April 18, 2024

Food Grade Alcohol is Estimated to Witness High Growth Owing to Increasing Demand for Food Processing Applications

The food grade alcohol market has witnessed significant growth in recent years owing to increasing demand for food processing applications such as food flavoring, food preservatives and food coloring. Food grade alcohol provides purity and enhances the texture, tastes and flavours of various food items. It acts as a preservative by killing or preventing the growth of microorganisms responsible for food spoilage. Food grade alcohol from grains like corn and wheat also helps maintain food quality and freshness.

The Global Food Grade Alcohol Market is estimated to be valued at US$ 2.56 Bn in 2024 and is expected to exhibit a CAGR of 5.5% over the forecast period from 2024 to 2031..

Key Takeaways
Key players operating in the food grade alcohol are MGP, Cargill Incorporated, ADM, Cristalco, Grain Processing Corporation, Wilmar International Ltd., Extractohol, Pure Alcohol Solutions, Nedstar, Sasma B.V., Roquette Frères , Essentica, AVANSCHEM, Fairly Traded Organics, and Ethimex Ltd .

Key opportunities in the market include increasing demand from food processing industry and growth in alternative beverages industry. Food Grade Alcohol Market Size is increasingly being used in the production of alternative beverages like low calorie beers, wine coolers and hard seltzers.

Technological advancements such as development of cost effective purification technologies have helped facilitate wider production and applications of food grade alcohol. Advanced purification techniques allow purification of alcohol from a variety of sources like sugar beets, sugarcane and grains for food applications.

Market drivers
One of the major driver for food grade alcohol market is increasing health consciousness among consumers. People are increasingly opting for low calorie, low sugar food and beverage alternatives made using food grade alcohol which adds flavor and taste without extra calories. Rising inclination towards natural and clean label products is also pushing the demand for food grade alcohol in various food applications.

Current challenges in the food grade alcohol market

The food grade alcohol market has been facing various challenges in the recent past. Volatility in commodity prices has remained a major concern for manufacturers and buyers. The prices of raw materials such as corn, wheat, and sugarcane used for producing food grade alcohol fluctuate frequently owing to changing climatic conditions and global supply-demand dynamics. This makes cost management difficult. Furthermore, stringent regulations regarding the production, packaging, storage, transportation, and use of alcohol make compliance complex and increase production costs. Additionally, the overall consumption of alcoholic beverages has declined slightly in major consumer markets such as North America due to changing lifestyles and health trends. This acts as a restraint on the demand for food grade alcohol.

SWOT Analysis
Strength: Robust demand from end-use industries like food & beverages, pharmaceuticals and personal care products. Numerous health benefits associated with moderate alcohol consumption.

Weakness: Stringent regulations associated with the production, packaging, storage, transportation, and use of alcohol. Vulnerable to fluctuations in agricultural commodity prices.

Opportunity: Increasing popularity of premium and super-premium spirits worldwide. Growing demand for all-natural and organic ingredients in foods and cosmetics.

Threats: Declining overall alcohol consumption rates in developed regions. Health concerns associated with excessive or underage drinking. Intense competition among existing players.

Geographical regions contributing maximally to market value
North America dominates the global food grade alcohol market in terms of value owing to high consumption levels, presence of key players, and favourable regulations. Europe is another major revenue generator due to high alcohol affordability and social acceptance. Asia Pacific is projected to be the fastest growing regional market led by countries such as China and India where economic development and rising disposable incomes are boosting the demand for alcoholic drinks.

Fastest growing geographical region
Asia Pacific region is expected to exhibit the fastest growth in the global food grade alcohol market over the forecast period. Growth in the Asia Pacific region can be attributed to rising health awareness, growing middle-class population, increasing disposable incomes, and developing lifestyle trends. Additionally, improving regulations, robust F&B sector expansion, and westernization are positively impacting the alcohol market in the region. China, India and other Southeast Asian countries are anticipated to drive the demand for food grade alcohol in the coming years.

Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it