Functional Protein Market Size, Share & COVID-19 Impact Analysis, By Source (Animal and Plant), Application (Functional Food & Beverages, Animal Feed, and Dietary Supplements), and Regional Forecast, 2021-2028

The global functional protein market size was USD 5.24 billion in 2020. The market is projected to grow from USD 6.20 billion in 2021 to USD 15.98 billion in 2028 at a CAGR of 14.48% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with functional proteins witnessing below average impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of 8.54% in 2020 as compared to the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to new trend of consuming plant-based proteins and consumers' increased spending on healthy food products.

COVID-19 IMPACT

Spread of COVID-19 Across Globe Restricted Market Growth

COVID-19 pandemic restricted the supply of all the commodities worldwide in the 2^nd quarter of 2020, which caused disruptions in the supply chain, and hence many products could not make it to the markets. This resulted in a lesser supply of raw materials and finished products, which affected the overall revenue of this market, which recorded below-average growth in 2020.

Although there was a decline in the overall functional proteins market, plant protein consumption has increased since the COVID-19 pandemic. Even though consumer shift towards consumption of plant protein and protein concentrates was in the industry, the pandemic accelerated this trend. Consumers who are more concerned about COVID-19 consume more plant-based protein products than before. This can be attributed to consumers showing more preference towards products produced specially for wellness, health, and considering sustainability.

LATEST TRENDS

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New Trend of Consuming Alternative Protein is Positively Supporting Growth of Functional Proteins Market

Consumer interest in alternative proteins such as plant-based alternatives grew gradually in the last decade. Thus, consumers are purchasing plant-based protein alternatives for meat and dairy products in increasing numbers. Meat alternatives especially have seen rapid growth over the past few years. Moreover, plant-based products such as soy, oat, rice, and nut beverages are popular in protein sources. 

Several factors contributing to this evolution include increased consumer focus on health, ethical considerations, and animal welfare sentiments. Some consumers want to shift to plant-based proteins considering their health benefits, while others want to shift because they want to refrain from consuming meat-based products. Adopting this trend in developed and developing countries offers promising growth opportunities in the functional protein industry in the coming years.

DRIVING FACTORS

Increasing Demand for Plant-Based Proteins Boosts Market Growth

Plant-based products are considered healthier and more sustainable alternatives for meat products, and hence, more consumers have been shifting towards plant proteins in the last few years. Pea protein and soy protein are the major plant-based protein products that will offer promising growth opportunities during the forecast period. When it comes to alternative proteins, plants are the largest source due to their minimal environmental impacts and significant health benefits. Other alternative proteins are insect proteins, lab-grown meat proteins, and algae proteins, but above all, demand for plant-based proteins boosts the overall protein market. With the availability of plants and new technologies that minimize the environmental impact, this factor is expected to boost the market growth.

Increased Spending On Healthy Supplements to Drive Market Growth

Healthy supplements such as dietary supplements have been high in demand over the last few years all across the globe. Functional proteins and dietary supplements are used in competitive sports, body toning, and muscle-building activities, and millennials are the forefront users of this type of proteins. Moreover, in treatments for diabetes, chronic disease, and underweight conditions, consumers choose various healthy functional supplements as meal replacements. In addition to this, cancer patients' dietary supplements are also widely used to build strong anticancer immunity in the body. With functional proteins in such a wide array of applications, functional protein market share in the global market will increase in upcoming years.

RESTRAINING FACTORS

Animal Welfare Sentiments to Restrain Animal Segment Growth

In recent years there has been a notable increase in interest of consumers in plant-based products considering the sentiments related to animal welfare and animal safety. While some consumers avoid meat products to reduce the health risks and environmental impacts, animal welfare is also an important reason for consumers shifting to meal alternatives.

Moreover, the meat production process by rearing animals is associated with other critical global issues such as greenhouse gas emissions, deforestation, and freshwater consumption. Although alternative ways of producing meat have been tried in recent years, consumer sentiments towards animal cruelty are changing. With more consumers shifting towards plant-based food, the market share of the animal protein segment is expected to decline in the coming year. This can be considered a significant threat to the growth of the animal and dairy protein segment.

SEGMENTATION

By Source Analysis

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Animal Segment Holds Major Market Share Attributed to Variety of Products Available in Dairy Segments

On the basis of source, the market is segmented into plants and animal. Animal sources dominate the global market as this segment holds the highest market share. This is attributed to the popularity of milk-based protein supplement, their benefits, the popularity of meat and seafood products such as pork, fish, and other animal-based meats. However, there is a shift in consumer purchasing habits towards plant-based proteins in developed countries. Similarly, consumers spend more on meat-based products in developing countries with increased spending power. With animal and milk protein powders available easily, tier 2 and tier 3 cities consumers buy those products over plant-based products, mainly in developing countries. Since major countries of Asia Pacific, Africa, South America, and the Middle East are in developing phase; the animal-based segment is expected to dominate the market in these regions; however, its market share is expected to decline with the increase in popularity of plant-based proteins.

Plant-based proteins are a comparatively new product segment in the global functional protein market; with increased internet penetration, more consumers are aware of the availability and health benefits of plant-based proteins. Hence, its popularity has been growing over the last few years. With increased adoption and new market players in the plant protein industry, this segment is expected to increase its market share in the upcoming years.

By Application Analysis

Functional Food & Beverages Holds Major Share Owing to Wide Use of Functional Proteins in Meat and Poultry Applications

Functional proteins in functional food & beverages applications are used in various applications such as baked goods, bars, drinks, culinary applications, frozen desserts, infant foods, meats, sauces, pet food, snacks, bakery, breakfast cereals, dairy alternatives, protein bar, general protein fortification, poultry, seafood, meat-free options, beverages, savory snacks, patties & sausages, loose minced meat, emulsified and restructured products, ice cream, and seasoning &savory applications. Owing to its wide range of applications, functional foods are used extensively in the food and beverages industry to enhance the texture of the food and improve the taste and flavor of the product.

The food and beverages industry is one of the fastest-growing industries globally, and functional food and beverages are its subparts; hence the growth of the food & beverage industry would drive the market for functional enzymes and proteins in food and beverages applications.

Apart from the food and beverages industry, functional enzymes and proteins are also used in animal feed products to increase the dietary benefits of animal feed and make it healthier for animals. The animal feed industry is emerging quickly due to the commercialization of the poultry and livestock industry. With increasing commercialization in the livestock industry, functional enzymes and protein application in the animal feed industry is expected to grow with consistent CAGR over the forecast period.

The dietary supplements industry is one of the fastest-growing segments of the nutraceuticals industry, with consumers becoming more health cautious. Moreover, increasing awareness among baby boomers about the consumption of healthy supplements, dietary supplements are proving to be one of the attractive application segments of this industry.

REGIONAL INSIGHTS

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Asia Pacific holds the largest functional protein market share. The growth of the functional enzymes and proteins in Asia Pacific is the result of the region's economic growth owing to the presence of the fastest developing countries such as China, India, Australia, and Japan. Population growth is also one of the significant drivers for the protein market to grow in the Asia Pacific region.

In addition to increasing demand due to population growth, market growth is also driven by socio-economic changes in the Asia Pacific, such as rising income levels, increased spending capacity, aging populations, and increased urbanization. Recognition of the importance of protein in a healthy diets is a new trend evolving in the region. Economic development of the region can be seen in transitions in dietary patterns in low and middle families in developing countries of the region. With Asia Pacific expected to evolve faster than ever during the forecast period, Asia Pacific is expected to remain a dominant region and capture the largest share in market size.

North America and Europe are developed regions in the global markets, and hence consumption patterns are evolving and changing in these two regions. An increase in the consumption of protein supplements in the daily diet is reflected in countries of these regions. The highest per capita functional enzymes and proteins consumption occurs in Europe and North American countries.  The average supply of fats and proteins increased per capita per day over the last decade. This increase has been most noted in North America and the European countries.

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South America and the Middle East & Africa regions are evolving gradually in the functional protein industry. South America region has emerging countries such as Argentina, Brazil, Chile and Peru. Hence, economic growth in lower- and middle-income families result in increased spending on health supplements. With income groups transitioning from lower to middle and middle to higher middle groups, spending on health supplements is expected to prevail in the long run, which will benefit the market's growth in these regions.

KEY INDUSTRY PLAYERS

The market is seeing growth mainly in the plant protein segment. Hence, many market players adopt various developments to capture various regional markets and strengthen their market presence in new markets. There are many new startup companies in multiple regions competing with the global key players in terms of innovations. With new startups launching, many mainstream companies compete to capture market share in the functional protein industry.

One of the famous North American companies, Maple Leaf Foods, launched its functional plant proteins in North America. Moreover, it is also investing hugely in plant protein products. It recently invested USD100 million in its Indianapolis plant in the U.S. Baby boomers are usually considered an important category for the plant-based protein market with a wide range of innovative products such as pea protein and microalgae. Companies are also working towards improvisation of the taste of plant protein products to attract more consumers.

LIST OF KEY COMPANIES PROFILED:

• DuPont Nutrition (Delaware, U.S.)


• Essentia Protein Solutions (Iowa, U.S.)


• Glanbia, Plc (Kilkenny, Ireland)


• ProtiFarm (Ermelo, Netherlands)


• ADM (Illinois, U.S.)


• AMCO Proteins (New Jersey, U.S.)


• DSM (Heerlen, Netherlands)


• Merit Functional Foods (Manitoba, Canada)


• Plantible Foods (San Marcos, U.S.)


• Roquette Frères (Lestrem, France)

KEY INDUSTRY DEVELOPMENTS:

• September 2021: Farmers Edge Inc. and Merit Functional Foods (Merit) launched a pilot program focused mainly on improving protein crop production, quality, and marketing opportunities. The new program is expected to improve the efficiency and sustainability of the ingredients produced by Merit.


• January 2020: Nestlé collaborated with Burcon and Merit to develop and produce plant proteins. This partnership is expected to enable Nestlé to accelerate the development of plant-based meat and dairy alternatives.

REPORT COVERAGE

An Infographic Representation of Functional Proteins Market

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The market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading product application areas. Besides this, the report offers insights into the functional protein market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the market growth over recent years.

Report Scope & Segmentation: