Clean Label Ingredients Market

Market Overview

The global clean label ingredients market size was valued at USD 20.9 billion in 2021 and is projected to reach USD 44.46 billion by 2030 at a CAGR of 8.90 from 2022 to 2030.

Clean label  ingredients are food additives and ingredients, such as colours, flavours, fruit and vegetable ingredients, starch & sweeteners, flours, “and malt, that meet any or all of the primary criteria and at least one of the secondary criteria.” Primary factors include fewer product ingredients with chemical names that are easy to ‘understand and no artificial ingredients; secondary factors include natural, organic, and non-GMO qualities.’ The greater the number of ingredients in food, the more artificial it becomes. For a healthy lifestyle and to reduce the risk of infection caused by artificial food items, consumers are demanding natural and organic ingredients.

The COVID-19 pandemic had a substantial impact on the market for clean label ingredients. The purchasing habits of consumers have shifted; they have become more health-conscious and cautious about food than in the past. Beyond labels and products, COVID-19 has altered the consumer's perception of cleanliness. Consumers continue to place a premium on clean labels for both in-home and away-from-home purchases; as a result, this factor contributes to an increase in the use of clean label ingredients in various food applications.

Market Dynamics

Market Drivers For The Clean Label Ingredients Market

• Increasing Awareness Is Driving The Market

The growth of the market is attributable to the rising interest in identifying the ingredients present in food and beverage products worldwide, particularly among health-conscious consumers. In recent years, free-from products have exploded in popularity across all retail formats. The increasing demand for transparent and natural ingredients for children has prompted parents to favour foods with clean ingredient labels for their children.

• Demand For Clean Drinking Water Is Driving The Market

Consumption of bacteria- and chemical-free water increases as consumer awareness of the importance of safe, nutrient-rich drinking water increases. The pharmaceutical, biopharmaceutical, and food industries utilise testing of drinking and manufacturing water. The prevalence of water-borne diseases such as typhoid, dysentery, and cholera has a significant impact on the market expansion.

The increasing government awareness and support for providing clean drinking water and manufacturing water has fueled the growth of the market. In addition, the increasing use of these ingredients in restaurants, coffee shops, and hotels to meet the preferences and tastes of customers has a positive effect on their overall sales. Moreover, market leaders are focusing on a variety of initiatives to increase consumer awareness of the benefits of clean label ingredients.

• Government Regulations Driving The Market

Due to the increasing number of synthetic products on the market, the government regulatory bodies of various countries are becoming involved in the labelling of products from various industries. Globally, more and more food products with ""free-from"" claims appear on supermarket shelves and restaurant menus. This is a result of the increasing number of consumers who are extremely conscientious about the food and beverages they consume. The absence of artificial ingredients is one of the most sought-after free-from claims, compelling food and beverage manufacturers to eliminate their use.

Restraints For Clean Label Ingredients Market

• Lack Of A Universal Set Of Standards

Geographic attitudes have significant implications on a global market, making it challenging to establish a universal set of standards for clean label ingredients. All-natural, purer ingredients are more expensive and may shorten the shelf life of a product. The development of a wide variety of products has resulted in a rise in the number of challenges, such as those pertaining to shelf life and processing requirements. Consumers are demanding more simplified ingredients as well as shorter clean labels. However, they are not willing to compromise on quality or taste. This balance is a significant challenge for ingredient formulators and product manufacturers alike.

In addition, they increase the product stock to meet the requirements of stricter regulations. This tends to increase the total cost of production, resulting in a price increase. This factor may pose a substantial threat to the expansion of the Clean Label Ingredients Market. Product transparency presents an opportunity for manufacturers and brands to emerge as trustworthy sources for consumers, thereby assisting providers in enhancing their image and market standing.

Opportunities For The Global Clean Label Ingredients Market

• R&D Creating Room For New Opportunities

Through the development of new products, companies have begun to invest significantly in R&D in order to increase their market share significantly. However, the development of a clean label product is a highly complex process requiring tedious operations such as the removal of high-functionality ingredients that have been traditionally used for specific purposes and their replacement with a clean label ingredient without compromising the product's overall taste or quality.

Moreover, The interest of consumers in ingredients is increasing, as are their origins' development and innovation in product sales. This trend is expected to create lucrative opportunities in the clean label ingredients market.

Segmental Analysis

On the basis of Form, the market is divided into Dry and Liquid segments. The dry form is the largest and most rapidly expanding segment. This is due to its stability and manageability during supply chain operations. In addition, the ease of production at lower costs and the versatility of their use in a vast array of food and beverage products have contributed to the rise in demand for dry ingredients.

The market is segmented on Type into Natural Flavors, Natural Colors, Malt, Flour, and Others. This market was dominated by the flour market. As an essential ingredient, flour is used extensively in a variety of food applications, including bakery, packaged foods, beverages, dressings & sauces, and confectionery. Natural colours are anticipated to be the segment with the highest growth rate. This growth is attributable to consumers' increasing awareness of the adverse health effects of artificial colours, their eco-friendly nature, and additional health benefits.

By application, the market is segmented into Bakery, Beverages, Snacks and Cereals, and Others. The segment of prepared foods/ready meals & processed foods dominated the global market. This application's dominance is frequently attributed to consumers' hectic lifestyles, as a result of which they favour convenience foods. The market for cereals and snacks is anticipated to grow at the quickest rate due to an increase in the number of snacking occasions between meals, as well as consumer demand for more convenient and nutritious alternatives to junk food.

Regional Analysis

Based on regional analysis, the Global Clean Label Ingredients Market is segmented into North America, Europe, Asia Pacific, and the Rest of the World. The North American region held the largest market share in the Clean Label Ingredients Market, as North America has the highest number of products with clean labels and consequently the highest consumption of clean label ingredients. During the forecast period considered by this study, Asia-Pacific is anticipated to be the market with the highest growth rate. The demand for clean label ingredients in the Asia-Pacific region is being driven by rising consumer awareness and health consciousness regarding the adverse effects of artificial ingredients.

Recent Developments

• In 2021, Koninklijke DSM N.V. acquired First Choice Ingredients, a leader in the US taste market, as a developer of clean label, fermented dairy, and dairy-based savoury flavourings for taste and functional solutions in a variety of applications. The acquired company ferments and combines a variety of natural dairy products with cultures and enzymes to produce clean-label taste solutions with sensory and functional benefits. The strategy behind the acquisition grants First Choice Ingredients access to DSM's world-leading biotechnology tools, fermentation expertise, and global client relationships. The primary objective of Koninklijke DSM N.V.'s current endeavours is to grow the business.
• In 2021, Cargill, Inc. introduced SimPure rice flour, a clean-label bulking agent with a comparable flavour, texture, and functionality to maltodextrin. At the SupplySide West trade show, the company officially unveiled the new ingredient. The primary objective of this innovation was to broaden the company's product lineup.
• Archer-Daniels-Midland Company has added two organic flours to its complementing range of organic and grain-based products in the year 2020. The motivation behind this innovation was to enable the company to meet the rising consumer demand for clean label ingredients.

Clean Label Ingredients Market Segmentation

On the basis of Type

• Natural Flavors
• Malt
• Flour
• Natural Colors
• Others

On the basis of Form

• Dry
• Liquid

On the basis of Application

• Bakery
• Beverages
• Snacks and Cereals
• Others