Food Grade Alcohol Will Grow At Highest Pace Owing To Increasing Demand From Food & Beverage Industry

Food Grade Alcohol

The food grade alcohol market consists of alcoholic beverages that are generally used for cooking purposes. Food grade alcohol contains around 96% alcohol by volume (ABV) and is also known as denatured alcohol. It provides benefits like extending shelf life, extracting flavors, acting as a preservative in processed foods, and extracting caffeine for coffee along with tea extracts.

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. The growing demand from food & beverage industry for applications like food processing, baked products, beverages, soups & sauces is driving the market growth. Recent product innovations with regards to extraction capabilities and purity levels by key players is fueling the demand.

The Food Grade Alcohol Market Size is witnessing high growth owing to increasing consumption of processed and packaged food items across the globe. In addition, rising health-consciousness has led to surge in demand for low-fat, low-calorie food & beverage products requiring use of food grade alcohol. Technological innovations like extractors with higher efficiencies producing food grade alcohol are further propelling the market.

Market Trends

One of the key trends in the market is the growing preference for organic and all-natural food products. This is fueling the demand for naturally sourced food grade alcohols produced from sugarcane, corn, wheat, and fruits. Another trend is the increasing applications of food grade alcohols in dietary supplements, medicinal syrups, and sanitizers due to its antibacterial properties.

Market Opportunities

Rising popularity of low-alcohol and alcohol-free beverages presents a key opportunity as food grade alcohols are increasingly being used as extracts and flavors in such products. Secondly, growth in food processing industry across emerging nations of Asia Pacific and Latin America will continue creating lucrative opportunities over the forecast period.

Impact of COVID-19 on Food Grade Alcohol Market

The Covid-19 pandemic has significantly impacted the growth of the food grade alcohol market. During the initial outbreak, several countries imposed strict lockdowns and movement restrictions which led to closure of on-trade outlets like restaurants, bars etc. This negatively impacted the demand for food grade alcohol from 20% to 40% as they are majorly used in these outlets for making beverages and food preparations. However, with people stocking up essential items, the off-trade sales especially through online channels witnessed significant rise. Manufacturers also responded swiftly by utilizing their existing alcohol production facilities to meet the surge in demand for hand sanitizers and surface disinfectants.

As the pandemic prolonged, consumers started spending more time at home for food preparation which boosted the sales of ready to cook and ready to eat packaged food products. This increased the use of food grade alcohol as a food additive and preservative in these products. Several new product launches in the packaged food segment incorporated food grade alcohol. The demand from the pharmaceutical industry also rose steadily for producing medicines, disinfectants and sanitizers using food grade alcohol.

Going forward, strong focus on health, hygiene and safety is expected to continue driving the the market even in the post pandemic era. Manufacturers will have to invest in developing innovative solutions, expand production capacities and leverage digital platforms to cater changing consumer demands. Adopting sustainable practices and ensuring steady supply chain will also be critical for long term growth.

Geographical Regions with Highest Consumption of Food Grade Alcohol Market

North America holds the leading share in the global the market in terms of value. The region accounted for over 35% market share in 2024 primarily driven by high consumption in the US. Ease of availability, strong economies, shifting preferences towards healthier and natural ingredients boost the product demand. Growing health awareness and stringent regulations regarding food additives further support the market growth. Asia Pacific is identified as the fastest growing regional market for food grade alcohol attributed to expanding middle class population, rapid urbanization and rising disposable income levels in countries like China and India. Increasing expenditure on processed food, beverages and packaged goods act as a major driver.

Europe stands as another prominent regional market owing to well-established food processing industry and high usage of food grade alcohol as a natural preservative. Countries like Germany, UK, France, Italy contribute substantially to the Europe market. Latin America and Middle East & Africa also present lucrative opportunities for food grade alcohol market participants considering their developing economies and improving standards of living.

So in summary, North America currently leads while Asia Pacific region shows highest growth potential for the market globally over the forecast period.

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