Functional Food Ingredients Market: Current Analysis and Forecast (2021-2027)

Functional foods are foods and ingredients that offer a health benefit beyond basic nutrition for the improvement of outer or inner health. The Academy of Nutrition and Dietetics categorizes the three main functional foods such as natural products (vegetables, fruits, grains, dairy, fish, and meat), enriched or fortified foods, and synthesized food ingredients like prebiotics.

The increasing prevalence of chronic diseases is augmenting the consumer shift towards healthier food alternatives. As per the Food and Agriculture Organization, by 2020, chronic diseases will account for almost three-quarters of all deaths worldwide, and that 75% of deaths are due to stroke, 71% of deaths due to ischaemic heart disease (IHD), and 70% of deaths due to diabetes will occur in developing countries. In addition, the Rising consumer interest, and high awareness of immunity-enhancing properties of proper diet and food habits, are some of the key factors fueling the growth of the global functional food ingredients market. Moreover, the increase in functional food ingredient product sales is burgeoning the growth of the functional food ingredients market. According to the U.S. Census 2020, with 109 million Americans aged 50 or older and 48 million aged 65 and older, lifestyle issues and conditions of aging will progressively drive functional food sales.

However, some of the restraints in the market are adherence to the international quality standards & regulations and lack of awareness about functional ingredients such as prebiotics and probiotics in developing countries.

Based on Type, the market is fragmented into Probiotics, Proteins & amino acids, Phytochemicals & plant extracts, Prebiotics, Fibers & specialty carbohydrates, Omega-3 fatty acids, Carotenoids, Vitamins, and Minerals. The protein & amino acids segment garners a significant share of the functional food ingredient market in 2020. The functional food ingredients such as prebiotics, omega-3 fatty acids, proteins, minerals, fibers, and phytochemicals are mainly derived from plant sources. Plant-based proteins are a major source of protein for vegetarians and vegans. Their low carbon footprint, high nutritional profile, and low price are major factors driving their consumption. Plant-based sources such as Soy, corn, pulses, millet, sorghum, sunflower seeds, wheat, groundnuts, barley, and beans are highly enriched in amino acid content. The increasing inclination of consumers toward natural and plant-based products has been encouraging the demand for plant-based food amino acids.

Based on Health Benefits, the market is segmented into Gut health, Cardiovascular health, Bone health, Immunity, Nutritive health, Weight management, and Other health benefits. The Nutritive Health segment garners a significant share of the functional food ingredient market in 2020. The increasing awareness among the population concerning the health benefits of probiotics and prebiotics is intensifying the segment growth. Moreover, the rising demand for dietary supplements and rising disposable income are further generating lucrative functional food ingredients market growth opportunities.

Based on Application, the market is bifurcated into Food and Beverages. The Beverages segment holds the largest share in 2020 and is expected to register the highest CAGR in the upcoming period. Many Functional food ingredients for example minerals, vitamins, and proteins are used in energy drinks. Numerous energy drinks have been developed by manufacturing companies to deliver specific health benefits, for example promoting heart health, energy-boosting, and improving immunity. With the ever-increasing range of functional applications being sought by consumers, suppliers are using new ingredients that better meet the functional goals of consumers. For instance, in the sports drink field, suppliers are developing their choice of ingredients to improve sports nutrition benefits. Drinks with branch-chained amino acids and creatines growing in popularity.

Based on the Source, the market is bifurcated into Natural and Synthetic. The Natural segment is further segmented into Animal, Microbial, and Plant. The Natural segment holds the largest share in 2020 and is expected to register the highest CAGR in the upcoming period owing to a high preference towards food ingredients in natural form, rising consumer demand for natural ingredients. Moreover, the rising health benefits coupled with ingredients obtained from natural sources are also fueling the functional food ingredients market.

For a better understanding of the market adoption of Functional Food Ingredients, the market is analyzed based on its worldwide presence in the countries such as North America (United States, Canada, and the Rest of North America), Europe (Germany, France, Spain, United Kingdom and Rest of Europe), Asia-Pacific (China, Japan, India, Australia, and Rest of APAC), and Rest of World. North America will dominate the Functional Food Ingredients market on account of the increase in demand for high-priced fortified nutritional food & beverage products in the region. The application of food ingredients is estimated to increase at a faster pace in the region due to its demand among consumers. In addition, the changing customers' lifestyles are also propelling the growth of the functional food industry in the North American region. Some of the major players operating in the market include Amway, Archer Daniels Midland Company, Arla Foods, BASF SE, Cargill Inc, DSM NV, General Mills Inc, Herbalife, Ingredion Incorporated, and Kerry Group PLC. Several M&As along with partnerships have been undertaken by these players to boost their presence in different regions.