Functional Food Ingredients Market is Projected to Reach $137.1 billion by 2026
The global functional food ingredients market size is estimated to be valued at USD 98.9 billion in 2021. It is projected to reach USD 137.1 billion by 2026, recording a CAGR of 6.8% during the forecast period. Functional food ingredients deliver additional or enhanced benefits over and above their basic nutritional value. Some functional foods are generated around a particular functional ingredient, such as probiotics, prebiotics, or plant stanols and sterols. Other functional foods or drinks can be foods fortified with a nutrient that would not usually be present to any great extent.
North American consumers are becoming increasingly health-conscious and have started to pay close attention to the labels of food products. This has led to a heightened awareness toward the food ingredients that they consume; these factors have been fueling the market growth for functional food ingredients. The North American region holds potential for the consumption of functional food ingredients and is expected to play an important role in the global market. This dominance is driven by the prevalence of chronic diseases due to hectic lifestyles and increasing awareness among consumers regarding the health benefits of functional foods. In addition, the region has the highest prevalence of obesity. According to CRN 2019 data, over three-quarters of all US adults take dietary supplements; 58% take multivitamins; 31%, vitamin D; 28%, vitamin C; 21%, protein; 20%, calcium; 20%, B complex; 16%, omega-3s; 15%, green tea; 14%, magnesium; 13%, probiotics; 13%, iron; 12%, turmeric; and 12%, vitamin E. The functional food ingredients industry focuses on investing more in research programs with an aim to introduce new ingredients to address the diversified demands from potential customers in the region.
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The key market players in the North American functional food ingredients industry include Cargill, Incorporated (US), Archer Daniels Midland Company (US), and DuPont (US). These industry players have their R&D centers where they develop a wide range of functional food ingredients for the food & beverage industry. Cargill invested USD 146 million to expand its protein production facility in Nashville, Tennessee, US. Also, in 2017, ADM introduced Onavita DHA algal oil, a new DHA, which is produced from a high-quality, reliable US algae supply.
A majority of functional food ingredients are sourced naturally. The increasing consumer awareness about the health benefits associated with ingredients sourced from natural sources is driving the natural segment. Functional food ingredients are currently being sourced from both natural and synthetic means. Although the cost of producing synthetic ingredients is much lower than natural ingredients, growing consumer demand for natural ingredients due to growing awareness about the health benefits associated with ingredients sourced from natural sources is driving growth in the natural segment over the synthetic segment. The natural food ingredients market has managed to remain relatively stable despite the economic downturn and is expected to increase in the future. North America and Europe continue to be the mainstay markets for natural functional food ingredients. Plant protein is also gaining an increasing level of importance due to its lower environmental impact by reducing energy consumption, emissions, land use, and water consumption; it also offers better input conversion efficiency.
With the increasing awareness among consumers, the market for functional food is increasing as consumers prefer balanced diets and food that not only addresses their appetite, but also helps enhance their immunological tolerance. This, along with product innovations in terms of flavors and variant offerings, presents significant opportunities for the growth of applications in the functional food ingredients market. Factors that further fuel consumer interest in functional foods are the rapid advances in science & technology, increase in health care costs, aging, and growth in interest in attaining wellness through diet, among others. The snacks subsegment is projected to grow at the highest CAGR during the forecast period as customers around the globe are increasingly inclined toward food items that can easily be consumed without any effort. The increase in demand for snacks & convenience food products in the Asia Pacific region has witnessed a rise in demand for various functional food ingredients that have led consumers to adopt healthier lifestyles. This has led to an increase in consumption due to the constant increase in population, rise in disposable income, and changes in lifestyle trends.