The global Functional Food Ingredients market is estimated to be worth USD 11.3 billion in 2024 and is projected to reach a value of USD 21.7 billion by 2034, expanding at a CAGR of 6.7% over the assessment period of 2024 to 2034
Functional food ingredients are ingredients added in foods and beverages that provide health benefits beyond basic nutrition. These ingredients helps in improving health, reducing the risk of diseases, and enhances overall well-being. Few of the ingredients are probiotics, prebiotics, proteins and amino acids, phytochemicals and plant extracts, omega-3 fatty acids, carotenoids, and fibers and specialty carbohydrates.
Advances in food technology have enabled the fortification of different variety of food and beverages with essential nutrients like vitamins, minerals, and probiotics without changing their taste or texture. Techniques such as microencapsulation and nanotechnology ensure that these nutrients are effectively delivered and absorbed.
This innovation helps consumers to enjoy healthier foods that are delicious and convenient, and still meeting current lifestyle diet. Nestle has developed products like NAN Optipro infant formula, which uses microencapsulation to provide essential nutrients effectively.
| Attributes | Description |
|---|---|
| Estimated Global Functional Food Ingredients Business Size (2024E) | USD 11.3 billion |
| Projected Global Functional Food Ingredients Business Value (2034F) | USD 21.7 billion |
| Value-based CAGR (2024 to 2034) | 6.7% |
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The below table presents a comparative assessment of the variation in CAGR over six months for the base year (2023) and current year (2024) for global Functional Food Ingredients market.
This analysis reveals crucial shifts in market performance and indicates revenue realization patterns, thus providing stakeholders with a better vision about the market growth trajectory over the year. The first half of the year, or H1, spans from January to June. The second half, H2, includes the months from July to December.
| Particular | Value CAGR |
|---|---|
| H1 | 6.1% (2023 to 2033) |
| H2 | 6.4% (2023 to 2033) |
| H1 | 6.6% (2024 to 2034) |
| H2 | 6.9% (2024 to 2034) |
The above table presents the expected CAGR for the global Functional Food Ingredients demand space over semi-annual period spanning from 2024 to 2034. In the first half (H1) of the year 2023, the business is predicted to surge at a CAGR of 6.1%, followed by a slightly higher growth rate of 6.4% in the second half (H2) of the same year.
Moving into year 2024, the CAGR is projected to increase slightly to 6.6% in the first half and remain relatively moderate at 6.9% in the second half. In the first half (H1 2024) the market witnessed a decrease of 10 BPS while in the second half (H2 2024), the market witnessed an increase of 24 BPS.
Rising Demand for Plant-Based Functional Ingredients
The shift towards vegetarian and vegan diets is driving demand for plant-based proteins like pea, soy, and hemp. Consumers are seeking alternatives to animal products for health, environmental, and ethical reasons. This augments to other plant-derived functional ingredients, such as fibers, antioxidants, and omega-3 fatty acids from algae, which are being included into a wide range of food and beverage products to meet the growing demand.
The Growth of Probiotics and Prebiotics: Enhancing Gut Health and Immunity
Probiotics are useful bacteria that support gut health, and prebiotics, non-digestible fibers that feed these bacteria, are gaining popularity for their function in improving digestion and boosting immunity. They are being included into a wide range of products, including yogurts, beverages, and snacks.
This is driven by growing consumer awareness of gut health’s impact on overall well-being and the inclination towards functional foods that promote a healthy microbiome.
The Period of Customized Nutrition
Personalized nutrition is gaining popularity as consumers are searching for products that addresses their unique health requirements. This is driven by advancements in technology and in depth understanding of individual dietary requirements.
Companies are now offering customized meal plans, supplements, and functional foods based on genetic, lifestyle, and health data, which aims to optimize well-being and address specific health concerns more effectively.
The Popularity of Functional Beverages
Functional beverages are on the rise as consumers seek convenient ways to enhance their health. These drinks are fortified with vitamins, minerals, probiotics, and other beneficial ingredients, catering to specific health needs like immunity, energy, and digestion. The is propelled by a growing awareness of health and wellness, making it easier for individuals to include essential nutrients into their daily routines.
The Rise of Melatonin and Chamomile in Wellness Products
Sleep-friendly ingredients such as melatonin and chamomile are getting prominent as individuals are seeking natural solutions for better sleep. Melatonin helps regulate the sleep-wake cycle, while chamomile is known for its calming effects. These ingredients are being included into various products like teas, supplements, and snacks, addressing to the growing demand for improved sleep quality.
Principal Consultant
Global Functional Food Ingredients sales increased at a CAGR of 5.4% from 2019 to 2023. For the next ten years (2024 to 2034), projections are that expenditure on Functional Food Ingredients will rise at 6.7% CAGR
As the global population is aging, there is an increasing focus on functional foods that support healthy aging. Ingredients like glucosamine and chondroitin are sought after for joint health, while omega-3 fatty acids and antioxidants are popular for cardiovascular support.
Additionally, nootropics such as ginkgo biloba and omega-3s are being included into diets to enhance cognitive function. These functional foods aims to solve age-related health concerns, help older adults in maintaining mobility, mental sharpness, and overall well-being. This is driven by a desire to improve quality of life and extend healthy, vigorous years.
The increasing prevalence of chronic diseases such as diabetes, cardiovascular diseases, and obesity, along with widespread micronutrient deficiencies, is driving consumers to find functional foods that provide specific health benefits. These foods are fortified with essential nutrients that help in managing and preventing these conditions.
For instance, foods enriched with omega-3 fatty acids support heart health, while those containing probiotics improve gut health. This shift towards functional foods is part of a broader drift towards preventive healthcare and better nutrition intake.
Tier 1 companies comprise market leaders with market revenue of above USD 80 billion capturing significant sales domain share of 50% to 60% in the global sphere. These business leaders are characterized by high production capacity and a wide product portfolio.
These trade leaders are distinguished by their extensive expertise in manufacturing and reconditioning across multiple packaging formats and a broad geographical reach, underpinned by a robust consumer base. They provide a wide range of series including reconditioning, recycling, and manufacturing utilizing the latest technology and meeting the regulatory standards providing the highest quality.
Prominent companies within tier 1 include Kerry Group, Cargill Incorporated, Archer Daniels Midland (ADM), DuPont Nutrition & Biosciences, Ingredion Incorporated, Tate & Lyle PLC, BASF SE, Royal DSM, Arla Foods Ingredients, Chr. Hansen Holding A/S, Glanbia plc, Friesland Campina, Roquette Frères, and Kemin Industries, Inc.
Tier 2 companies include mid-size players with revenue of USD 20 to 80 billion having presence in specific regions and highly influencing the local retail space. These are characterized by a strong presence overseas and strong consumer base knowledge. These industry players have good technology and ensure regulatory compliance but may not have advanced technology and wide global reach.
Prominent companies in tier 2 include Naturex (acquired by Givaudan), Bioriginal Food & Science Corp., Sabinsa Corporation, Nutraceutical International Corporation, AIDP, Inc., and Brenntag Group
Tier 3 includes the majority of small-scale companies operating at the local presence and serving niche demand space having revenue below USD 20 billion. These companies are notably oriented towards fulfilling local marketplace demands and are consequently classified within the tier 3 share segment.
They are small-scale players and have limited geographical reach. Tier 3, within this context, is recognized as an unorganized field, denoting a sector characterized by a lack of extensive structure and formalization when compared to organized competitors.
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The following table shows the estimated growth rates of the top sales domains. The United Kingdom and India are set to exhibit high Functional Food Ingredients consumption, recording CAGRs of 6.9% and 7.1%, respectively, through 2034.
| Countries | CAGR 2024 to 2034 |
|---|---|
| United States | 4.2% |
| United Kingdom | 6.9% |
| Germany | 5.4% |
| India | 7.1% |
| China | 2.8% |
The ecosystem for Functional Food Ingredients in the United States is projected to exhibit a CAGR of 4.2% during the assessment period. By 2034, revenue from the sales of Functional Food Ingredients in the country is expected to reach USD 3.0 billion.
Increased scientific research has proven the health benefits of functional ingredients which has boosted consumer confidence and demand. Studies confirming the efficacy of probiotics, omega-3s, and antioxidants have made these ingredients more appealing.
At the same time, the rise in plant-based diets has driven demand for plant-derived functional ingredients like proteins and amino acids. Consumers seeking sustainable and ethical food alternatives are shifting to plant-based sources, which offer health benefits without relying on animal- based products.
Functional Food Ingredients demand in Germany is calculated to rise at a value CAGR of 7.3% during the forecast period (2024 to 2034). By 2034, Germany is expected to account for 9.6% of Functional Food Ingredients sales in Europe.
Germans are becoming more health-conscious, which is leading to a higher demand for foods with added health benefits. Ingredients like probiotics, omega-3 fatty acids, and plant extracts are popular for their ability to improve overall health and prevent diseases.
Additionally, the fast-paced lifestyle and the increasing number of single households are driving the need for convenient, ready-to-eat meals that are also nutritious. Functional beverages and snacks, which are easy to consume on-the-go, are particularly popular as they offer both convenience and health benefits.
Integration of Functional Food Ingredients in India is projected to increase at a value CAGR of 4.3% over the next ten years. By 2034, the segment size is forecasted to reach USD 1.3 billion, with India expected to account for a demand space share of 36.9% in South Asia.
Indian consumers are increasingly seeking multifunctional benefits in their foods, preferring ingredients that provides energy, improves sleep, and improves mood. This shows a holistic approach to health, where food is seen as a means to support overall well-being.
Additionally, there is a growing demand for ingredient transparency. Consumers want to know exactly what is in their food, including nutritional content and health claims, developing trust and informed choices. Cultural preferences also play an important role, with traditional ingredients like millets and Ayurvedic herbs gaining popularity. These familiar ingredients are valued for their historical connection with various health benefits.
| Segment | Probiotics (Ingredient Type) |
|---|---|
| Value Share (2024) | 36.7% |
Sales from the Probiotics segment are projected to register a CAGR of 4.2% from 2024 to 2034.
Due to probiotic's proven benefits for digestive health and immunity, consumers are gradually being aware of the importance of gut health in overall well-being. Additionally, the growing interest in natural and preventive healthcare solutions has made probiotics popular. They are now commonly found in various products like yogurts, supplements, and beverages, catering to health-conscious consumers.
| Segment | Bakery and Confectionery (Application) |
|---|---|
| Value Share (2024) | 25.8% |
The Bakery and Confectionery application segment is anticipated to advance at 5.1% CAGR during the projection period.
Manufacturers are responding to consumer demand for healthier bakery options by including nutrient-rich ingredients such as oats, legumes, nuts, and probiotics. These ingredients not only enhance the nutritional composition of bakery products but also add unique flavors and textures. This innovation allows consumers to enjoy their favourite baked goods while benefiting from added health benefits.
Innovation of protein-fortified biscuits which are enriched with plant-based proteins, such as pea or soy protein, to satisfy the growing demand for high-protein snacks. They provide a healthier alternative to traditional biscuits, offering the same taste and texture while delivering additional nutritional benefits.
Market players are focusing on investing in R&D to develop functional ingredients with enhanced health benefits and sensory properties. They are diversifying product portfolios to meet diverse consumer needs and forming strategic partnerships with firms, to leverage expertise and accelerate innovation. These strategies help them stay competitive in the evolving functional food market.
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This segment is further categorized into probiotics, prebiotics, proteins and amino acids, phytochemicals and plant extracts, omega-3 fatty acids, carotenoids, and fibers and specialty carbohydrates.
This segment is further categorized into natural and synthetic.
As application, the ecosystem has been categorized into food and beverage, dairy products, bakery and confectionery, and animal feed.
Industry analysis has been carried out in key countries of North America, Latin America, Europe, East Asia, South Asia, Oceania, and the Middle East & Africa.
The global Functional Food Ingredients industry is estimated at a value of USD 11.3 billion in 2024.
Sales of Functional Food Ingredients increased at 5.4% CAGR between 2019 and 2023.
Kerry Group, Cargill, ADM, DuPont Nutrition & Biosciences, Ingredion Incorporated, Tate & Lyle PLC, BASF SE, Royal DSM, Arla Foods Ingredients, Chr. Hansen Holding A/S, Glanbia plc, FrieslandCampina, Roquette Frères, and Kemin Industries, Inc. are some of the leading players in this industry.
The North America domain is projected to hold a revenue share of 31.9% over the forecast period.
Europe holds 24.3% share of the global demand space for Functional Food Ingredient.
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