Food Grade Alcohol Market Size, Share & Trends Report

Food Grade Alcohol Market Size, Share & Trends Analysis Report By Type (Ethanol, Polyols), By Application (Healthcare & Pharmaceutical, Food, Beverages), By Source, By Function, And Segment Forecasts, 2020 - 2027

  • Published Date: Jun, 2020
  • Base Year for Estimate: 2019
  • Report ID: GVR-2-68038-879-4
  • Format: Electronic (PDF)
  • Historical Data: 2016 - 2018
  • Number of Pages: 184

Report Overview

The global food grade alcohol market size was valued at USD 2.34 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 3.8% from 2020 to 2027. Growth in the food processing industry, coupled with rising demand for alcoholic beverages, is likely to be one of the key factors driving the market for food grade alcohol.

U.S. food grade alcohol market size

Alcoholic beverages, which were earlier considered a premium offering, are now gradually becoming an essential product that can be found in majority of the households globally. Introduction of new products and rising consumption in emerging economies due to burgeoning population have helped in the growth of market.

Growth in volume consumption has benefitted the food grade alcohol industry as it forms an important component of any alcoholic drink worldwide. The changing drinking habits of the millennial population and rising number of craft distilleries have fueled the growth of alcoholic beverages industry.

Moreover, there have been changes in consumer preferences in terms of food and beverage flavors due to new product development by the existing market participants. This is further anticipated to boost the growth of the market in the forthcoming years.

The outbreak of COVID-19 in December 2019 and its deadly effects on North American, Asia Pacific, and European countries, especially China, Italy, France, Germany, Spain, Iran, and U.S., are estimated to result in a demand-supply gap, and thus restrain the product demand. However, growth in the pharmaceutical sector, along with growing need for hand rubs, is estimated to fuel the product demand.

Type Insights

In terms of revenue, ethanol emerged as the dominant type with a share of 71.6% in 2019. This is attributed to growing adoption of product in the food and beverages industry to increase the shelf life of the final product. Polyols are estimated to witness the fastest growth in the near future owing to its primary utilization as a sugar alternative.

Ethanol is extensively used in the end-use industries, including personal care, pharmaceutical, and food and beverage. In the personal care industry, the product is primarily used as an astringent, anti-foaming agent, and preservative in several hair care, skin care, and oral care products. Moreover, it is used as a food additive in several food preparations to enhance the flavors and quality of the food products.

U.S. was the prominent producer, consumer, and exporter of ethanol worldwide. According to U.S. Grains Council, the country’s ethanol production accounted for more than 15 billion gallons in 2019 and Brazil was the major importing country from U.S., with imports accounting for around 400 million gallons in 2019.

Source Insights

In terms of volume, molasses and sugarcane dominated the market with a share of 37.6% in 2019. Molasses and sugarcane are one of the most preferred sources for food grade alcohol production. Key countries sourcing alcohol from sugarcane and molasses include Brazil, India, China, and Thailand owing to abundant raw material availability.

As of 2019, India had about 330 distilleries, which can produce over 4.8 billion liters of rectified spirits (alcohol) per year. Of this total, about 166 distilleries have the capacity to distil 2.6 billion liters of alcohol, which is used in several end-use applications, including food and beverage, pharmaceutical, and fuel production. Whereas, Thailand has 26 functioning alcohol production facilities with installed capacities of 5.89 million liters/day, out of which 11 plants use molasses as a primary source for alcohol production.

Fruits such as apple, grapes, banana, and orange are used in alcoholic beverage preparations. Grapes are extensively used as a raw material in alcohol fermentation in order to produce distilled liquor, such as brandy and wine. The natural sugar content present in grapes provides the necessary material for fermentation and is adequate to produce a wine with an alcohol content equal to or greater than 10 percent. In addition, other fruits such as mangoes, guava, papaya, pineapple, ripe plantain, cashew fruit, and tangerine, which contain ample amount of sugars levels ranging from 10% to 20%, are also used for alcohol production.

The major restraints for fruit-based alcohols include raw material collection, transportation, storage, and pretreatment. Hence, market players are continuously involved in conducting R&D to enhance these operations, thereby optimizing the production cost.

Function Insights

In terms of revenue, coloring and flavoring agent emerged as the dominant function segment with a share of 41.4% in 2019 and is anticipated to witness the fastest growth over the forecast period. In food applications, alcohol is used as an additive, which aids in the even distribution of food colors as well as helps in enhancing the flavor of food extracts. For instance, the most commonly used flavor, i.e. vanilla extract, is made by processing vanilla beans in water and ethanol solution. In U.S., vanilla is called an extract only when it contains an alcohol or ethanol base as regulated by the FDA. In addition, polyols such as sorbitol and isomalt are used as flavoring and coloring agents in several food products.

In pharmaceutical application, polyols such as xylitol and mannitol are used as hard coatings, which is a customary method of covering tablets. It is primarily used to cover unpleasant odors and tastes or to protect actives against light. Furthermore, xylitol in combination with sorbitol is used in the manufacturing of breath mints and other compressed mint tables. Roquette Frères, a French polyol manufacturer, develops and markets a wide range of polyols, including sorbitol, xylitol, and mannitol, as a coating agent for pharmaceutical and food applications.

Application Insights

Food was the dominant application segment of food grade alcohols with a revenue share of 28.2% in 2019. This is attributed to the widespread use of the product as an ingredient in the production of chemical intermediates, blood fractionation/plasma, vaccines, pills and tablets, antibiotics, vitamins, and other variety of medicines. Polyols are also used as an active ingredient in the reduction of brain swelling and acute kidney failure.

Global food grade alcohol market share

Food grade alcohols are used to sterilize the skin before injections. It is also used to sterilize medical devices in the healthcare and pharmaceutical industry. These sterilization applications are expected to accelerate the product demand from the pharmaceuticals industry, especially during disease outbreaks, such as COVID-19. However, disruptions caused in the supply chain network owing to limited availability of workforce and industrial lockdowns in two of the major API producers, i.e. China and India, are likely to impact the market growth negatively. With government support, manufacturers’ attempts to cater to the demand for pharmaceuticals are expected to overcome such market restraints.

Food grade alcohols (ethanol/polyols) are safe for human consumption owing to their purity level (lack of additives). They are produced from feedstocks, such as sugarcane and molasses, fruits, grains, rice, and corn-based products. Furthermore, they play significant role in the manufacturing of flavors and extracts, animal-feed supplements, candy, food dyes, and glazes. These factors are expected to bolster the demand for the product from the food application in the near future.

Regional Insights

Europe emerged as the dominant regional market with a revenue share of 34.1% in 2019. Growing application in the food and beverages sector to fulfill the demand of a large consumer base is anticipated to trigger the regional market growth. The food and beverage sector in Europe provides ample opportunities for the food grade alcohol market in terms of a vast consumer base and novel application scope. Market players in the food and beverages industry in the region continuously aim to develop new products and take up innovation strategies in order to meet the demand and gain a competitive edge in the market.

Alcohol policies in different regions are regulated by the national, regional, and local governments, along with United Nations agencies, the World Health Organization (WHO), and the European Union (EU). The stringent regulation on alcohol consumption concerning the harmful effects and increasing drink and drive cases in the region is estimated to hamper the market growth.

North America is expected to expand at a CAGR of 3.3%, in terms of revenue, from 2020 to 2027.  Food grade alcohol is gaining popularity amongst consumers as well as food and beverage manufacturers owing to its flexibility in manufacturing different variety of food flavors. Additionally, presence of more than 2,500 breweries and distilleries where food-grade alcohol is consumed by several end-use industries is booting the market growth in North America.

U.S. has witnessed a significant number of infected people from the Coronavirus pandemic, which led to the shutdown of firms, production facilities, transport facilities, and other public areas in most of the infected cities. The extension of U.S. lockdown is expected to result in a demand-supply gap due to shortage of labor and restriction in the supply of product is expected to hamper the production of food grade alcohol, thus altering the industry dynamics.

Key Companies & Market Share Insights

The market is fragmented with a significant number of market participants operating at the global or domestic levels. The market competition is intense as industry participants are engaged in maintaining a customer base to have a competitive edge over each other. This has resulted in high ethanol production and exports in the market, especially from the players with sugar manufacturing plants.

The players are trying to compete to gain a greater market share by adopting strategies such as mergers & acquisitions and new product launches. Leading players in the market are engaged in directing their growth strategies, thus heading towards the developing countries for augmenting their research capabilities to strengthen their distribution base and enhance their product portfolios. The market is further characterized by a manufacturer’s focus on R&D for product innovation and diversification. Manufacturers are inclined towards continuous investment in process improvement for consistently meeting the growing demand from the food and beverages and pharmaceutical sectors. Some of the prominent players in the food grade alcohol market are:

  • MGP

  • Cargill, Incorporated

  • ADM

  • Cristalco

  • Grain Processing Corporation

  • Manildra Group

  • Wilmar International Ltd.

  • Roquette Frères

  • Extractohol  

  • Greenfield Global Inc.

  • Pure Alcohol Solutions

  • Ethanolsa Pty Ltd.

  • ILLOVO SUGAR AFRICA (PTY) LTD.

  • Bartow Ethanol of Florida, L.C

  • GODAVARI BIOREFINERIES LTD.

Food Grade Alcohol Market Report Scope

Report Attribute

Details

Market size value in 2020

USD 2.41 billion

Revenue forecast in 2027

USD 3.14 billion

Growth Rate

CAGR of 3.8% from 2020 to 2027

Market demand in 2020

3,576.69 kilotons

Volume forecast in 2027

4,284.40 kilotons

Growth Rate

CAGR of 2.6% from 2020 to 2027

Base year for estimation

2019

Historical data

2016 - 2018

Forecast period

2020 - 2027

Quantitative units

Volume in kilotons, revenue in USD million, and CAGR from 2020 to 2027

Report coverage

Volume and revenue forecast, company ranking, competitive landscape, growth factors, and trends

Segments covered

Type, source, function, application, region

Regional scope

North America; Europe; Asia Pacific; Central & South America; MEA

Country scope

U.S.; Canada; Mexico; U.K.; Germany; France; Italy; Spain; Hungary; China; India; Japan; South Korea; Indonesia; Brazil; Argentina; Saudi Arabia; UAE

Key companies profiled

MGP; Cargill, Incorporated; ADM; Cristalco; Grain Processing Corporation; Manildra Group; Wilmar International Ltd.; Roquette Frères; Extractohol; Greenfield Global Inc.; Pure Alcohol Solutions; Ethanolsa Pty Ltd.; ILLOVO SUGAR AFRICA (PTY) LTD.; Bartow Ethanol of Florida, L.C; GODAVARI BIOREFINERIES LTD.

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Segments Covered in the Report

This report forecasts volume and revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global food grade alcohol market report on the basis of type, source, function, application, and region:

  • Type Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

    • Ethanol

    • Polyols

  • Source Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

    • Molasses & Sugarcane

    • Fruits

    • Grains

    • Others (corn & rice)

  • Function Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

    • Coatings

    • Preservatives

    • Coloring & Flavoring Agent

    • Others

  • Application Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

    • Healthcare & Pharmaceutical

    • Food

    • Beverages

    • Personal Care

    • Others

  • Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

    • North America

      • U.S.

      • Canada

      • Mexico

    • Europe

      • Germany

      • U.K.

      • France

      • Italy

      • Spain

      • Hungary

    • Asia Pacific

      • China

      • India

      • Japan

      • South Korea

      • Indonesia

    • Central & South America

      • Brazil

      • Argentina

    • Middle East & Africa

      • Saudi Arabia

      • UAE

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