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The global hydrocolloids market size accounted for USD 9.07 billion in 2019. The global impact of COVID-19 has been unprecedented and staggering, with hydrocolloids witnessing a slight negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market will exhibit a lower growth of 3.31% in 2020 than the previous year-on-year growth during 2016-2019. The market is projected to grow from USD 9.37 billion in 2020 to USD 13.30 billion in 2027 at a CAGR of 5.13% during the 2020-2027 period. The rise in the CAGR is attributable to this market’s demand and growth, returning to the pre-pandemic levels once the pandemic is over.
Hydrocolloid is a broad-spectrum term used to define a heterogeneous group of polysaccharides that form a gel-like substance when dispersed in water. They are extracted from various sources such as plants, microbes, animals, seaweed, & others, gaining huge popularity among several manufacturers worldwide. They are widely used in various application sectors such as food and beverages, cosmetics, and pharmaceuticals due to their thickening, gelling, stabilizing, and improving the textural properties. The increasing demand for convenience foods has led the manufacturers to utilize such products extensively in various processed foods, which is expected to boost sales in the forthcoming years.
Disruptions in Supply Chain Management amid COVID-19 to Impede Market Growth
The global COVID-19 pandemic outbreak resulted in the closure of various processing plants across countries due to the implementation of lockdown to contain the spread of the virus. Various supply chain disruptions were observed during the pandemic as transportation and logistics remained non-functional due to the shortage of labor and border lockdowns. The travel curbs leading to restrictions on cattle movements and shutting down abattoirs have negatively impacted hydrocolloid production. According to the report published by Fortscap Healthcare Ltd., India, the company slashed down its natural capsule production from 23 million units per day to 14-16 million units owing to the shortage of gelatin.
Similarly, in May 2020, Indonesia’s Tropical Seaweed Innovation Network (TSIN) stated that the virus outbreak has directly impacted the country’s seaweed farmers. The demand for raw materials has decreased, which has led to a fall in its price. However, the global economy is slowly overcoming the shortfalls and regaining its normal pace, which is assumed to boost the market growth in the forthcoming years.
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Surging Trend of Incorporating Hydrocolloids in Cosmetic Products to Fuel Growth
The demand for natural ingredients and clean-label cosmetic products is increasing worldwide due to the growing awareness of the detrimental effects of synthetic and chemical products on the skin. A paradigm shift towards natural products as synthetic chemicals in the cosmetics cause skin irritation, rashes, and allergies. Hence, the natural additives were becoming the choice of most consumers worldwide and prompted the incorporation of gelatin, carrageenan, xanthan gum, and others due to their thickening, gelling, and water-binding properties of various cosmetics and personal care products. They are highly compatible and chemically stable, making them an ideal ingredient for personal care products such as body wash, toothpaste, lotions, and others.
According to the Ministry of Foreign Affairs, Europe’s natural cosmetics market value stood at USD 4.11 billion in 2018 and grew faster in the global cosmetics market. Thus, it is anticipated to fuel the market growth during the forecast period.
Increasing Consumption of Convenience Foods Worldwide to Spur Demand
The growing consumption and demand for convenience foods directly impact the increased utilization of hydrocolloids in these products to improve shelf-life, quality, and other factors. It enhances the viscosity and improves the textural properties of various food products such as processed meat, gravies, and sauces. The processed food industry is influenced by the demand for ready-to-eat products, owing to the proactive lifestyles of the consumers. According to a global events company, Montgomery Group, 2020, the U.K. food-to-go sector is likely to reach USD 31.6 billion by 2024 due to the ease of utilization and consumption of convenience foods.
Consumers are willingly spending on such products as they are easily available and less time-consuming. Such factors have led to the increased incorporation of the product in processed foods by the manufacturers to suffice the growing demands.
Increasing Popularity of Clean-label Additives to Drive Market Growth
The exponential growth in the natural and clean-label food consumption across the food and beverages industry due to its growing awareness has influenced the demand for hydrocolloids. Moreover, this has led to the increasing reliance on natural fibers and gums for functional properties, stability, safety, and quality of food products. According to the American Oil Chemists' Society Journal of 2015, the hydrocolloids, apart from imparting textural properties, also enhance the nutritional properties of the food as they contain nearly 60-90% of dietary fibers.
Processed foods with nutritional and potential health benefits are witnessing a surge in demand due to their additional sensory properties and convenience, which is expected to positively impact the global hydrocolloids market growth.
Stringent Government Regulations and Operational Delays to Hinder Growth
Numerous government regulatory bodies are closely observing the utilization of hydrocolloids in various food products. The regulatory bodies such as the United States Food and Drug Administration (USFDA), European Parliament and Council, World Health Organization (WHO), Food and Agriculture Organization Expert Committee on Food Additives, and others strictly regulate food safety. They control and set the guidelines on the amount of its direct or indirect utilization in food and beverages.
For instance, in April 2016, the Food and Drug Administration (FDA) prohibited the utilization of certain cattle material due to the potential risk of bovine spongiform encephalopathy (BSE) in human food, dietary supplements, and cosmetic products. Thus, negatively impacting gelatin production and its utilization in the region. The manufacturers were bound to clarify and declare that the raw materials used are inspected and safe for human consumption. Thus, receiving regulatory approval for new products becomes a long and expensive procedure that results in operational delays. This is likely to pose as a restraining factor in market growth.
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Gelatin to Hold Major Market Share
Based on type, gelatin holds the major share in the market due to its broad range of pharmaceutical products such as wound dressing and tablet formulations. It is diversely used in food products as a clarifying agent in desserts, candies, jellies, ice creams, etc. On the other hand, it is an essential protein source and effectively replaces carbohydrates and fats in food products. Furthermore, its utilization in developing diet products without affecting their flavor and textural properties influencing its demand from processors.
Guar gum, a poly galactomannan, is utilized to prepare low-glycemic index food products and prepare biodegradable films for food packaging and flavor encapsulation applications. It is also used in paper manufacturing, pharmaceuticals, and the cosmetics industry to preserve and water-retention properties. Thus, its multifunctional properties increase its incorporation in various end-use applications.
Xanthan gum is extensively utilized in various food products to improve their texture, flavor, consistency, and shelf life. In addition to this, it prevents the food as well as cosmetic products from separating. Due to such attributes, it is likely to account for the third-largest share in the market.
Carrageenan is a polysaccharide extracted from red seaweed widely utilized in the pharmaceutical, food, and cosmetic industry for its gelling and thickening properties. It is used as an inactive excipient in tablets and is regarded as a vegan substitute for animal-derived gelatins.
Animal to Emerge as the Most Utilized Source for Production
Based on the source, the market is segmented into microbial, animal, seaweed, and others.
The animal source segment is likely to emerge as the most widely used source due to the abundant availability of animal by-products as raw material for processing hydrocolloids. Skin, bones, and hides of animals such as cows, pigs, and poultry are utilized for its manufacturing. It is the most preferred source of choice as it promotes the full utilization of animals that were primarily raised for meat, thereby contributing to zero waste generation. Nowadays, manufacturers are embarking upon manufacturing products that ensure full traceability and support animal welfare, which helps deliver safe products, thus offering lucrative opportunities for the segment to grow.
In recent years, seaweed has emerged as a valuable hydrocolloid source due to its functional properties and importance in food, biotechnology, and medicinal industries, thereby paving ways for segmental growth in the forthcoming years.
The microbial hydrocolloids such as xanthan gum, guar gum, gellan gum, and others are worldwide adopted as a thickening agent in food products and culture media for experiments. They are incorporated in plant-based products such as soy milk as an emulsifier for obtaining the organoleptic properties as the dairy products. Agar is used as a laxative, appetite suppressant, and thickener in condiments, while pectin is used as a thickener in baking and cooking.
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Wide Utilization in Food Industry to Lead the Application Segment
Bakery, confectionery, condiments, and beverages are common applications where the food processors use hydrocolloid ingredients as coating materials to reformulate their functional properties. They impart appealing texture to the food products, stabilizes flavors, stabilizes emulsions, and provides structure to reduced sugar-beverages.
The rheology control and water-binding ability have led to an impressive demand for hydrocolloids from the pharmaceutical industry. It also helps provide attractive features such as regulating the flow behavior and imparting stickiness to the oral formulations are the factors anticipated to further fuel the product demand in the industry.
The cosmetics industry extensively utilizes hydrocolloid ingredients in various water-based applications for manufacturing deodorants, sunscreens, toothpaste, and others as a viscosity control agent. Its thickening and water-binding properties are witnessing an upsurge in its utilization, which is likely to propel market demand in the forthcoming years.
Asia Pacific Hydrocolloids Market Size, 2016-2027 (USD 3.44 Billion)
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Asia Pacific market stood at USD 3.44 billion in 2019 and is anticipated to remain at the forefront during the forecast period. The rising demand for processed foods and fast foods is anticipated to propel its demand in the region. The functional and clean-label perspective of the product has led to its utilization as a stabilizing and texturizing ingredient and its adoption as the ingredient for many food and beverage processors. The rising population and increasing demand for clean-label and natural food ingredients such as stabilizers and thickening agents have increased the demand for hydrocolloids. Moreover, hydrocolloid manufacturing bases in countries such as Thailand, India, China, and Indonesia contribute to regional growth.
China Hydrocolloids Market Share, By Application, 2019
The market in North America is anticipated to hold the second-largest share in terms of revenue during the forecast period. The consumer demand for low-calorie food products has influenced the manufacturers to incorporate the product in various processed foods. The trend of consuming fortified convenience food products has fuelled the demand for such products in the region.
Countries like the U.K., Russia, Germany, and France are among the major hydrocolloids in Europe. Further, the food industry's growth and extensive utilization of natural ingredients in food products are likely to drive the regional market.
The market in South America is mainly driven due to its incorporation in the food industry as a clean-label food additive. The demand for such natural and safe food additives is expected to impetus its demand in the region.
In the Middle East and Africa, the inclination towards ready-to-eat food products and convenience food is increasing, which is likely to fuel the region's hydrocolloids demand.
Companies Focus on Innovative Product Launches for Broadening their Portfolios
The market is consolidated with the presence of several prominent global players. The increasing popularity of the product as a clean-label additive has significantly led to its increase in demand. Companies such as Koninklijke DSM N.V., Cargill, Incorporated, Archer-Daniels-Midland Company, DuPont de Nemours, Inc., and Kerry Group plc are concentrating on new product launches and strategic expansions of their business for portfolio broadening and meeting the demands. For instance, in September 2019, TIC Gums, Inc. launched Ticaloid PRO 122 RD, a hydrocolloid blend for incorporating ice cream and ready-to-drink beverages to meet the keto trend.
An Infographic Representation of Hydrocolloids Market
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The market 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 market segments. Various key insights are an overview of related markets, recent industry developments such as mergers & acquisitions, the regulatory scenario in critical countries, and key industry trends.
Fortune Business Insights says that the global market size was USD 9.07 billion in 2019 and is projected to reach USD 13.30 billion by 2027.
Growing at a CAGR of 5.13%, the market will exhibit promising growth during the forecast period (2020-2027).
Gelatin is expected to be the leading segment based on product type during the forecast period.
The wide utilization of convenience foods is expected to act as a growth-boosting factor.
Koninklijke DSM N.V., Cargill, Incorporated, Archer-Daniels-Midland Company, DuPont de Nemours, Inc., and Kerry Group plc are a few of the key players in the market.
Asia Pacific dominated the market share in 2019.
Food and beverages lead the application segment in the global market during the forecast period.
The increasing incorporation of cosmetic products is the key market trend.
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