Functional Ingredients Market size has experienced rapid growth in recent years and will continue to garner momentum during the forecast period 2021-2027. Worldwide, consumers are looking to take a more holistic and long-term approach to health and immunity management to minimize the risk of illness and diseases. The increasing occurrence of various chronic diseases and the ongoing COVID-19 pandemic has led a vast majority of consumers to include new products that offer functional benefits to their day-to-day diets.
Functional food ingredients aid in improving overall health and wellbeing, proper weight management, and prevention of conditions such as obesity, high blood pressure, and heart disease. Foods with functional benefits are gaining popularity particularly among the younger section of the population which is becoming more conscious about health, wellness, and immunity. The different types of functional ingredients include proteins, probiotics, prebiotics, fatty acids, omega 3, omega 6, soy proteins, and hydrocolloids. Among these, probiotics will witness substantial consumption in the functional ingredients market share.
Probiotics are emerging as one of the most sought-after ingredients consumers are looking to increase in their diets. These ingredients are known to aid in digestive, improve mental health, and ensure proper heart health. The sales of probiotic ingredients in the supplement form are growing with a large number of consumers seeing supplements as a convenient option. Food & beverage brands are aiming to cash in on the increasing popularity of probiotics by introducing new products.
For example, in June 2021, Fonterra’s subsidiary NZMP had expanded the application range of its probiotic strains to produce new varieties of snacks, beverages, and confectionery products. Food manufacturers are also looking to strengthen their probiotics portfolio by adopting acquisition strategies. Citing an instance, Cargill had acquired a minority stake in probiotics company BioGaia with a USD 25 million investment in December 2020.
In terms of the applications, the food & beverage sector is likely to dominate the functional ingredients market through 2027. The use of various ingredients in food and beverage products has increased tenfold over the past few years. Food companies are looking to include these ingredients in a wide range of product offering including dairy products such as yogurt, bakery products, confectionery items, packaged and ready-to-eat foods, snacks bars, energy drinks, nutritional supplements, and countless others. In a recent instance, PepsiCo had launched the Soulboost line of sparkling water products with functional ingredients in June 2021.
Geographically, North America is expected to hold a substantial share of the functional ingredients market over 2021-2027. Increased health and wellness concerns in the region can be linked with the high occurrence of obesity, diabetes, and digestive disorders. In the U.S., obesity affects more than 40% of the adult population, according to the American Society for Metabolic and Bariatric Surgery (ASMBS).
Obesity is linked to over 40 types of diseases including heart disease, hypertension, stroke, type-2 diabetes, and at least 13 types of cancer. Increasing awareness towards these factors is encouraging more consumers to invest in high-quality foods with active functional ingredients.
Archer-Daniels-Midland Company (ADM), Arla Foods, BASF, Amway (Alticor), Cargill, Kerry Group PLC, DSM, Ingredion Incorporated, Herbalife, and General Mills Inc are some of the biggest names in the functional ingredients business.
Mergers, acquisitions, and collaborations are also popular strategies among market players as they aim to penetrate deeper into the functional ingredients industry. In July 2021, Kerry Group had paid nearly USD 149 million to take over Biosearch Life, a leading manufacturer of functional ingredients for food & beverage, pharmaceutical, and nutraceutical sectors.
The popularity of vegan diets and demand for plant-based ingredients is increasing and leading food brands are innovating to bring new vegan-friendly products to the market. For example, Ingredion Inc. had added two new plant-protein products to its portfolio in March 2021.
The coronavirus pandemic has made health and immunity a massive factor in the decisions that people make about food and beverage products. The outbreak has fueled consumer interest in functional foods which deliver numerus health and wellness benefits such as immunity and stress relief.
Functional foods have been gaining traction globally even before the pandemic. COVID-19 has just accelerated the trend. This means that the functional food demand will be prevalent even in the post-pandemic era. Foods with functional ingredients will certainly continue to be an important part of the human diet for years to come.