The global specialty food ingredients market was valued at USD 71.00 billion in 2022 and is expected to reach USD 104.79 billion by 2028, growing at a CAGR of 6.70%. The global market has experienced significant growth due to advancements and innovative applications in the food industry, particularly in the development of food & beverage, dairy products, and baked goods. Specialty food ingredient offers several advantages, including sweetness, cost-effectiveness, taste, nutritional benefits, reduced bulk, and preservation qualities.
Specialty food ingredients are additives utilized in the food industry to provide a different type of taste, flavor, texture, and other ingredients. These ingredients can be produced through chemical synthesis or extracted from plants and are accessible to consumers in various forms, such as packets, powders, or small tablets. These foods are generally in small amounts yet are more nutritious than other foods. These ingredients are substances that are added to food and drink to improve the taste or to boost the nutritional content of food or drink. The area of beverage and food processing relies heavily on specific food ingredients. Additionally, the rising demand for sugar-free food and beverages is driving specialty food ingredients market growth as consumers increasingly adopt healthier lifestyles and become more health-conscious. In the modern world, a high population has developed a hectic lifestyle and a traumatic schedule, which presents a vast opportunity to market specialty food ingredients.
With increasing concerns about obesity, there is a growing push for individuals to integrate healthy specialty food ingredients into their dietary choices. Based on a 2022 survey conducted by the International Food Information Council, it was found that 72% of Americans are making efforts to reduce or completely remove sugar from their diets, and 23% are choosing low-calorie sugar substitutes. As a result, the extensive adoption of high-value specialty food ingredients is anticipated not only to endure in the United States but also to gain momentum in various other regions. Moreover, many companies in the specialty food ingredients market are responding to this trend by introducing sugar-free and low-calorie snacks and beverages utilizing specialty food ingredients. For instance, in April 2023, Planet Bake introduced a product line of specialty food ingredients, grain-free, vegan doughnuts featuring allulose for natural sweetness. Furthermore, in March 2023, HighKey, a low-sugar baked foods company, launched a sugar-free sandwich cookie made with Erythritol and Allulose as specialty food ingredients, featuring two crispy chocolate wafers with a vanilla creme filling.
The report covers the detailed market analysis of the specialty food ingredients market. The report includes various chapters such as value chain analysis, competitive landscape, marketing mix, and SWOT analysis. The report also focuses on the factors that are contributing to the demand for specialty food ingredients. Urbanization, rising population, and per capita income are some of the factors which are discussed in the report. Apart from this, millennials, the working population, and the demand for premium & organic products are also the supporting factors in propelling the specialty food ingredient market.
MARKET GROWTH DYNAMICS
High Adoption of Sugar Free Food Ingredients
With each growing day, consumer requirements are evolving and varying. This buried varying consumer demand leads to the specified trends such as the demand for specialty food ingredients which are sugar-free ingredients, saturated fat, and salt, deliver more fiber, and are fortified with health-supporting ingredients. With the central focus of people to improve their immunity and health, the demand for sugar-free food ingredients are increased. Moreover, the rising number of diabetes cases, rising demand for food with low calories, and sugar taxes imposed on sugary drinks are the main reasons driving the growth of the sugar-free food ingredients products market.
For instance, companies such as Tate & Lyle are leading specialty food ingredient vendors. In 2022, Tate & Lyle focused on the research and development sector to produce Polyols, sugar-free sweeteners. These sweetening solutions can help reduce sugar without sacrificing the sweetness consumers enjoy. Moreover, Tate & Lyle’s sub-brand SPLENDA Sucralose was introduced, and it reshaped the sweetener landscape in 2022. Sucralose is a sweetener, which is a zero-calorie sweetener. SPLENDA Sucralose processed to create sucralose – 600 times sweeter, with no-calorie sweetener. Its ability to maintain sweetness through various food processing conditions, pH, and long shelf life.
Increasing Demand for Premiumization
Consumers are willing to pay a premium price for food ingredients that offer superior taste, unique flavors, innovative blends, and perceived health and wellness benefits. As consumers become more health-conscious, they are seeking beverages that align with their wellness goals. Premium food ingredients often use natural and functional ingredients like antioxidants, herbal extracts, and other beneficial components, which attract health-conscious consumers. Furthermore, some consumers view premium products, including specialty food ingredients, as status symbols or lifestyle choices. By choosing premium specialty food ingredients, they feel they are making a statement about their taste, sophistication, and lifestyle preferences. Such factors have a positive side on the specialty food ingredients market growth.
High Competition Among Vendors
The global specialty food ingredients market is becoming saturated with a wide variety of products from different brands. As a result, it becomes increasingly difficult for new entrants to establish a unique identity and gain market share. The competition in the specialty food ingredients market is not limited to other tea brands alone. Companies in this market face competition from various other beverages, including carbonated soft drinks, energy drinks, coffee, flavored water, and more. This diverse range of competitors further intensifies the battle for consumer attention.
Established brands often enjoy higher brand recognition and consumer loyalty, making it challenging for new or smaller brands to compete on the same level. Building brand awareness and gaining consumer trust can take substantial time and investment. Moreover, securing prominent shelf space in retail stores is highly competitive. Major retailers may prioritize shelf space for well-known and high-selling brands, leaving limited opportunities for newer or smaller players to display their products prominently.
INSIGHTS BY APPLICATION
Specialty food ingredient is widely used in food and beverage, bakery, and confectionery and can also be used in nutritional supplement to reduce sugar & lower calorie and carbohydrate. The global specialty food ingredients market by application is segmented into beverages, food, bakery, dairy products, confectionery, processed foods, and others. The beverages application segment held the most prominent share of the global market in 2022. Rising levels of obesity and diabetes have created push factors, including huge awareness among consumers who have increasingly cut down their sugar consumption. It has also spurred the national regulators to reformulate their products. Low-sugar options also witness growing consumer demand for products supporting health and wellness. There is an increasing demand for ingredients that can reduce sugar content across several categories, including soft drinks, various beverages, dairy, bakery, confectionery, soups, sauces, and dressing, with a particularly high demand for sugar substitutes from natural sources.
INSIGHTS BY COMPONENT TYPE
The global specialty food ingredients market by component types is classified into two segments: specialty sensory ingredients and specialty functional ingredients. Specialty food ingredients typically preserve, emulsify, color, texture, help processing, and add an extra health dimension to produced food. The sensory ingredients segments dominated the global market in 2022. The growing demand for clean-label and natural ingredients is one of the primary drivers of the sensory additives market. Consumers are more focused on their products' environmental and health impact and seek products with recognizable and natural ingredients.
INSIGHTS BY SPECIALTY SENSORY INGREDIENTS
The flavors and fragrances specialty food ingredient segment dominated the global specialty food ingredients market in 2022 and was valued at over USD 9.54 billion in 2022. As customer expectations for packaged and convenience foods rise and competition intensifies, demand for sensory ingredients is expected to rise. Sensory ingredients, such as odor, flavor, appearance, taste, and texture of foods detectable by human senses, are often used to evaluate food quality. Increasing demand for these ingredients in packaged and convenience foodstuffs and confectioneries is expected to drive product demand.
INSIGHTS BY SPECIALTY FUNCTIONAL INGREDIENTS
The global specialty food ingredients market by specialty functional ingredients is segmented into probiotics, antioxidants, vitamins, preservatives, minerals, and others. In 2022, the probiotics segment dominated the market and is projected to continue its dominance over the forecast period. Customers are more well-being cognizant and zeroing in on their ways of life and diets, bringing about a blast popular for probiotic-strengthened food varieties and drinks worldwide. The growing use of probiotic ingredients in functional beverages & food due to their health benefits helped to raise the demand for probiotic ingredients during the forecast period.
INSIGHTS BY SOURCE
The natural source segment commands a prominent position within the global specialty food ingredients market. In 2022, the global specialty food ingredients market by natural ingredients was valued at over USD 40 billion. This rise in the demand for natural specialty food ingredients can be attributed to the increasing prevalence of health and wellness trends among more health-conscious consumers. Heightened awareness of the potential health risks associated with excessive food ingredient consumption, including obesity, diabetes, and tooth decay, has motivated individuals to seek healthier specialty food ingredients for sweetening their foods and beverages.
APAC region dominated the global specialty food ingredients market in 2022 and was valued at over USD 26 billion. The region is expected to continue to flourish its trend of dominance during the forecast period owing to the growth and expansion of the food and beverages market, especially in emerging economies. Asia-Pacific is set to register a high growth rate during the forecast period owing to the increasing adoption of natural specialty food ingredients in Asian food products such as pickles and flavored sauces, globalization, westernization, changing lifestyles, and increasing personal disposable income.
The North American specialty food ingredient market has grown substantially, driven by a heightened health awareness among consumers. This heightened awareness has increased demand for low-calorie sugar substitutes and sugar-free products. In addition, health concerns, the adverse effects of sugar, and the growing prevalence of lifestyle diseases, such as heart disease and diabetes, have spurred individuals to seek healthier alternatives, including specialty food ingredients. The growing awareness of natural sweeteners has created a demand for manufacturers to supply these alternatives, serving as a significant driver for market expansion.
The global specialty food ingredients market is highly fragmented, with the presence of numerous local, regional, and international vendors across the globe. The leading global specialty food ingredients market vendors are Tate & Lyle PLC, Cargill, Incorporated, Ingredion Incorporated, Archer Daniels Midland, Givaudan S.A., Kerry Group plc, International Flavors & Fragrances and Heartland Food Products Group. The number of global players is, however, limited, and the growing trend of natural specialty food ingredients in food products has given rise to numerous domestic and local vendors in the market that are posing a tough challenge to the reputed vendors across all the geographies.
In the modern world, consumer preferences for animal-based products and natural food production have grown. Plant-based feed additives have exceptionally high growth possibility or potential as a component of healthy animal feed. To support feed customers in this developing space, the world’s leading agribusiness company, Cargill, 2023 announced it had signed an agreement to acquire Delacon, the globally foremost expert in plant-based phytogenic additives. Combining Delacon’s photogenic with Cargill’s animal health technologies provides the next frontier for animal sustainability and productivity: wholesome food production. This leads to a new venture for developing the animal’s specialty food ingredient market.