The nutraceutical ingredients market is estimated to be valued at USD 162.1 billion in 2020 and is projected to reach USD 227.5 billion by 2025, at a CAGR of 7.0% from 2020 to 2025. The growth of the nutraceutical ingredient market is driven by factors such as rising awareness regarding health & wellness among consumers and increasing demand for fortified food products. Key drivers for the market’s growth include increasing incidences of chronic diseases worldwide and mandates on food fortification by government organizations.
Nutraceutical Ingredients Market Dynamics
Driver: Increasing incidences of chronic diseases
The burden of chronic diseases is rapidly increasing worldwide. According to the WHO, by 2020, chronic diseases will account for almost three-quarters of all deaths worldwide, and that 71% of deaths due to ischemic heart disease (IHD), 75% of deaths due to stroke, and 70% of deaths due to diabetes will occur in developing countries. The number of people in the developing world with diabetes will increase by more than 2.5-fold, from 84 million in 1995 to 228 million by 2025. On a global basis, 60% of the burden of chronic diseases will occur in developing countries. Globally, there is a significant rise in the population suffering from chronic ailments, such as obesity, diabetes, blood pressure, and cardiovascular diseases. This has led to people becoming more conscious of their eating patterns. The link between diet and health is significant, and people are opting for healthier food. Consumers are also looking for options that provide the right combination of nutrition and taste. Fortified food ingredients cater to this pressing need by providing food formulators with ingredients offering specific functionalities and healthier alternatives. Hence, the entire health and wellness movement strengthens the demand for nutraceutical ingredients.
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Restraints: Higher costs of fortified products dissuading large-scale usage and adoption
Nutraceutical ingredients find a wide variety of applications, such as functional food & beverages, animal nutrition, pharmaceuticals, and personal care products. However, the inclusion of nutraceutical ingredients in food & beverage products, feed products, pharmaceuticals, and personal care products results in an increase in the prices of these end products. This, in turn, leads to lower adoption of such products, thereby stunting market growth. For instance, in comparison to traditional bottled water products, probiotic-infused bottled water products cost more. Despite these probiotic-infused bottled water products offering essential health benefits, such as better digestive and immune health, most consumers still remain unlikely to entirely adopt the product or replace their traditional bottled water consumption entirely. Therefore, the premium pricing of fortified products highly hinders market growth for nutraceutical ingredients during the forecast period.
Opportunities : Product-based and technological innovations in the nutraceutical ingredients industry
Personalized healthcare technologies are being rapidly adopted by various nutraceutical ingredient manufacturers to formulate better suited and customized end products for consumers. Consumer product companies are now increasingly collecting data to enable a proper analysis of purchasing behavior and lifestyle to provide consumers with tailored options in accordance with their purchasing patterns. For instance, in 2013, Tesco announced its intention to use its Clubcard information to be able to track various chronic illnesses that consumers pay heed to, for the provision of tailored solutions to promote healthier eating habits. This information not only aids consumer companies to come up with personalized dietary advice but also establish significant partnerships with different pharmaceutical companies to help personalize over-the-counter supplements. Apart from the study of consumer purchasing patterns, the personalization of nutraceutical products is also amplified by genomics by enabling treatments that are closely linked to an individual’s genetic profile. This provides a huge market opportunity for nutraceutical end-product manufacturers, whereby, linking a diet to a genome not only results in boosting health, but also reduces the chance of developing adverse health conditions, such as cardiovascular diseases, obesity, diabetes, or inflammatory bowel diseases. Such corroborated usage of technology with a dietary design is further expected to present unforeseen market growth opportunities for nutraceutical ingredient manufacturers.
Challenges: Consumer skepticism associated with nutraceutical products
Along with a growing consumer awareness about better dietary choices and increasing health awareness, there also remains an underlying consumer skepticism associated with the adoption of nutraceutical products. Although there are multiple factors, but the two major reasons that are hindering the consumer adoption of nutraceutical products are synthetic sourcing and unsubstantiated health claims. Health claims act as a major marketing and selling points for most nutraceutical ingredient manufacturers; however, when such claims do not result in successful fruition, consumer skepticism toward these products increases. Another factor hindering market growth for nutraceutical products is their formulation or synthetic sourcing. Most consumers do not prefer products that have been genetically modified to impart beneficial product characteristics. These factors act as major deterrents to market growth for various nutraceutical ingredient manufacturers.
By type, the probiotic segment is projected to account for the largest share to the nutraceutical ingredients market during the forecast period
The nutraceutical ingredients market, by type, has been segmented into probiotic, proteins and amino acids, phytochemical & plant extracts, fibers & specialty carbohydrates, omega 3 fatty acids, vitamins, prebiotics, carotenoids, minerals and others. The probiotic segment is projected to be the largest segment during the forecast period. Probiotic ingredients are becoming one of the essential ingredients for various health & nutritional applications as they have positive effects on overall human health. Owing to this, probiotic ingredient is widely used across various applications such as functional food, beverages, dietary supplements, and animal nutritional industries.
By application, the market for dietary supplement is projected to account for the fastest growing in the nutraceutical ingredients market during the forecast period
The global market, by application, has been segmented into food, beverages, personal care, animal nutrition and dietary supplement. The dietary supplement segment is projected to be the fastest-growing, by application, during the forecast period. The segment is growing because dietary supplements offer various health benefits such as improvement in the balance of the gut microflora, improvement of intestinal functions such as bulking and regularity, increased calcium absorption & improvement in bone density, enhancement of immune function, reduction in the release of toxins that can lead to fatty liver and other diseases, reduced risk of cardiovascular diseases, control of blood sugar, possible reduction of risk of obesity & metabolic syndrome, and improvement in abdominal pain, bloating, and constipation.
By form, the dry segment is projected to dominate the nutraceutical ingredients market during the forecast period
On the basis of form, the market is segmented into dry and liquid. A number of nutraceutical ingredients that are used in the dry form are vitamins, amino acids, prebiotic & probiotic premixes, proteins, and some minerals such as zinc and folic acid. These ingredients are extracted in dry form from several sources. For instance, vitamin C is extracted from acerola plant, protein powder, and fiber and amino acid from the hemp plant. The dry form preserves the flavor & color of food & beverage products and also provides benefits in terms of easy handling and storage, which is difficult with liquid ingredients. The dry form of nutraceuticals is available either in a tablet or capsule form in dietary supplements.
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Asia Pacific is projected to be the fastest growing market for the forecast period
The Asia Pacific nutraceutical ingredients market is completely driven by India, which accounted for nearly 31.5% of the market share in 2019. Factors such as changing lifestyles, changing dietary patterns, and growing awareness about nutrition are expected to drive the demand for nutraceutical ingredients in the country even more. Apart from this, rising hospitalization costs is forcing consumers to consume supplements and other nutrients such vitamins and minerals, in order to maintain their health. Consumers in the country are now willing to spend an additional amount for fortified products, which has increasingly helped manufacturers of nutraceutical ingredients to find a substantial market opportunity.