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The global botanical extracts market size was USD 4.65 billion in 2020 and is expected to grow from USD 5.05 billion in 2021 to USD 9.62 billion by 2028 at a CAGR of 9.6% during the forecast period (2021-2028). The global impact of COVID-19 has been unprecedented and staggering, witnessing a marginally negative impact on supply & demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of -0.27% in 2020 as compared to the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.
The demand for botanical extract is anticipated to witness a strong gain over the forecast period on account of its numerous related health benefits and its ability to work as an alternative to modern medicine. Growing demand for convenience food, rising awareness concerning the benefits of herbal products over synthetic products, and increasing demand for food and other applications are significant factors anticipated to boost product demand.
Supply Chain Disruptions amid COVID-19 to Hamper Performance
The outbreak of COVID-19 since the beginning of 2020 has severely hit the market, which led to disruption in the supply chain of botanical extracts. Thus, a supply crunch was witnessed by a few manufacturers, which resulted in fluctuation in raw material prices. Besides, several cosmetic stores were also shutdown owing to lockdowns imposed by many countries. However, increasing consumption of immunity-boosting herbal dietary supplements and functional food products to maintain optimal health amid the pandemic is likely to spur the product demand in food & beverages and dietary supplement industries over the short term.
The product demand was slightly impacted in 2020 after the COVID-19 outbreak. This is due to the slowdown of the cosmetics industry in the region that uses botanical extracts as an ingredient. The sales of cosmetics, such as face creams, lotions, and other skincare products, declined during the end of the first quarter of 2020 due to shift in consumer behavior toward beauty products as non-essential products during the pandemic. However, growing demand for botanical-based dietary supplements, particularly immunity-boosting herbal supplements and strong growth of packaged food products amid pandemic is likely to favor the botanical extracts market growth.
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Growth of Clean Label Trend in Food & Beverages Market
The demand for clean-label foods and beverages with simple, clean, and organic ingredients has surged in recent years as consumers became more conscious about what they are consuming. Clean label is a trend accelerating innovation across all consumer-packaged goods (CPG) categories. The growth in clean-label product launches surged consumer demand for clean-label food products to propel the consumption of clean label ingredients and health issues related to synthetic food additives and food safety incidents.
Rising Demand for Convenience Products
The global demand for convenience food products such as bakery & confectionery, sauces & dressings, ready meals, ready-to-drink (RTD) beverages, and sports & energy beverages has been rapidly increasing for the past several years. This growth can be mainly attributed to changing lifestyle of consumers, increasing population of working women, introduction of food products in attractive packaging by food processing companies, increased penetration of brick & mortar and online retail networks, and rise in disposable incomes, especially in emerging countries such as India, China, Brazil, and others. In convenience food products, botanical ingredients are commonly added to impart fragrance, flavor, and nutritional properties. Botanical extracts offer concentrated taste and longer shelf life and thus, convenience food & beverages manufacturers prefer botanical ingredients in extracts or concentrates rather than fresh botanicals. In addition, botanical ingredients impart an authentic taste as they are derived directly from plants, usually from the leaves, flowers, or fruits compared with non-botanical extracts. Therefore, increasing consumption of convenience food products is likely to fuel the demand for botanical extracts in the coming years.
Expanding Supplements Industry
The global dietary supplements industry has expanded rapidly over the past several years. Changing lifestyle, rising health concerns, increasing healthcare costs, and growing preference for a fit and active lifestyle are some of the key factors surging the demand for various dietary supplements, including vitamins, minerals, multivitamins, protein & amino acids, fibers & specialty carbohydrates. Extracts of different botanicals, including aloe vera, bitter orange, green tea, black tea, ginseng, and turmeric are utilized to prepare dietary supplements associated with aromatherapy, cognition energy, immune system, joint health, obesity, anxiety, and vascular system. Therefore, the expanding nutraceuticals industry is expected to fuel the demand for botanical ingredients.
Fluctuations of Raw Material Prices
Raw materials, including tea leaves, ginseng roots, turmeric, and others are procured by botanical ingredients manufacturers to produce respective extracts and concentrate. Raw materials are cultivated worldwide as different agricultural produce demands varied climatic conditions. Besides, raw materials are an agricultural commodity; therefore, these are extensively utilized in other industries, including food & beverages, animal feed, and others. Therefore, on account of climatic conditions, varied demand from other application industries, economic conditions, and trade relations, raw materials' prices fluctuate frequently. This results in disruption in the cost structure and profit margin of botanical ingredients manufacturers and presents challenges to the market.
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Leaves Sector to hold Significant Botanical Extracts Market Share Owing to Increasing Concern Over Obesity Disorders
Leaves are expected to hold a substantial market share over the forecast period. Leaves are any flattened green outgrowth from the stem of a vascular plant. The primary function of a leaf is to yield food for the plant by photosynthesis. Chlorophyll is the substance that gives plants their characteristics such as green color and helps absorb light. Botanically, leaves are an essential part of the stem system. A constant vascular system attaches them to the rest of the plant to allow the free exchange of water, nutrients, and end products of photosynthesis such as carbohydrates and oxygen.
Herbs are the leafy part of a plant, used in a wide variety of applications such as dietary supplements, food & beverage, cosmetics, and pharmaceuticals. The herbs segment is expected to drive the growth of this market on account of their extensive utilization in traditional medicines. Herb-based medicinal products are attaining significance globally due to their health benefits such as stabilizing hormones, metabolism, strengthening the immune system, and are more reasonably priced than conventional medicines.
CO2 Extraction Sector to hold Largest Market Share, Owing to Widely Used in Applications
CO2 extracts, commonly known as supercritical CO2 extracts, are highly pure plant extracts produced from a moderately high and new efficient extraction process. The CO2 extraction process has superior herbal extracts widely utilized in botanical medicine and food to flavor several products such as soft drinks, bakery and confectionery, and dairy products. Besides its uses in food and herbal medicine, CO2 extract is used in pharmaceutical, dietary supplements, and oral care products. CO2 extracts are sourced from various sources such as vegetables, fruits, herbs & spices, and other plant parts such as roots and leaves. CO2 extract is a natural flavor extract and is getting traction from consumers.
Food and Beverage Sector to hold Largest Market Share Owing to its Wide Utility in Varied Applications
Botanical extracts are increasingly being incorporated into various food & beverage applications such as bakery, dairy, energy drinks, and confectionery products owing to their unique flavor and health benefits. Botanical ingredients contain polyphenols, which are vital elements in preventing cardiovascular and neoplastic diseases. Health-conscious consumers are getting inclined toward food products with high nutritional content. Thus, food & beverages manufacturers focus on fortifying food products with a clean label (natural and recognizable ingredients) and nutritious plant-based ingredients such as tea extracts.
Europe Botanical Extracts Market Size, 2020 (USD Billion)
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Europe to Exhibit Highest Market Share On Account of Rising Awareness Regarding the Consumption of Nutritional Products
The Europe botanical extracts market is anticipated to progress at a growth rate of 8.3% over the forecast period. This is due to the increasing product demand in beverages and the rising demand for ready-to-drink (RTD) beverages among the population in the region. The growth of the beverage sector is driven by rising demand for RTD beverages as consumers' preference has been shifting from carbonated drinks to those that contain healthy, plant-based ingredients such as tea, kombucha, and matcha.
Asia Pacific is expected to witness the highest growth, in terms of value, from 2021 to 2028 in the global botanical ingredients market. Factors, such as the penetration of organized and e-commerce retail, are driving the consumption of convenience food products, including ready meals, RTD beverages, packaged snacks, and other products, wherein botanical ingredients are incorporated to impart flavor, fragrance, and functional properties.
Beverages are critical application type of botanical extracts in North America, owing to the increasing demand for functional beverages. This is due to growing awareness regarding the health benefits associated with the use of bio-based ingredients for weight loss and regulation of blood sugar.
Companies Focus on Expanding their Production Capacity to Meet the Global Demand
This market is consolidated, owing to the presence of a limited number of established and regional players. Key companies, such as International Flavors & Fragrances Inc., Kalsec Inc., Dohler GmbH., and Nexira, are the prominent players in this market. These key players are focusing on the increase of their production capacity to meet the global demand.
An Infographic Representation of Botanical Extracts Market
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The research report provides qualitative and quantitative insights into the market. It also offers a detailed analysis of the market size and growth rate for all possible segments in the market. Various key insights presented in the report are an overview of related markets, recent industry developments, such as mergers & acquisitions, the regulatory scenario in critical countries, and key industry trends.
Value (USD Billion)
Fortune Business Insights says that the global market size was USD 4.65 billion in 2020 and is projected to reach USD 9.62 billion by 2028.
Registering a CAGR of 9.6%, the market will exhibit steady growth during the forecast period (2021-2028).
The spices segment is expected to be the leading segment based on source in the global market during the forecast period.
Rising consumer awareness concerning health, wellness, and nutrition to drive the market growth
International Flavors & Fragrances Inc., Kalsec Inc., Nexira, and Synergy Flavors are the leading players in the market.
Europe dominated the market in terms of share in 2020.
Based on application, the food & beverages segment is set to lead the global market.
Innovation in botanical ingredients industry to expected to meet the global market demand.
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