May 22, 2024

The Food Grade Alcohol Market is Trending due to Rising Demand for Pharmaceutical Grade Ethanol

Food grade alcohol helps preserve food products and extend shelf-life by inhibiting microbial growth. It is also used as a solvent for extraction and purification processes in the pharmaceutical industry. The growing consumption of packaged and processed foods along with increasing use of pharmaceutical-grade ethanol in sanitizers and disinfectants has propelled the food grade alcohol market.

Food grade alcohol refers to distilled ethanol produced from various starch and sugar feedstocks such as grains, sugar beets, sugarcane and fruits. It is free from poisonous substances and contaminants. Food grade alcohol is used as a processing aid and extraction solvent in the food industry. It helps extend the shelf-life of products by preventing spoilage from microbes. Food grade alcohol also helps improve texture and mouthfeel in certain foods. In the pharmaceutical sector, food grade alcohol is widely utilized as an antimicrobial agent and extraction solvent to purify herbal extracts and homeopathic medicines. It is also a key ingredient in hand sanitizers and disinfectants amid the COVID pandemic.

The Global Food Grade Alcohol Market is estimated to be valued at US$ 2.56 Bn in 2024 and is expected to exhibit a CAGR of 5.5% over the forecast period from 2024 to 2031.

Key Takeaways

Key players operating in the food grade alcohol are MGP, Cargill Incorporated, ADM, Cristalco, Grain Processing Corporation, Wilmar International Ltd., Extractohol, Pure Alcohol Solutions, Nedstar, Sasma B.V., Roquette Frères , Essentica, AVANSCHEM, Fairly Traded Organics, and Ethimex Ltd.

The growing consumption of packaged foods and increased production of pharmaceutical products has augmented the demand for food grade alcohol globally. Food grade alcohol helps increase the shelf-life of packaged foods and acts as an efficient extraction solvent in the pharmaceutical industry.

North America dominated the global Food Grade Alcohol Market Size in 2024 due to high consumption of convenience foodstuff and beverages in the region. However, Asia Pacific is expected to witness the fastest growth during the forecast period owing to increasing health awareness and rising disposable income.

Market Key Trends

The increasing use of high purity ethanol as a sanitizing agent amid the COVID-19 outbreak is one of the key trends witnessed in the food grade alcohol market. Various countries have approved the use of ethyl alcohol of minimum 70% concentration for industrial production of hand sanitizers and disinfectants to curb the spread of coronavirus. This has augmented the demand for pharmaceutical grade ethanol significantly. Furthermore, the growing popularity of all-natural and organic ingredients is another major trend, as consumers prefer food and cosmetic products containing recognized and familiar food-based additives like alcohol.
Porter’s Analysis

Threat of new entrants: The food grade alcohol industry require high level of innovation and investments involving technology, production and distribution infrastructure. These factors make it difficult for new players to enter this market.

Bargaining power of buyers: Buyers have moderate bargaining power in this market due to availability of substitutes. However, buyer bargaining power is expected increase as more private label and store brands enter this market.

Bargaining power of suppliers: Suppliers have moderate bargaining power as key inputs like grains are available from numerous sources globally. However, factors like environmental regulations and infrastructure requirements limit supplier flexibility.

Threat of new substitutes: Existing substitute are non-alcoholic beverages, however demand for alcoholic beverages are generally inelastic. Development of novel zero-proof alcohol products may emerge as substitutes in future.

Competitive rivalry: Market is moderately competitive with key players like MGP, ADM and Roquette Frères dominating global production and distribution. However, regional players compete intensely on price and quality.

Geographical Regions

North America accounts for the largest share of the global food grade alcohol market, both in terms of value and volume. This is due to factors like increasing demand for processed and packaged foods as well as beverages in countries like United States.

Asia Pacific region is projected to be the fastest growing market for food grade alcohol during the forecast period. This growth can be attributed to rising disposable incomes, expanding population, and increasing health consciousness in developing countries of China and India.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it