Dehydrated Alcohol Market Size Forecast to Reach $15 Billion by 2025

Dehydrated Alcohol Market size is forecast to reach $15 billion by 2025, after growing at a CAGR of 6% during 2020-2025. Dehydrated alcohol which is also known as anhydrous ethanol is a volatile chemical compound that contains approximately 98% ethanol by volume. Increasing usage of dehydrated alcohol in medical industries as an antimicrobial agent for manufacturing sanitizers and disinfectants also boosts the growth of dehydrated alcohol market. Besides, the growing use of dehydrated alcohol as fuel for internal combustion engines in the United States is likely to aid the growth of market. However, dehydrated alcohol is volatile and flammable in nature which further cause challenges during transportation.

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Grade - Segment Analysis

Pharmaceutical grade holds the largest share of more than 35% in the dehydrated alcohol market in 2019. In Pharmaceutical sector, the dehydrated alcohol is used as a solvent and injected into nerves and ganglia for relief of pain. It is also used as an antiseptic and disinfectant which helps in preventing the spread of bacteria and to sterilize the skin as well as medical equipment. Surging demand for medial wipes and hand sanitizers which contain dehydrated alcohol is driving the growth of this market. Huge government investment and research activities in healthcare further boost the growth of dehydrated alcohol market. According to the World Health Organization (WHO), between 2000 and 2017, global health spending in real terms grew by 3.9% a year while the economy grew 3.0% a year. Thus, continuous spending aids the growth of dehydrated alcohol market for medical purposes.

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Source- Segment Analysis

Based on the source, sugarcane segment is projected to witness highest CAGR of 7.5% in the dehydrated alcohol market during the forecast period. Extraction of anhydrous ethanol from sugarcane involves processes such as conversion into simple sugar, fermentation and then distillation. UNICA, the Brazilian sugarcane ethanol industry association, has announced that mills in the country’s south-central region produced 31.95 billion liters of ethanol from April to December 2019, including 981.9 million liters of corn ethanol. Easy availability and high yield of sugarcane is driving the production of dehydrated alcohol from sugarcane. According to United States Department of Agriculture, global sugarcane production will increase by 22 million tons and reach 188 million by 2021, subsequently aiding the production of dehydrated alcohol.

Application - Segment Analysis

Based on the application, the fuel/fuel additive segment is projected to witness a highest CAGR of 8% in the dehydrated alcohol market during the forecast period due to surging demand for environment friendly fuel. Dehydrated alcohol is used as a blend in engine fuel. It reduces greenhouse gas emissions as well as other ozone-forming pollutants as compared to gasoline. Dehydrated alcohol has a higher-octane number than gasoline, thus addition of dehydrated alcohol provide premium blending properties. To attain the standard 87 octanes, lower-octane gasoline is blended with 10% dehydrated alcohol. Moreover, the automotive OEM’s are also focusing to produce environment friendly vehicles owing to the stringent emission norms. For instance, in July 2019, TVS has launched dehydrated alcohol-based motorcycle that will reduce dependence on petrol and increase energy security.

COVID-19 has hampered the demand for dehydrated alcohol as a fuel or fuel additives. The outbreak of coronavirus has disrupted the global supply chain and transportation. Industries are being shuttered all around the world. The decrease in purchasing capital of people has a direct impact on the automotive, which in turn lowered the demand for dehydrated alcohol for fuel additive and hampered the growth of market. According to the Society of India Automobile Manufacturers (SIAM), passenger vehicle sales declined by 51% to 143,014 units in March 2020 whereas the sales of commercial vehicles crashed by 88%. However, extensive use of dehydrated alcohol in medical wipes and hand sanitizers are likely to aid the growth of market in this pandemic situation.

Geography - Segment Analysis

North America dominated the dehydrated alcohol market with a share of more than 35% in 2019 followed by the Asia Pacific and Europe. Stringent regulations toward reducing the usage of environment polluting fossil fuels and rising demand from the food processing industry for making beverages is driving the demand for dehydrated alcohol in the region. For instance, In October 2017, the U.S. Environmental Protection Agency (EPA) proposed the Clean Power Plan (CPP), that would limit carbon dioxide (CO2) emissions from existing fossil-fuel-fired power plants, thus increasing the usage of dehydrated ethanol. According to National Health Expenditure Accounts (NHEA), the U.S. health spending accounted for 17.7% as a share of the nation's Gross Domestic Product and health care spending grew by 4.6 % reaching $3.6 trillion in 2018. Thus, rising health concerns and surging demand for health care products such as sanitizers and face wipes also boost the growth of dehydrated alcohol market.

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Drivers – Dehydrated Alcohol Market

Surging demand for personal care & cosmetic products

The rise in disposable income of middle class and growing aspirations of people to live a good life and look good has fuelled the demand for cosmetic products. Dehydrated alcohol is a common ingredient in many cosmetics and beauty products. It acts as an astringent for cleaning the skin and are also used as a preservative in lotions. According to the Indian Brand Equity Foundation (IBEF), India's beauty, cosmetic and grooming market was valued at $ 6.5 billion in 2016 and estimated to reach $ 20 billion by 2025. Dehydrated alcohol easily mixes with water and many organic compounds, and makes an effective solvent for use in lacquers, varnish, deodorants and household cleaning products.

Growing demand from end use industries for paint, dyes, and inks

Dehydrated alcohol is widely used as a chemical reagent and organic solvent for manufacturing paints, dyes, polishes, and inks. Dehydrated alcohol improves the rheological properties of paint resins and other heterogeneous solid mixtures. Increase in construction activities combined with the rapid expansion of automotive sector is driving the demand for paints, dyes, polishes, and inks which in turn propels the growth of dehydrated alcohol market. Oxford Economics has forecasted that the volume of construction output will grow by 85% to $15.5 trillion worldwide by 2030. Thus, increase in construction activities increases the demand of paints and dyes which in turn fuels the growth of dehydrated alcohol market. Furthermore, the growing aviation sector in the developing country like China and India are also contributing ti the growth of this market.

Challenges – Dehydrated Alcohol Market

Volatility in prices and side effects of dehydrated alcohol

There are various micro and macro-economic factors responsible to price volatility. From decades, the hospitals and clinics uses dehydrated alcohol as an injectable medicine to treat maladies as chronic pain or to prevent infections in patients who must receive nutrients intravenously. But, presently various manufacturers are no longer permitted to produce their versions of dehydrated alcohol, wholesalers are also running out of their inventories of the old drug and are forced to stock Ablysinol, and growing uses of dehydrated alcohol for use with a specific heart procedure. These factors are responsible for the price hike of dehydrated alcohol. For instance, in February 2020, according to the STAT report, the price of a 10-vial pack of an injectable medicine called dehydrated alcohol would jump from about $1,300 to $10,000 because huge amount of resources is required for its production. Thus, volatility in prices of dehydrated alcohol is a major challenge. Moreover, the harmful effects of dehydrated alcohol also hamper the growth of market. The most encountered side effects are post-injection neuritis with persistent pain, hyperesthesia, and paresthesia. Certain dehydrated alcohol-based drugs may also result in muscle weakness, urine or stool incontinence, or low blood pressure. In addition, dehydrated alcohol is volatile and highly flammable. It should be stored in a cool place away from the heat source which further increases the storage and transportation costs.

Market Landscape

Technology launches, acquisitions and R&D activities are key strategies adopted by players in the dehydrated alcohol market. In 2019, the market of dehydrated alcohol has been consolidated by the top five players accounting for xx% of the share. Major players in the dehydrated alcohol market are, Archer Daniel Midland Company, Butamax Advanced Biofuels, Llc, Mitsubishi Chemical Corporation, Flint Hill Resource LP, Valero Energy Corporation, Green Plains Inc., Anderson Inc., Solvay S.A., Pacific Ethanol Inc, Sasol Limited, among others.

Acquisitions/Technology Launches

In April 2017, Butamax Advanced Biofuels Llc, signed a joint venture with DuPont and acquired the Nesika Energy, LLC along with its state-of-the-art ethanol facility in Scandia, Kansas. With this acquisition Butamax enhanced its bio-isobutanol capacity to the facility, while continuing to produce ethanol before and after adding this capacity.

In January 2015, Flint Hills Resources acquired the ethanol plant of Southwest Georgia Ethanol, LLC situated near Camilla, Georgia. With this acquisition Flint Hills Resources’ biofuels business includes seven ethanol plants with a combined annual capacity of 820 million gallons.

Key Takeaways

Increasing environmental concerns due to the emission of greenhouse gases in developing nations like China and India has escalated the use of dehydrated alcohol as a fuel and fuel additives.

Increase in health concerns among people is boosting the use of dehydrated alcohol for making disinfectants and drugs.

Common side effects of dehydrated alcohol include persistent nerve pain, numbness and tingling which may restraint the growth of market.

Adoption of electric and hybrid vehicles may hamper the growth of dehydrated alcohol market.

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B. Denatured Alcohol Market
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