Growing Demand for Natural and Clean Label Ingredients is Expected to Drive the Market Growth During the Forecast Period 2022-2027

Functional ingredients are considered as ingredients that have the ability to positively influence health besides basic nutritional value. They are preventative in nature rather than curative. In recent years, there has been substantial growth in consumer demand for natural/organic food products. Owing to different research initiatives and government bans, consumers are becoming more aware of the negative health impacts connected with the intake of certain synthetic or artificial food ingredients. According to a poll performed by the Food Marketing Institute in 2019, 86 percent of consumers believed that food goods or brands that provide thorough and "simple to comprehend" ingredient lists on their labels have a greater level of confidence. The key players in the market have been working on product development and expansion by focusing on novel formulations. Kerry Group, for instance, acquired Fleischmann's Vinegar Company Inc. (FVC), a USDA-certified all-natural specialty ingredient producer, in October 2018, bolstering Kerry's taste and clean-label strategy in a number of European Union countries, thereby generating revenue for Functional Ingredients Industry.

Rapid expansion of health-conscious population in the emerging economies is anticipated to drive the demand for the fortification of food and thus result in the growth of functional ingredients market. Various factors including growing instances of chronic diseases and micronutrient deficiencies, upsurge in the middle-class income in developing economies, new governmental fortification programs, augmenting interest in health and wellness owing to COVID-19 pandemic, is projected to propel the sales of functional foods, further driving the demand for functional ingredients. The rise in the demand for product innovations and development of existing products by the key players in the market to consolidate their position has propelled the investment heavily in R&D and capital investments for these initiatives, which is estimated to create a positive impact on the growth of the Functional Ingredients market in the coming years. For instance, Kerry Group, an Irish food firm that sells food and beverage components, bought Niacet for $1,011.80 million (€853 million) in June 2021. Kerry integrated Niacet into its worldwide food protection and preservation platform as a result of this acquisition, expanding its food protection, food ingredient, and preservation strategy to offer new products and technology to a wider market. Probiotics are widely used in baked goods, confectionery products, dairy products, breakfast cereals, and others. According to World Health Organization approximately 280 million people in the world have depression as of now. Depression is a mood disorder that lasts for at least 2 weeks and can have a range of symptoms like feeling sad, worthless, irritable, and so on. According to the National Centre for Complementary and Integrative Health Trusted Source, probiotics contain living microorganisms that contribute to a person’s microbiome, whereas prebiotics help maintains the health of these microorganisms. The health of the microbiome may affect Central Nervous System (CSN) disorders including some mental disorders like depression. This shift in strategy is largely due to consumer pressure in the United States, where many people are health-conscious and demand certain ingredients in the products, thereby, driving the Functional Ingredients Industry.

The Functional Ingredients market in North America is expected to grow as the customers are becoming more aware of Functional Ingredients as a result of big marketing campaigns. Consumers are becoming more conscious of the necessity of a balanced diet and active lifestyle as a result of the high prevalence of diabetes in the country, leading them to prefer natural sweeteners such as stevia beverages. According to the CDC's Division of Diabetes Translation, there are approximately 34 million persons in the United States who have diabetes as of 2018. According to FMCG Gurus, clean label, natural ingredients are becoming increasingly significant in the market, with 37% of Mexican consumers stating it's crucial for beverages to have natural claims. More than one-third of people equate the word "natural" with additive-free, organic, healthier, and environmentally friendly products. The growing trend of vegetarianism and veganism is one of the key factors for the rise of plant protein components in the region which further drives the Functional Ingredients Industry.

According to The International Food Information Council (IFIC) Foundation’s 2017 Food & Health Survey, more than 2 billion people globally have micronutrient deficiencies owing to the lack of essential vitamins and minerals each day. With the rise in the adoption of urban lifestyle, these deficiencies were further worsened. But now people are becoming more health-conscious. The pandemic accelerated the ever-increasing focus on health and wellbeing. During the pandemic when people were forced to stay indoors, snacking at home became a common habit. People started having snack food as regular food instead of consuming them between main meals which were healthy and with low sugar and low-fat attributes. Lifestyle-related issues, such as diabetes and obesity, are also driving the growth functional ingredient market. Furthermore, the frequency of chronic non-communicable diseases such as cardiovascular disease (CVD), high blood pressure, and type 2 diabetes has risen, raising concerns about rising healthcare expenditures and lowered quality of life. For instance, according to WHO, the most common NCD is cardiovascular disease, which fatalities 17.9 million people each year, followed by cancer (9.3 million), respiratory disorders (4.1 million), and diabetes (4.1 million) (1.5 million). Rapid unplanned urbanization, globalization of unhealthy lifestyles, and population aging are all driving reasons behind these diseases. Raised blood pressure, increased blood glucose, high blood lipids, and obesity are all symptoms of poor diet and lack of physical activity. These are known as metabolic risk factors, and they can contribute to cardiovascular disease, which is the major cause of early mortality which in turn is driving the Functional Ingredients Market.

Many pioneers have jumped into the vegan movement by heavily investing in plant-based food processing businesses, regardless of their primary business. This pattern has persisted, and many investments and deals in the plant-based food industry have occurred globally in recent years. Thus, increasing the growth of the Functional Ingredients Market. For instance, in May 2020, Nestle SA invested $103.3 million in China, its second-largest market, to expand and boost its operations. In Tianjin, the company plans to open its first plant-based product’s production line, as well as invest more in its regional confectionery market and upgrade its Nestle Chengzhen Wafer line. Vegan food is expected to grow in popularity in India by 2022, according to surveys, as people notice several health benefits such as lower cholesterol levels, weight loss, and reversing lifestyle disorders. Veganism and its health benefits are now being promoted by a number of celebrities. People are becoming more aware of the benefits of adopting a vegan diet, which will contribute to the growth of the vegan food market globally. Thus, increasing the growth of the Functional Ingredients Market.

In 2020, Kerry Group expanded its clean-label food protection capabilities through the acquisition of two companies, Georgia-based IsoAge Technologies, and Biosecur Lab, located in Quebec, Food Ingredients First reported.

The major companies in the Functional Ingredients Market include BASF SE, Archer Daniels Midland Company, DowDuPont, Cargill Incorporated, and Arla Foods. In July 2020, DuPont launched a plant-based Danisco Planit portfolio to widen product options.

The rise in the market for functional ingredients can be ascribed to rising consumer health awareness, which has led to a rise in the adoption of better diets. In the coming years, rising health concerns and expanding health challenges such as obesity, diabetes, and digestive ailments are expected to propel the market forward. The food and beverage sector has seen a significant increase in demand for functional ingredients as a result of new investments and the introduction of novel products by major producers. For instance, in 2021, Arla Foods Ingredients launched a new whey protein ingredient to help meet the growing demand for high protein yogurts with health credentials and a premium positioning.