireland), DSM (Netherlands), Chr. Hansen (Denmark), Sensient technology corporation (US), Tate & Lyle (UK), Givaudan (Switzerland), Biocatalysts (UK), Omega Protein (US), Enzyme Supplies (UK), FDL Ltd (UK), Nutriati (US), Crespel & Dieters (Germany), Axiom Food (US), Amano Enzymes (Japan), Amco proteins (US), and Aminola (Netherlands).

Target Audience:

• Raw material suppliers
• Specialty food ingredient manufacturers and suppliers
• Food safety agencies such as the FDA and EUFIC
• Food & beverage manufacturers/suppliers
• Commercial research & development (R&D) institutions and financial institutions
• Importers and exporters of specialty food ingredient
• Food & beverage traders, distributors, and suppliers
• Government organizations, research organizations, consulting firms, trade associations, and industry bodies
• Associations, regulatory bodies, and other industry-related bodies:
• European communities
• World Health Organization (WHO)
• OECD-FAO Agricultural Outlook
• United States Department of Agriculture (USDA)
• European Union (EU)

Report Scope:

Specialty Food Ingredients Market By Type

• Acidulant
• Colors
• Enzymes
• Emusifiers
• Food Flavors
• F&B Starter Cultures
• Preservatives
• Functional Food Ingredients
• Specialty Starch
• Sugar Substitutes

Specialty Food Ingredients Market By Application

• Beverages
• Food
• Dairy Products
• Bakery
• Confectionery
• Meat & Poultry
• Others
• Distribution Channel
• Manufacturers
• Distribution

Specialty Food Ingredients Market By Region:

• North America
• Europe
• Asia Pacific
• South America
• RoW

Key Features of the Specialty Food Ingredients Market

• The demand for healthy and natural food products is on the rise as consumers prioritize their health and seek food options that are free from artificial ingredients and preservatives.
• Innovations in food processing and preservation techniques have enabled manufacturers to develop high-quality specialty food ingredients that have an extended shelf life.
• There has been a noticeable increase in the launch of food and beverage products that utilize specialty food ingredients, driven by the growing demand for healthy and convenient food options.
• The specialty food ingredients market is experiencing growth due to the escalating demand for plant-based and functional ingredients. Consumers are showing a heightened interest in ingredients like probiotics, fibers, and omega-3 fatty acids.

Recent Developments

• In June 2020, Cargill, Incorporated launched INFUSE for European customers. This will help in creating tailor-made ingredient blends and ingredient formulation.
• In June 2020, Kerry Group introduced 13 new plant-based protein ingredients made from pea, rice, and sunflower under its product line Hyprol and ProDiem. This will strengthen the company’s portfolio of plant-based options.
• In April 2020, DSM completed the acquisition of Glycom (Denmark) to expand its product line of nutritional lipids, vitamins, and nutrient premixes.
• In April 2020, Chr. Hansen acquired HSO Health Care GmbH for strengthening its functional ingredients business.