Fermentation Chemicals Market

Market Overview

The global fermentation chemicals market size was valued at USD 65.06 billion in 2021 and is expected to generate USD 98.34 billion by 2030.

The market is projected to grow at a CAGR of 5.30% during the forecast period (2022–2030). Vegetable feedstocks like corn, sugar, and starch are used to make fermentation chemicals. Fermentation reactions are commonly utilized in manufacturing foods and drinks on a big scale. Food (nutritional) quality, flavor, and durability are improved through fermentation reactions and products. Primary fermentation processes such as ethanol (beverages), lactic acid (dairy products, vegetables, and sourdough), propionic acid fermentations (cheese), and others are commonly utilized for this purpose.

The global fermentation chemicals market is segmented based on product, application, and region. 

Market Dynamics

Market Drivers

• Environment-friendliness of Fermentation Chemicals 

Fermentation chemicals are used in various end-user industries to increase the rate of a chemical reaction. These are eco-friendly and less expensive compared to petroleum-based chemicals. The demand for fermentation chemicals is expected to grow in the years to come because of their function to accelerate the reaction rate resulting in lower production time.

The absence of feedstock such as sugarcane, corn, and soybean in adequate quantities has driven the focus of various industries toward fermentation chemicals. Moreover, increasing emphasis on using bio-based chemicals over petrochemicals is expected to drive the demand for the product. Growing crude oil prices and rising concerns about carbon discharge are the main reasons pushing the shift toward bio-based chemicals.

Fermentation chemicals find applications in various end-use industries, including pharmaceuticals, textiles, metals, personal care & cosmetics, and others. The chemicals have witnessed substantial demand in the past few years owing to rising demand for end-use products, including processed foods and nutritional & pharmaceuticals. The demand is observed to be more prominent in the Asia-Pacific region due to the presence of a significant number of manufacturing companies and the growing trend of consuming organic products among consumers.

• Growing Major End-Use Industries

Fermentation chemicals find applications in various end-use industries, including pharmaceuticals, textiles, metals, personal care & cosmetics, and others. These chemicals have witnessed substantial demand in the past few years owing to rising demand for end-use products, including processed foods and nutritional & pharmaceuticals. The demand is observed to be more prominent in the Asia-Pacific region due to a significant number of manufacturing companies and the growing trend of consuming organic products among consumers.

The growing safety concerns regarding plastic dumping and overflowing landfills are driving the global PHA market growth. Government sanctions that make bioplastics packaging mandatory and incentives for green packaging companies in the form of tax rebates have also prompted the growth of PHA in the recent past and the trend is expected to continue over the forecast period. The growing demand for PHA globally is expected to drive the global market for fermentation chemicals over the forecast period.

Market Restraints

• Complex and Cost-Intensive Manufacturing Processes

The industrial fermentation process for obtaining products, such as bioplastics, biofuels, polymers (xanthan, polyhydroxyalkanoates (PHA), and polylactic acid (PLA)), and composites, is a highly complex, multistep one. It requires high capital investment and a high level of expertise. The process helps convert sugars, cellulosic materials, and starches into fuel, food ingredients, feed, and other industrial products.

This increases the number of processing steps and the overall cost by almost 10% compared to the direct conversion of vegetable feedstock into desired products. The procedure of converting cellulosic materials is even more complex and is not yet used on a commercial scale. Commercializing cellulosic material fermentation requires technological advancements and reduced raw material costs for profitability.

Given the limited availability and depletion of arable and fertile land, the effective and efficient use of biomass is of high priority for market participants. Another major barrier to market uptake is the higher production cost through various biological processes. Setting up of new biorefineries for manufacturing fermentation chemicals incurs high capital costs and R&D expenditure by major market participants.

Market Opportunities

• Rise in Opportunities for Green Chemistry

Green chemistry is the research and development of chemical products and processes that use fewer or no hazardous substances. Green chemistry refers to the complete life cycle of a chemical product, including its design, manufacture, use, and disposal. Green chemistry is also known as sustainable chemistry.

Green chemistry is a term that refers to the use of chemicals where,

• pollution is avoided at the molecular level
• is a chemistry philosophy that applies to all aspects of the subject, not just one field
• applying cutting-edge scientific answers to real-life environmental issues
• it stops pollution from being generated, it reduces the source of pollution
• it reduces the harmful health and environmental effects of chemical goods and processes

Fermentation chemicals such as citric acid, ethanol, and acetic acid are produced by microorganisms such as fungi, bacteria, and eukaryotic cells. These are the most used additives, antioxidants, preservatives, and flavors in a variety of industrial settings, including food & beverages.

Regional Analysis

Significant Growth in North America

The global fermentation chemicals market share is segmented into four regions: North America, Europe, Asia-Pacific, Middle East & Africa, and Central and South America. In 2020, North America accounted for the largest share of the global fermentation chemicals market. The North American fermentation chemicals market share is expected to generate USD 42,201.17 million by 2030, at a CAGR of 4.89%. North America dominated the fermentation chemicals market share in 2020, accounting for 42.06% of total revenue. Due to the sheer existence of prominent market players, North America is the dominant area.

Expanding the pharmaceutical industry in countries such as Mexico and the U.S. is expected to surge the demand for fermentation chemicals. According to the report published by a pharmaceutical manufacturer, AstraZeneca, in 2020, the global pharmaceutical market witnessed an increase of 3.8% in terms of revenue. The market in countries like the U.S., Japan, Germany, and others grew by 3.7% in terms of revenue.

The North America pharmaceutical market share is expected to reach approximately USD 633 billion by 2024, at a CAGR of 3.5%. This is attributed to the increasing aging population and rising cases of non-communicable diseases such as cardiovascular diseases, chronic respiratory diseases, cancer, and diabetes, which is anticipated to fuel the demand for pharmaceutical products in the region. This, in turn, is spurring the demand for fermentation chemicals. Moreover, the outbreak of COVID-19 has surged the demand for antiviral drugs to treat the affected patients and vaccines, which is expected to drive the demand for fermentation chemicals in North America.

The growing demand for food & beverage products in the region is expected to bolster the need for fermentation chemicals. According to a report by the U.S. Committee for Economic Development, the food & beverage industry comprises approximately 27,000 companies and contributes nearly 5% to the total U.S. GDP.

The Asia-Pacific fermentation chemicals market is expecting lucrative growth in the coming future. Asia-Pacific fermentation chemicals market share is expected to generate a value of USD  26,301.95 million by 2030 at the highest CAGR of 5.14% during the forecast period.

The growing population in countries such as India and China, coupled with rising income levels and purchasing power parity, has led to the high demand for the above-mentioned products. In addition, the rapidly growing number of food & beverage start-ups, especially in India, is projected to boost the demand for fermentation chemicals in several industries over the forecast period.

Segmental Analysis

The global fermentation chemicals market is classified into product and application.

Based on Product

The fermentation chemicals market is segmented into alcohol, enzymes, organic acid, and others. The alcohol segment is dominant over other product types of fermentation chemicals and is expected to generate USD 30,118.57 million by 2030. It is expected to grow at a CAGR of 4.9% during the forecast period.

Alcohol represents a group of chemicals with an OH functional group produced through a fermentation process. Alcohol is mainly of four types, including denatured, isopropyl, rubbing, and ethyl. It is used as a solvent in a wide variety of chemical processes involving distillation and extraction, and alcohol is used as the main ingredient in alcoholic beverages. It can be derived from various sugars, fruits, and starch sources such as sugar cane, sweet sorghum, corn, wheat, and potato. In the personal care industry, alcohol is mainly used in formulating cosmetic products such as anti-foaming creams, astringents, and preservatives in hair care, sink care, and oral care products. In addition, it is used as a food additive to enhance the flavors and help improve the food quality.

It is used as a solvent in a variety of industrial applications such as chemical processing. It is a major component in paints and tinctures due to its miscibility with water. The increasing use of alcohol in industries including personal care, pharmaceutical, and food & beverage is anticipated to drive the product demand over the forecast period.

Based on Application 

The fermentation chemicals market is segmented into five categories: industrial application, food & beverages, nutritional & pharmaceuticals, plastics & fibers, and others. The food & beverages segment is anticipated to generate USD 25,693.64 million by 2030 at a CAGRof 4.38%.

As it helps to extend the shelf life of food through preservation, the increasing penetration of processed food and beverages will be a major factor driving the overall market growth. Furthermore, growing trends such as the development of food processing technologies, reducing harmful alterations in food, and preserving nutritional value are boosting the fermentation chemical industry.

Growing population base across the world is expected to surge the demand for food & beverages. This is presumed to have a direct positive influence on the fermentation chemicals market. Food products traditionally produced through fermentation chemicals include dairy products such as kefir, yogurt, sour cream, and cheeses; food additives such as flavors; alcoholic beverages inclusive of distilled spirits, beer, and wine; plant products, which include tofu, sauce, soy, coffee, bread, sauerkraut; and fermented meat and fish, including salami and pepperoni.

According to the U.S. Department of Agriculture (USDA), total American cheese production in the U.S. was 5,253.8 million lb, 5,232.2 million lb, and 5,341.5 million lb in 2018, 2019, and 2020, respectively. This signifies the positive market growth of fermentation chemicals in the food & beverage application market.

Impact of covid-19

In December 2019, the Covid-19 pandemic originated in Wuhan, Hubei Province, China. The World Health Organization (WHO) declared a public health emergency and high alert in early March 2020. This pandemic posed a serious threat to humans and economics. This unprecedented crisis has led to a rise in demand for patient engagement solutions and remote monitoring. Currently, most healthcare facilities are trying to expand homecare settings or other temporary setups that are intended to offer optimal care.

The state of urgency has led to the growing demand for ventilators and other personal protective equipment. Manufacturers, even from other industries, have focused their efforts on meeting the demand for such personal protective devices in contrast to their product portfolio. For the fermentation chemicals market, the government-imposed lockdown and barriers to cross-border transportation have highly affected the raw material supply chain resulting in their increased prices, ultimately increasing the cost of raw materials for manufacturers.

Thus, manufacturers started sourcing from local raw material suppliers. This is expected to create high demand for fermentation chemicals coupled with an increased preference for organic feedstocks in the coming years.

Recent Developments

• March 2018- Modern Meadow established a long-term collaboration with Evonik, a leading provider of microbial fermentation, to help them scale up their collagen and fermentation production. Modern Meadow will work with Evonik to industrialize and scale-up collagen production for use in the company's bio leather materials technology under the terms of the agreement.