Vegetable oils and fats are extracted from a wide range of plant sources. Whilst many seeds and nuts are a source of oils, approximately 30 vegetable oils and fats are commercially available. Vegetable oils are usually edible oils, while non-edible oils derived mainly from petroleum are termed mineral oils. Vegetable fats are mixtures of triglycerides. Soybean oil, rapeseed oil, olive oil, palm oil, rice bran oil, and cocoa butter are some of the major fats used globally. In common usage, vegetable oil refers exclusively to vegetable fats which are liquid at room temperature. Fats can be segmented into three major types: saturated fats, unsaturated fats, and Trans fat.
The global vegetable fats and the oil market was valued at ~USD 235 billion in 2020 and it is expected to grow at a CAGR of 4% from 2020 to 2027 due to rising awareness to use healthier alternatives among consumers and favorable policies implemented by many regions to support the production and consumption of vegetable oils. Palm oil is the largest segment in the vegetable oil market. Whereas, butter and margarine have the highest market share in the fat market segment. Europe dominates the global vegetable fats and oils market with more than 35% market share. However, APAC is expected to witness the fastest growth during the forecast period owing to the presence of two leading palm and palm kernel oil producers like Malaysia and Indonesia, and two major fats & oils consuming countries like China and India.
Raw material cost is the major cost component of vegetable fats and oil production. Major raw materials are seeds of sunflower, palm kernel, safflower, cotton, sesame, grapeseed, peanut, soybean, almond, etc. It accounted for more than 50% of the overall vegetable fats and oil production cost. Other key cost components include utility costs, machinery cost, and labor cost. As vegetable fats and oil manufacturers across the world need to depend on a few key raw material suppliers from Asia, many manufacturers started to outsource their manufacturing operations within APAC to reduce logistics and labor costs and increase profitability.
The Covid-19 pandemic affected the global vegetable fats and oils market negatively. As many governments were forced to temporarily halt large-scale industrial operations, the production of vegetable fats and oils dropped significantly during the period. India and many European countries are largely dependent on Indonesia and Malaysia for their palm oil import. The lockdown created a big demand-supply gap of oilseed-processed products in the domestic market of India and Europe. As the demand is rising in these regions, there was no efficient availability of raw materials. This resulted in a significant increase in the price of raw materials for vegetable fats and oil production.
Associated British Foods, Archer Daniels Midland Company, Bunge Limited, Wilmar International Limited, United Plantations Berhad, Unilever, Ajinomoto Co., Inc., and Mewah International Inc. are some of the key suppliers of vegetable fats and oils. The global vegetable fats and oils industry feature a highly fragmented landscape as the industry leaders contributes less than 20% of the overall market share. Leading suppliers are strengthening their presence through multiple mergers and acquisitions. Grand View Research will help our client identify the best-suited suppliers by mapping their core capabilities and operational efficiency.
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