Market Challenges And Opportunities

Guerbet Alcohol Market Restraints:

Stringent regulations pertaining to use: Stringent regulations around the production and sale of guerbet alcohol can hamper the market growth. Many governments worldwide have implemented strict rules in response to public health and safety concerns over excessive or irresponsible consumption.

For example, the World Health Organization (WHO) recommends that countries should establish appropriate policies and regulations to ensure the reduced harmful use of alcohol. This includes limiting both the physical and economic availability of alcoholic beverages through restrictions on production volumes, retail outlet density, and marketing activities. Several nations have adopted the WHO's suggested best practices into their domestic laws and policies in order to curb alcoholism and related societal harms.

In the European Union (EU), there are strict regulations that products, labelled as 'alcoholic beverages' or 'spirits', must meet exacting standards for ingredients, production methods, packaging, labelling, and marketing. This leaves little flexibility for innovative new types of guerbet alcohol products to easily enter the market. Establishing a new alcoholic product and getting it approved for legal sale under the EU regulatory framework can be an extensive, time-consuming and cost-prohibitive process for small producers. For instance, in 2020, according to a report published by the International Centre for Alcohol Policies, South Africa witnessed a significant decline in reported incidents of alcohol-related harms after implementing policies like restrictions on trading hours for alcohol retailers and a nationwide ban on alcohol sales during the early period of the COVID-19 pandemic.

Counter balance: If current guerbet alcohol formulations do not meet new regulations, consider reformulating products to comply with these standards also broaden the product portfolio to include a variety of guerbet alcohols that cater to different regulations across various regions and industries. This can reduce the risk of business being significantly impacted by a single regulatory change.

Volatility in raw material prices: The volatility in raw material prices is a major concern hampering growth of the guerbet alcohol market. Guerbet alcohols are manufactured by reacting normal alcohols like butanol or hexanol with themselves in the presence of an acid catalyst. This process utilizes large amounts of normal alcohols as starting materials. However, the prices of normal alcohols have witnessed significant fluctuations over the past few years due to various macroeconomic and geopolitical factors impacting their supply. For instance, according to the Food and Agriculture Organization (FAO) of the United Nations, the price of corn, which is one of the key sources for producing butanol through fermentation, had been increased by over 30% from January 2020 to January 2022 due to reduced supplies caused by adverse weather conditions in major producing countries. Similarly, crude oil prices, from which chemicals like hexanol are derived, range between US$ 20-120 per barrel, since 2020, thus leading to inconsistent raw material costs.

Such volatility in input prices poses major challenges for guerbet alcohol producers to undertake long-term capacity expansion plans and make large capital investments. It impacts their ability to offer stable product prices to end-use industries and sign long-term supply contracts.

Rising use as stabilizer in explosives: Increasing use of guerbet alcohol as a stabilizer in the explosive industry is one of the key factors driving growth of the guerbet alcohol market. Guerbet alcohol helps in maintaining the consistency of explosives during storage, transportation, and usage. This allows for safer and more stable detonation of explosives.

The mining and construction industries have witnessed significant growth over the past few years. With rapid urbanization and infrastructure development projects, the demand for explosives to break and clear rock surfaces has increased substantially. The safe use of such large volumes of explosives requires effective stabilization, which is predominantly achieved through the addition of guerbet alcohol. For instance, India's National Infrastructure Pipeline (NIP) envisions will invest over US$1.5 trillion by 2025 to boost the construction of roads, railways, and other projects.

High demand from coatings segment: The coatings segment has witnessed a major surge in demand for guerbet alcohol in recent years and this is positively impacting the overall growth of the guerbet alcohol market. Guerbet alcohol finds wide application in coatings mainly due to its excellent film forming, thickening, and stabilizing properties. It is used as a dispersant, emulsifier, and stabilizer in formulations of water-based paints and coatings.

The increased preference for water-based paints and coatings over solvent-based variants across industries such as automotive, construction, and packaging amongst others has significantly boosted the consumption of guerbet alcohol. The guerbet alcohol market is further gaining from rising applications of water-based coatings in infrastructure and building construction. For instance, according to data provided by the World Bank, India and China are expected to witness consistent growth in building construction over the next few years supported by rapid urbanization. These estimate real estate development may contribute around 13% of India's Gross Domestic Product GDP and closer to 25% of China's GDP by 2025.

Guerbet Alcohol Market Opportunities:

Innovation of new application areas: The guerbet alcohol market relies on its usage in personal care and hygiene applications such as shampoos, face washes, and lotions. While these remain the core segments, diversifying into new and innovative areas could drive further market growth. One such promising new application is in agrochemical formulations. Guerbet alcohol acts as an excellent suspending agent and stabilizer for agrochemical agents like fungicides, herbicides, and insecticides. Its ability to improve the efficacy of these chemicals by maintaining even distribution can increase farmers' crop yields.

Guerbet alcohol's viscosifying properties make it effective for secondary and tertiary oil recovery processes like hydraulic fracturing and chemical flooding which can yield 20-40% more oil.

Growing construction industry in emerging nations: Growing construction industry in emerging nations present a huge opportunity for the guerbet alcohol market. As urban populations in countries like India, China, Indonesia, Egypt, and others continue to rise rapidly, there is immense pressure on these nations to rapidly expand housing, commercial and infrastructure development. This vast scale of construction activity requires a plethora of materials to be used for activities like painting, manufacturing of lacquers, solvents, plastics, and others.

Guerbet alcohol is a synthetic alcohol that is derived from acetaldehyde, finds widespread applications in manufacturing of paints, coatings, lacquers, and others used extensively in construction. It helps impart characteristics like corrosion resistance, hardness, and durability to various construction materials. Guerbet alcohol is also used as a solvent in manufacturing of plastics, resins and adhesives which witnesses huge demand from the construction industry for activities like laying pipes, manufacturing furniture, windows, and others. Its high solvency properties and low toxicity make it an ideal green choice for many construction applications. For instance, according to the data provided by the United Nations Department of Economic and Social Affairs, urban population in countries like India is projected to rise by over 404 million between 2018-2050.

Guerbet Alcohol Market Drivers: