The global specialty food ingredients market is projected to grow at a CAGR of 5.30% during the forecast period (2021-2026).
The COVID-19 pandemic was seen disrupting the market growth, in the initial few months of lockdowns, where even with the rising demand for specialty ingredients, key players and organizations across the globe reported their inability to battle logistical concern. However, the market has been recovering making the impact marginal over the past few months, as the food & beverage sector continued to combat new daily challenges, supply chain disruption being major of it. Furthermore, the pandemic also resulted in the generation of opportunities for many private players to emerge in the markets, to cater to the inflated demand for food products, which, in turn, benefitted the ingredient manufacturer. The need for innovative snack products was consistently high in developed countries like the United States, the United Kingdom, Germany, Spain, and Italy, due to the associated convenience of storing, usage, and rapid provision of nutrition and energy on consumption.
Over the medium term, the industry for speciality food ingredients essentially thrives on the wider technological and functional benefits that these ingredients confer, in terms of high quality, safety, affordability, nutrition, and deliciousness of the processed food products.
Moreover, the preference for certain types of food products is now core to some consumers’ identities, especially in developed economies, which is driving the demand for specialty food ingredients. There is a strong correlation between the specialty food ingredient market and the processed food market, with the former conferring functional benefits and customized value-addition as per the end-user applications. The globally recognized companies operating in the specialty food ingredients market utilize smart technology or intellectual property to develop innovative ingredients and solutions. However, new product development is a highly capital-intensive process.
Key Market Trends
Growing Demand for Natural & Label-Friendly Food Colorants
With increasing preference for clean label products, the demand for natural colorants is expected to increase exponentially during the forecast period. Although natural colors are safer, they have a few fictional issues, like consistency. This production of such colors involve high production costs and lack of raw material availability. Natural colorants have varied applications in functional foods. Food colors find application in many processed foods including candies, snack foods, margarine, cheese, soft drinks, jams/jellies, gelatins, pudding, and pie fillings. The main constraint of the industry is the high cost of production, chemical instability due to fluctuating temperature/pH conditions and increased regulations. Paprika is a natural food color that is ground, and is made from the chili peppers (capsicum). It is used as a garnish in many recipes to create vibrant colors. With increasing applications and demands specialty ingredients manufacturers continue to innovate and offer new label friendly products ultimating boosting the growth of the market.
North America Holds the Largest Market Share
The market for specialty food ingredients in North America is driven by rising rates of diabetes and obesity, which is warning consumers to focus on healthier lifestyles, and thus, fueling the demand for food products with functional & specialty ingredients. The American population is increasing becoming health-conscious and thus increasingly demand for helathy food products and thus manufacturers tend to launch products with specialty food ingredients. Specialty foods are outpacing their non-specialty counterparts in almost every category, due to the rise in awareness regarding food quality.
The global speciality food ingredients market is highly competitive, and dominated by international players. Major players in the market include DuPont de Nemours Inc., Cargill Incorporated, Kerry Group, and Koninklijke DSM NV, among others. Product innovation and development is the most adopted strategy by the players operating in the market followed by mergers & acquisitions, and expansions for increasing their visibility, and portfolio of offerings. Manufacturers are focusing on providing all-natural speciality ingredients that increase the shelf-life of the product and enable the manufacturer to label its products as “100% all-natural”, addressing consumer demand for “clean labels”.
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