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The global functional food ingredients market size is estimated to grow by USD 48.06 billion at a CAGR of 7.16% between 2022 and 2027. The growth of the market depends on several factors, including the increased demand for functional food ingredients from the probiotics segment, the wide range of applications, and rising health awareness.
Functional food ingredients are additives used in food and beverages to preserve food quality, improve freshness and safety, and add nutritional value. It is also used to enhance the shelf life of a product and its taste, texture, and appearance. Functional food ingredients are used in savory snacks, nutrition bars, baby foods, dairy products, and confectioneries. Functional foods are foods that provide health benefits in addition to nutritional value. Some of these functional foods include vitamins or other health-promoting components.
This report extensively covers market segmentation by application (food and beverages, pharmaceuticals, and others), product (probiotics and prebiotics, proteins and amino acid, dietary fibers, vitamins and minerals, and others), and geography (APAC, North America, Europe, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The Increased demand for functional food ingredients from the probiotics segment is notably driving the functional food ingredients market growth, although factors such as the high cost of functional foods may impede the market growth. Our researchers studied the data for years, with 2022 as the base year and 2023 as the estimated year, and presented the market's key drivers, trends, and challenges. Although there has been a decrease in demand for the market during the COVID-19 pandemic, a holistic analysis of drivers will help companies refine marketing strategies to gain a competitive advantage.
Key Functional Food Ingredients Market Driver
The increased demand for functional food ingredients from the probiotics segment is the key factor driving the global functional food ingredients market growth. Probiotics are the largest product segment in the market, and the segment may continue to retain its market share during the forecast period. The probiotics segment of the market is gaining traction as consumers prefer a more balanced diet that not only can take care of their appetite but also offers nutritional benefits.
Probiotics are microorganisms that provide immunity, nutritional benefits, and vitamin K, which is an essential nutrient for blood clotting. Yogurt, kefir, sauerkraut, tempeh, kimchi, a few varieties of cheese, buttermilk, and fermented soybeans are among the probiotic products that are in high demand. Lactobacillus, Bifidobacterium, and Enterococcus strains are mainly used in food products such as dairy products, dietary supplements, drugs, medical foods, and feed additives. Thus, the increased demand for probiotic products will significantly propel the growth of the global functional food ingredients market during the forecast period.
Key Functional Food Ingredients Market Trend
The growth of the packaged food and beverage industry will fuel the global functional food ingredients market growth. The growth in disposable income and changes in food habits have led to high demand for packaged food products, particularly in North America and Europe. The demand for packaged products is growing, mainly driven by increased health and hygiene concerns. Thus, the significant growth of the packaged food and beverage industry will prove to be an opportunity for the market.
Natural functional food ingredients also prevent packaged food products from becoming stale and discolored and enhance their foam structure and stability. Thus, the growth of the packaged food and beverage sector is expected to drive the growth of the market significantly during the forecast period owing to its advantages and benefits.
Key Functional Food Ingredients Market Challenge
The high cost of functional foods is a major challenge to the global functional food ingredients market growth. The high cost of functional foods will hamper the growth of the market. Although the sales of functional food products are anticipated to grow at a brisk rate, economic factors have severely hindered the growth of the functional food market.
The high prices of nutraceuticals and foods with medicinal value will limit the adoption of functional foods globally. In general, functional foods are expensive owing to their high distribution, storage, and transportation costs. Their complex extraction process adds to the cost. Functional foods are priced 30%-500% higher than comparable conventional foods. Thus, the high cost of functional foods will negatively impact the growth of the market during the forecast period.
Key Functional Food Ingredients Market Customer Landscape
Our analysis of the Life Cycle of the market indicates a movement from the innovator’s stage to the laggard’s stage. The report illustrates the lifecycle of the market, focusing on the adoption rates of the major countries including the US, China, India, Germany, and the UK. Technavio has included key purchase criteria, adoption rates, adoption lifecycles, and drivers of price sensitivity to help companies evaluate and develop growth strategies from 2022 to 2027.
Global Functional Food Ingredients Market Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market
Ajinomoto- The company offers functional food ingredients, namely AJI-NO-MOTO.
We also have detailed analyses of the market’s competitive landscape and offer information on 20 market vendors, including :
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the Probiotics and prebiotics segment will be significant during the forecast period. The probiotics and prebiotics segment is the largest product segment of the market in 2022. Probiotics are live microorganisms, such as Lactobacillus, Bifidobacterium, and Enterococcus, which are found extensively in yogurt, buttermilk, Greek yogurt, and other fermented dairy products. Prebiotics are non-digestible fibers that provide nourishment for probiotic bacteria in the body and promote their growth.
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The probiotics and prebiotics segment showed a gradual increase in market share with USD 29.16 billion in 2017 and continued to grow by 2021. Probiotics also help in reducing the risk of rotavirus-induced diarrhea and colon cancer. Prebiotics, which are present in numerous fruits and vegetables, are considered functional food ingredients that offer important advantages. The consumption of prebiotics helps in the reduction of cancer risk and increases calcium and magnesium absorption. Owing to their textural and gelling properties, prebiotics as functional food ingredients also have an impact on the quality of food items. Thus, the health benefits associated with the consumption of prebiotics and probiotics will augment the growth of the probiotics and prebiotics segment of the market during the forecast period. Furthermore, our report provides a brief analysis of the historical and forecast market share and their segments along with the reasons for growth from 2017 to 2027.
The growth of this segment is primarily attributed to the increasing adoption of Functional Food Ingredients, which is driven by an increase in the global demand for the functional food ingredients industry.
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APAC is projected to contribute 37% by 2027. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
APAC is the largest region of the global functional food ingredients market in 2022 and will continue to be the largest segment during the forecast period. The growth of the market in APAC can be attributed to the presence of many manufacturers of functional food ingredients and food additives in this region. China, Japan, India, and South Korea are the key revenue-generating countries in APAC.
This report forecasts the contribution of all the segments to the growth of the market. In addition, we have included the COVID-19 impact and the recovery strategies for each segment. The outbreak of COVID-19 led to a decline in demand for functional food ingredients in APAC. The outbreak of COVID-19 hindered the growth of the market in APAC in 2020. Owing to lockdowns and stringent social distancing norms, production at manufacturing units for functional food ingredients was halted. However, in 2021, the initiation of vaccination drives to cover most of the population living in the region, and a slow recovery in economic growth revived the growth of the regional market. Moreover, governments in APAC announced financial packages to revive the growth of the economy. For instance, in June 2021, the Government of India announced a relief package of approximately USD 1 trillion to support the Indian economy to overcome the adverse impact of the pandemic. Also, the increasing demand for functional food to boost immunity, the redesigning of distribution channels by vendors, and economic growth will propel the growth of the functional food ingredients market in APAC during the forecast period.
Our report forecasts revenue growth at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. The market has been segmented by product, application, and region.
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Functional Food Ingredients Market Scope |
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Report Coverage |
Details |
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Page number |
180 |
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Base year |
2022 |
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Historical year |
2017-2021 |
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Forecast period |
2023-2027 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 7.16% |
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Market growth 2023-2027 |
USD 48.06 billion |
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Market structure |
Fragmented |
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YoY growth (%) |
6.52 |
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Regional analysis |
APAC, North America, Europe, South America, and the Middle East and Africa |
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Performing market contribution |
APAC at 37% |
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Key consumer countries |
US, China, India, Germany, and UK |
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Competitive landscape |
Leading companies, Competitive Strategies, Consumer engagement scope |
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Key companies profiled |
Ajinomoto Co. Inc., AMCO Proteins, American International Chemical LLC, Arla Foods amba, Associated British Foods Plc, BASF SE, Beneo GmbH, Bio Botanica Inc., Cargill Inc., Chr Hansen Holding AS, Cooperatie Koninklijke Cosun UA, Diana Food SAS, Givaudan SA, Ingredion Inc., International Flavors & Fragrances, Kemin Industries Inc., Kerry Group Plc, Koninklijke DSM NV, Tate & Lyle Plc, and Archer Daniels Midland Co. |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Product
7 Market Segmentation by Application
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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