The global functional ingredients market size reached USD67.9bn in 2020 and is expected to register a steadily inclining revenue CAGR during the forecast period, according to latest analysis by Emergen Research. Encapsulating technology improves flavor and smell of food products and increasing demand for such ingredients is driving market revenue growth.
Increasing disposable income in developed and developing countries, changing lifestyle, rapid urbanization, and increasing consumption of low-calorie foods and higher nutrient benefits of functional food are all expected to drive the global functional ingredients market revenue growth. Another key factor expected to continue to drive revenue growth of the market is the increase in demand for functional ingredients for animal feed.
A factor expected to limit market growth during the forecast period is the relatively high pricing of some functional ingredients as well as wide availability of alternatives offered by local or domestic companies, especially in developing countries.
The global functional ingredients market revenue is expected to expand at a CAGR of 6.3% from USD67.9bn in 2020 to USD 109.2bn by 2028. Rising usage of functional ingredients in food and drinks, particularly in dairy products and bakery items, is one of the major factors boosting growth of the global functional ingredients market.
COVID-19 Impact Analysis
Raw material costs are expected to rise as a result of trade restrictions, delays in raw material supply, disruptions in supply-demand chain, and ineffective distribution channels caused by COVID-19. Non-availability and higher priced and better quality raw materials, as well as high manufacturing costs, are expected to pose limitations to the global functional ingredients market growth. Safety of the food supply chain has also taken a more serious note and become more imperative in the current COVID-19 scenario.
Vitamin supply was limited since key vitamins are imported by companies in various countries, and COVID-19 had a negative impact on the transportation and logistics networks worldwide. Because of ongoing trade restrictions, manufacturers are looking for substitute ingredients. Local businesses and domestic raw material suppliers are expected to benefit as a result.