Hydrocolloids Market Dynamics and Global Forecast to 2025

The hydrocolloids market is estimated to be valued at USD 9.7 billion in 2020 and is projected to reach USD 12.6 billion by 2025, at a CAGR of 5.3% during the forecast period. The demand for hydrocolloids is driven by the rise in demand for convenience food from the food industry. The global market is growing due to the changing lifestyles and eating habits among consumers. The demand for hydrocolloids is also attributed to the consumer awareness on diet, nutrition, and natural products available.

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DRIVER: Rise in consumption of premium food & beverage products

The increase in consumer preference for convenience foods indirectly contributes to the rise in demand for hydrocolloids required as stabilizers, texturants, binding agents, viscosity, and thickening agents in these convenience food products. The processed food market is driven by the greater need for convenience due to the busy lifestyles of consumers. This, in turn, increases the demand for hydrocolloids. The hydrocolloids industry has a positive outlook due to high growth in the food processing industry. A leading food journal estimates that about 35% of the American population consumes at least three prepared convenience food products in a week, and this is projected to grow to about 40% of the population in the future. The expenditure of the American population on home-prepared meal ingredients decreased from roughly 70% of the total expenditure in the 1960s to 53% in the 2000s, with increasing expenditure on convenience foods. Consumer preference in emerging economies such as China, India, Japan, Africa, and countries of the Middle East have gradually transitioned from traditional home-made breakfasts and snacking meals to ready-to-eat products, custom quick meals, and one-dish meals over the last couple of decades.

RESTRAINT: Stringent international quality standards and regulations

International bodies such as the National Food Safety and Quality Service (SENASA), Canadian Food Inspection Agency (CFIA), US Food and Drug Administration (FDA), World Health Organization (WHO), and Committee on the Environment, Public Health and Food Safety (EU) are associated with food safety regulations. These organizations have control over the usage of different chemicals and materials used in food & beverage processing, directly or indirectly. With stringent international regulations, regulatory approval of a food & beverage ingredient is critical. Without approval from the appropriate government bodies, the additive has no market or function in food. Obtaining regulatory approval for a new ingredient is becoming increasingly expensive and a time-consuming process.

OPPORTUNITY: Increase in investments in research & development

Hydrocolloids are largely utilized in processed and convenience foods. These products require food additives such as hydrocolloids that impart proper texture, viscosity, mouthfeel, and shape to the food. The wide application of hydrocolloids in food has led to the introduction of new procedures or complex steps in food processing. Food manufacturers are adopting sophisticated food processing methods and are demanding new hydrocolloids that can impart the desired functions.

Companies are investing highly in R&D to adjust the formulation of existing products and cater to customer requirements. Companies are innovating new products to benefit their customers. The rise in health concerns & the resultant consumer demand for healthy products and the requirement of custom-made hydrocolloid blends drive companies to invest more in research & development. Manufacturers are also thriving to develop cost-saving hydrocolloids that may enable them to manage the use of costly raw materials and other additives.

CHALLENGE: Unclear labeling leading to ambiguity and uncertainty

The issue of food labeling in the hydrocolloids industry is similar to that in the entire food industry, including regulatory environments and health concerns that are demanding more comprehensive labeling. In Europe, regulations have been introduced on the labeling of foodstuffs to enable European consumers to gain information regarding composition, manufacturer, storage methods, and preparation. Consumers are now becoming more aware of their right to information. They demand full information of the ingredients present in the food products. Although most hydrocolloids are obtained from natural sources, consumers have the perception that they are being obtained from synthetic sources due to which they are reluctant to use these products.

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North America is a dominant region in the global hydrocolloids market. Factors influencing its market dominance include the high demand for functional dairy products, convenience foods, higher per capita consumption of baked goods, and presence of major players. Consumers in the US are calorie-conscious due to which low-calorie and low-fat foods are popular in the country. The increasing prevalence of obesity and cardiac diseases has led consumers to demand natural and low-calorie food products. Food manufacturers are therefore concentrating on the application of natural hydrocolloids and their function as fat replacers

Leading manufacturers are DowDupont (US), Ingredion (US), Cargill (US), Kerry (Ireland), Archer Daniels Midland Company (US), Palsgaard (Denmark), Darling Ingredients (US), CP Kelco (US), Ashland (US), BASF (Germany), Tate & Lyle (UK), Glanbia (Ireland), Fuerst Day Lawson (UK), Koninklijke DSM N.V (Netherlands), and Nexira (France) are the players that hold a significant share in the hydrocolloids market.

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