Global Dry Chilies Market Outlook to 2030

Global Dry Chilies Market Overview

• In 2023, the Global Dry Chilies Market was estimated at USD 1.60 billion, experiencing steady growth during the historical period (2018-2023). The market's expansion is driven by increasing demand for spice and flavor enhancement in global cuisines, coupled with the rising popularity of ethnic foods in various regions.
• Key players in the global dry chilies market include McCormick & Company, Everest Spices, MDH Spices, and Badshah Masala. These companies are leading the market with extensive product portfolios and innovative processing techniques that enhance the quality and flavor of dry chilies.
• India, China, and Mexico are the leading producers and exporters of dry chilies, owing to favorable climatic conditions and a long-standing tradition of chili cultivation. These countries dominate the global supply chain and have substantially invested in improving yield quality and processing technology.
• In 2020, McCormick acquired FONA International for USD 710 million on a cash-free, debt-free basis. FONA is known for its clean and natural flavors, which complement McCormick's existing product offerings. This acquisition is part of McCormick's strategy to broaden its flavor solutions and enhance its market presence in the Americas.

Global Dry Chilies Market Segmentation

The Global Dry Chilies Market can be segmented based on type, application, distribution channel, end-user, and region:

• By Type: The market is segmented into whole chilies, chili powder, and chili flakes. In 2023, the chili powder segment held the largest market share due to its widespread use in culinary applications across different cuisines. The popularity of chili powder is driven by its ease of use, consistent flavor profile, and long shelf life, making it a preferred choice for consumers and manufacturers alike.

• By Application: The market is further segmented into food processing, household consumption, pharmaceuticals, and others. The food processing segment led the market in 2023, supported by the growing demand for spicy and flavorful ready-to-eat meals, sauces, and snacks. This segment's growth is also fueled by the increasing popularity of ethnic and regional foods in the global market.

• By Region: The global market is segmented into North America, Europe, Asia-Pacific (APAC), Latin America, and Middle East & Africa (MEA). Asia-Pacific dominated the market with a substantial share in 2023, driven by the region's large production base, high domestic consumption of dry chilies, growing exports to meet global demand, and favorable government policies supporting agricultural exports.

Global Dry Chilies Market Competitive Landscape

• Badshah Masala: Dabur has acquired a 51% stake in Badshah Masala for USD 70 Mn, valuing the entire company at USD 138 Mn. This acquisition reflects a revenue multiple of approximately 4.5x and an EBITDA multiple of about 19.6x, based on the estimated financials for FY2022-23, highlighting Dabur's strategic move to expand its presence in the spice and condiment market.
• McCormick & Company: In April 2024, McCormick entered into a partnership with Cognizant to transform and manage its global technology infrastructure. This agreement aims to enhance employee and customer experiences through AI-driven solutions, indicating McCormick's focus on digital transformation alongside its growth strategies.

Global Dry Chilies Industry Analysis

Growth Drivers:

• Rising Demand for Spices in Global Cuisines: The global demand for dry chilies is propelled by the increasing popularity of spicy and flavorful foods, especially in Western countries where ethnic cuisines are gaining traction. Europe, accounting for 40% of global dry chili imports, is expected to see annual growth of 7.5% in value and 6.1% in volume from 2017 to 2027. By 2021, imports are projected to reach USD 493 million and 178 thousand tonnes. The shift towards adventurous eating habits and the influence of global food culture have boosted the consumption of dry chilies.
• Expansion of the Processed Food Industry: The growing processed food industry, particularly in developing countries, is driving the demand for dry chilies. The food processing sector in India contributed 10.54% of the gross value added (GVA) in Manufacturing and 11.57% of GVA in the Agriculture sector in 2020-21. Chili-based sauces, snacks, and ready-to-eat meals have become staples in many households, contributing to the steady growth of the dry chilies market.
• Technological Advancements in Processing and Packaging: Recent innovations in processing and packaging technologies have improved the quality, safety, and shelf life of dry chilies, making them more attractive to consumers and food manufacturers. Advanced drying methods and packaging solutions, such as vacuum sealing and modified atmosphere packaging, preserve flavor and freshness, reducing spoilage and extending product longevity. These technological advancements have also streamlined the supply chain, enabling producers to export high-quality.

Challenges:

• Fluctuating Raw Material Prices: The dry chilies market faces important challenges due to the volatility of raw chili prices, which can fluctuate sharply because of unpredictable weather conditions, pest infestations, and other environmental factors. For instance, droughts or excessive rainfall can adversely affect chili crop yields, leading to supply shortages and price spikes. Additionally, pest infestations and diseases can further reduce crop quality and quantity, exacerbating price volatility.
• Regulatory Compliance and Quality Standards: Navigating the intricate regulatory landscape is another noteworthy hurdle for chili producers and exporters, especially in international markets. Different countries have varying food safety standards, pesticide residue limits, and quality certifications that exporters must comply with to gain market access. The European Union and the United States have stringent regulations regarding food safety, traceability, and quality control that require comprehensive documentation and adherence to international standards such as ISO, HACCP, and organic certifications.

Global Dry Chilies Market Government Initiatives

• Indias 2024 Agricultural Export Policy: The Indian government introduced the 2024 Agricultural Export Policy with a strong focus on bolstering the export of dry chilies, a major agricultural commodity for the country. The policy outlines several strategic measures, including the development of better infrastructure such as improved storage facilities and transportation networks to reduce post-harvest losses and maintain chili quality during transit.
• Mexicos Agricultural Innovation Fund: Mexico has launched an Agricultural Innovation Fund dedicated to supporting research and development in chili cultivation, recognizing the crop's economic importance and export potential. This fund focuses on developing new chili varieties that are more resistant to diseases and pests, which can impact crop yields and quality.

Global Dry Chilies Market Future Outlook to 2028

The global dry chilies market is expected to witness steady growth during the forecast period (2023-2028), driven by rising demand for spicy foods and increasing global trade of chili products.

Future Market Trends:

• Growth in Organic Chili Production: The demand for organic and sustainably sourced chili products is expected to rise, particularly in North America and Europe. The trend towards clean-label and organic foods will drive the growth of this segment, with more producers adopting organic farming practices.
• Increasing Use of Dry Chilies in Health and Wellness Products: The growing awareness of the health benefits of chilies, such as their anti-inflammatory properties and high antioxidant content, will boost their use in health and wellness products. This trend is expected to open new avenues for market growth, particularly in the pharmaceutical and nutraceutical sectors.