Food Grade Alcohol Market

Market Overview

The global food grade alcohol market size was valued at USD 6849 million in 2022. It is projected to reach USD 11212 million by 2031, growing at a CAGR of 5.63% during the forecast period (2023–2031).

Due to its high purity level, alcohol that has been designated as "food grade" can be consumed by humans without fear of harm. Depending on where it is used, the alcohol will have different requirements for purity, strength, and quality. It is made from a wide variety of plant materials, such as sugarcane, sugar beet, fruits, and others. The global markets for both production and consumption of a product are increasing. Market expansion has been spurred by the rising popularity of drinking alcoholic beverages at social events. It has been a significant motivator for the ethanol industry in recent years. Low-calorie food and sugar substitutes like polyols have come under increased scrutiny due to consumers' growing trend toward healthier eating.

Market Dynamics

What are the Primary Factors driving the Market for Food-Grade Alcohol?

A Rising Need for Polyols in the Food Business

Chocolate, pastries, spreads, bakery items, and non-alcoholic beverages are a few examples of polyols being used commercially because of their reputation as the healthiest sugar alternative. In addition to the above uses, they are frequently used as emulsifiers, bulking agents, taste enhancers, crystallizers, and stabilizing agents. For many uses in the food industry, polyols are a great choice due to their wide variety of desirable functional and organoleptic properties. Manufacturers are continuously using them in food compositions because they allow for replacing conventional sugar without altering the final product's sensory properties (flavor, color, texture). The growing prevalence of chronic diseases worldwide has also increased the emphasis on low-calorie and sugar-free food and drink options. As a result, polyol-containing low-calorie meals are likely to be a significant growth driver for the food-grade alcohol market.

What are the Main Factors that will slow down the Market for Food-Grade Alcohol?

Strict Guidelines on the Use of Alcohol in Food and Beverage Goods

Hygienic labeling and packaging, health claims, a safety data sheet, and other factors are all governed by laws on food-grade alcohol. As one example, the Food and Drug Administration (FDA) requires ethanol factories to be registered with them, adhere to good manufacturing practices, and create a Food Safety Plan that includes a hazard analysis and, if necessary, preventive actions. Market expansion is anticipated to be hindered by the proliferation of rules governing the manufacturing and distribution of ethanol for use in the food and beverage sector.

What are the Future Opportunities for Food-Grade Alcohol?

Increase in Demand in the Emerging Countries

Increased spending on food and nutraceutical products by consumers in the Asia-Pacific region is expected to strengthen the region's reputation as a leader in the global health and wellness industry. Increases in disposable income, consumer expenditure, and health consciousness all contribute to the growing demand for lower-calorie and low-sugar food options. In addition, many countries in this area have among the highest per capita alcohol consumption rates in the world. As a result, the use of ethanol in alcoholic beverages is expected to rise gradually over the next few years. For ethanol and polyol producers, this might mean increased sales and continued success in the booming market for food-grade ethanol.

Segmental Analysis

The global food-grade alcohol market is segmented by type, source, and application.

Based on type, the global food-grade alcohol market is bifurcated into ethanol, sorbitol, xylitol, and others.

The ethanol segment is the highest contributor to the market. Grain alcohol, often known as ethanol, is a colorless, transparent liquid that dissolves easily in water and several chemical compounds. It is created from the hydration of ethylene and occurs naturally due to plant fermentation. It's produced when yeasts convert sugar into alcohol. Ethanol is a common disinfectant and antiseptic in the pharmaceutical industry. Because of its solvent qualities, which make it possible to solubilize many medications, ethyl alcohol is approved by the United States Pharmacopeia (USP) and is considered appropriate for pharmaceutical usage. Its pharmacological effects, which include cooling, and antibacterial, depend on the concentration's strength.

Based on the source, the global food-grade alcohol market is bifurcated into sugarcane, sugar beet & molasses, grains, and others.

The grains segment is the highest contributor to the market. Grain alcohol, often known as ethanol, is a colorless, transparent liquid that dissolves easily in water and several chemical compounds. It is created from the hydration of ethylene and occurs naturally due to plant fermentation. It's produced when yeasts convert sugar into alcohol. Ethanol is a common disinfectant and antiseptic in the pharmaceutical industry. Because of its solvent qualities, which make it possible to solubilize many medications, ethyl alcohol is approved by the United States Pharmacopeia (USP) and is considered appropriate for pharmaceutical usage. Its pharmacological effects, which include cooling, and antibacterial, depend on the concentration's strength.

Based on application, the global food-grade alcohol market is bifurcated into food, beverages, and pharmaceutical & nutraceutical.

The beverages segment is the highest contributor to the market. Alcoholic drinks have traditionally been distilled from ethanol. Wine, brandy, and other distilled liquors are made by fermenting and distilling various grains and fruits to produce ethanol, the main component of the alcohol. Polyols can now expand their market share in response to rising demand for low-calorie beverages, including yogurt drinks, smoothies, and zero-sugar soda. On the contrary, the rapidly increasing demand for alcoholic beverages has created promising growth for ethanol usage in the food-grade alcohol market.

Regional Analysis

The global food-grade alcohol market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

North America Dominates the Global Market

North America is the most significant shareholder in the global food-grade alcohol market. It is because it is both the largest ethanol producer and consumer. The consumers in this area have a greater propensity to eat processed and convenience foods because of their way of life. For this reason, the food processing industry must upgrade to using food-grade ethanol. As awareness of the importance of health issues has grown, so has an interest in eating sugar-free, low-calorie foods. To meet this growing need, companies in the food and beverage industry have created items like low-calorie or sugar-free yogurts, smoothies, and soft drinks. Due to this, polyol (sugar alcohols) has become a promising alternative to cane sugar and is expected to grow in popularity.

Europe is expected to grow during the forecast period. One of the world's top producers and users of alcoholic beverages is found in this area. The expansion of the ethanol market is a result of its increasing use in the production of alcoholic beverages. Due to growing interest in alcoholic beverages, new applications for ethanol are opening up. The pharmaceutical business receives a disproportionate amount of support from European governments. It is why polyols are used in manufacturing so many different types of pharmaceuticals, including but not limited to tablets, pills, and others.

High demand for nutraceuticals can be seen throughout the Asia-Pacific region due to the region's rapidly growing urban population and rising standard of living. Market growth for polyols is predicted to be driven by rising consumer awareness of health issues and the rising trend among consumers to shift dietary patterns in the area. Furthermore, nations like China and India are becoming some of the top manufacturers and users of alcoholic beverages due to their expanding middle classes and disposable incomes. The demand for food-grade ethanol in this area is expected to increase due to this. Due to these factors, Asia-Pacific is projected to have the fastest CAGR over the forecast period.

Due to the increase in urbanization in Latin America, consumer lifestyles and dietary habits have undergone significant transformations. It has led to a shift in the urban population's eating habits toward healthier foods. This shift has increased the consumption of low-calorie food products, which is expected to generate lucrative growth opportunities for the polyols market. This market is anticipated to provide manufacturers with lucrative opportunities. In addition, there is an increase in the consumption of alcoholic beverages in Latin American nations, which is expected to drive the market for food-grade alcohol.

Recent Developments

• November 2022- ASSIST and Cargill collaborated to improve food security in the Philippines by enhancing the skills of smallholder maize growers.
• August 2022- ADM and New Culture Announced a Strategic Partnership to Expand the Market for Alternative Dairy Products

Food Grade Alcohol Market Segmentation

By Type

• Ethanol
• Sorbitol
• Xylitol
• Other

By Source

• Sugarcane
• Sugar Beet & Molasses
• Grains
• Others

By Applications

• Food
• Beverages
• Pharmaceutical & Nutraceutical

By Regions

• North America
• Europe
• Asia-Pacific
• LAMEA