FUNCTIONAL INGREDIENTS MARKET ANALYSIS

The global functional ingredients market size was valued at US$ 76.79 Billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 6.6% from 2023 to 2030. Functional ingredients market is growing on the account of rising prevalence of chronic diseases and micronutrient deficiencies, the growth of the middle class in emerging countries and rising consumer demand for healthier food products. The market growth is also bolstered by a number of technological innovations, such as encapsulation technology. This process enable manufacturers to use a range of functional ingredients in their products while maintaining the quality and safety that customers expect.

Global Functional Ingredients Market: Regional Insights

Based on geography, the global functional ingredients market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

North America is expected to dominate the global functional ingredients market and is expected to continue its dominance over the forecast period. This is attributed to the rising popularity of functional foods and the availability of varieties in restaurants and other food outlets.

Asia Pacific is expected to be the second leading region in the global market over the forecast owing to the booming economies of China, India, and Japan. These countries are characterized by a growing middle class population that is spending heavily on nutritional supplements and healthy foods. This is projected to offer lucrative opportunities for the manufacturers of these ingredients in the coming years.

Figure 1. Global Functional Ingredient Market, By Region 2023

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Global Functional Ingredients Market Drivers:

Growing demand for functional probiotic ingredients to propel market growth

The probiotics market continues to grow, and food companies are looking for new ways to incorporate these microorganisms into their products. For example, using functional probiotic ingredients such as lactic acid bacteria (LAB). LAB in fermented foods naturally enrich the gut with healthy microorganisms that promote immune system function, prevent intestinal problems and restrict growth of pathogenic microorganisms. Moreover, LAB also promote the growth of indigenous beneficial microorganisms in the gut.

Rising prevalence of chronic disease to uplift market growth

Increasing cases of chronic diseases, micronutrient deficiencies, growing demand for fortified foods owing to changing lifestyle and growing health awareness among consumers are some of the factors driving the market growth. Furthermore, the growing middle class in emerging economies and growth of the older population is again boosting the market for fortified foods and hence, the functional food ingredients.

Global Functional Ingredients Market Opportunities:

The global functional ingredient market is expected to witness potential opportunities in the near future owing to the increased awareness regarding the health benefits of functional food ingredients among the consumers, a rise in consumption of fortified foods to prevent micronutrient deficiencies, and presence of giant food companies actively creating and launching new products with functional ingredients. In addition to this, various initiatives undertaken by governments of the region to boost the economy and increase their food exports is driving demand for functional ingredients to boost immunity. These factors are further expected to present lucrative market opportunities.

The nutritional and functional food industry is a rapidly growing sector that provide opportunities to manufacturers for product differentiation. Increasingly consumers are seeking products that provide health benefits beyond basic nutrition, such as boosting mental alertness or promoting digestive health. This factor has fueled the development of a range of functional ingredients, many of which come from plants. The industry relies on scientific and clinical research to identify the beneficial effects of these compounds, which are then fortified into a wide variety of foods and beverages.

Global Functional Ingredients Market Trends:

Growing trend of plant-based ingredients

The growing emphasis on the use of plant-based food products and rising investments in research & development activities by key market players are fueling the functional ingredients market growth. Moreover, shift in consumer preference towards healthy snacks and drinks is further contributing to the market growth.

Growing health and wellness trend

A wide range of nutritional and functional food ingredients are helping to address consumer demands for better-for-you foods and drinks that offer health benefits beyond basic nutrition. Functional ingredients are also known as nutraceuticals ingredients, these ingredients can help prevent nutrient deficiencies and promote overall wellbeing.

Global Functional Ingredients Market Restraints:

Stringent regulations related to safety and efficacy to hamper market growth

Stringent regulations related to safety and efficacy of functional ingredients are restraining the market growth. In order to avoid this issue, researchers studying the benefits of plant-based ingredients should unambiguously describe their source material and ensure that they are using multiple batches of the same material.

High cost to hinder market growth

One disadvantage of many functional foods is that they are comparatively more expensive than their traditional counterparts. This can be a deterrent for some consumers who may not have the financial means to purchase these more costly products.             

Figure 2. Global Functional Ingredient Market, By Application 2023

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Global Functional Ingredients Market Segmentation:

The global functional ingredients market report is segmented into product, application, and region

Based on product, the market is segmented into Maltodextrin, Probiotics, Polydextrose, Modified Starch, Pectin, Omega-3 (EPA, DHA, ALA), Omega-6, Conjugated Linoleic Acid, Rice Protein, Protein Hydrolysate, and Mung Bean Protein. Out of which, Maltodextrin is expected to dominate the global market over the forecast period and this is attributed to the increasing use as an additive in various food and beverage such as meat substitutes, frozen meals, baked goods, sports, and energy drinks.

Probiotics segment is also expected to witness significant growth in the near future and this is owing to the growing demand from dietary supplements and food products like yogurt sauerkraut and kefir.

Based on application, the market is segmented into Food & Beverages, Personal Care, Pharmaceuticals, Animal Feed, and Other. Out of which, Food & Beverages is expected to dominate the global market over the forecast period and this is attributed to the growing number of health conscious consumers worldwide.

Pharmaceuticals segment is also expected to witness significant growth in the near future. Functional ingredients such as omega-3, conjugated linoleic acid, polydextrose, and maltodextrin are majorly used in pharmaceutical sector.

Global Functional Ingredients Market: Key Developments

In October 2019, the Tate & Lyle announced the accomplishment of doubling the capacity of non-GMO MALTOSWEET Maltodextrins production line at its facility in Boleraz, Slovakia U.S. The said product is a nutritive corn-based specialty sweetener made from locally sourced non-GMO corn.

In December 2019, Cargill has entered a joint development agreement (JDA) with Renmatix to use the company’s technology for converting unused plant materials into functional food ingredients.

In November 2022, Geno announced its entry into the functional foods and beverages market with the launch of its new functional ingredient, Avela™ natural (R)-1, 3-Butanediol.

Global Functional Ingredients Market: Key Companies Insights

The global functional ingredients market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global functional ingredients market are Archer Daniels Midland Company Cargill, Incorporated, E. I. du Pont de Nemours and Company, Ingredion Incorporated Koninklijke DSM N.V., Tate & Lyle plc FMC Corporation, and Omega Protein Corporation

*Definition: The use of functional ingredients in food and beverages is a growing because it promote healthy immune and digestive system function. These specialized foods, also known as nutraceuticals, are often more nutritious than their traditional counterparts and may help to reduce the risk of certain diseases.