The functional food ingredients market size, valued at USD 119.2 billion in 2024, is projected to grow at a 6.8% CAGR, reaching USD 165.8 billion by 2029. This growth is being driven by significant shifts and innovations within the industry, spurred by consumer demand for products that go beyond basic nutrition and offer added health benefits. Functional food ingredients are pivotal in addressing the growing consumer focus on health and wellness, providing advantages such as improved digestion, enhanced immunity, and better heart health.
As awareness of health issues grows and lifestyle-related diseases become more prevalent, consumers are increasingly seeking products that promote overall well-being. This has led to a rising demand for functional food ingredients. A February 2022 study by the National Center for Biotechnology Information (NCBI), titled “Consumer Acceptance Toward Functional Food,” highlights that individuals aged 65 and older tend to favor functional foods, such as yogurt with lactic acid bacteria, likely due to their greater focus on health. As consumers continue to prioritize products with added benefits, the demand for functional food ingredients is expected to drive sustained market growth.
Functional Food Ingredients Market Trends:
Here are some key trends currently shaping the Functional Food Ingredients Market:
Rising Consumer Demand for Health & Wellness: Consumers are increasingly seeking functional foods that offer health benefits, such as boosting immunity, improving digestion, and supporting heart health.
Growth of Plant-Based Ingredients: There’s a growing preference for plant-based functional ingredients, including plant proteins, fibers, and antioxidants, due to the surge in veganism and environmental consciousness.
Focus on Digestive Health: Ingredients like probiotics, prebiotics, and dietary fibers are seeing a rise in demand as consumers prioritize gut health and its link to overall wellness.
Clean Label and Natural Ingredients: Consumers are opting for foods with simpler ingredient lists, driving the demand for natural functional ingredients like turmeric, ginger, and omega-3 fatty acids.
Increased Use of Personalized Nutrition: Advances in nutrigenomics are leading to customized functional food products tailored to individual nutritional needs, encouraging growth in the market.
Fortified Foods and Beverages: The addition of vitamins, minerals, and bioactive compounds to everyday foods and drinks is a trend, especially in products targeting immunity and mental well-being.
Sustainability and Transparency: There is increasing interest in sustainably sourced and transparent supply chains, pushing companies to highlight the origin and environmental impact of functional ingredients.
Innovation in Delivery Formats: Companies are introducing functional ingredients in novel formats like gummies, powders, and energy bars, catering to convenience and on-the-go lifestyles.
Functional Food Ingredients Market Drivers: Increase in consumption of nutritive convenience and fortified food products
Hectic lifestyles, increasing health awareness, and growing recognition of nutritional gaps are driving consumers to look for products that offer both convenience and health benefits. Nutritious ready-to-eat foods like pre-packaged salads, smoothies, and meal replacement bars provide quick, convenient options for busy individuals, while fortified products such as cereals, milk, and beverages address specific nutrient shortfalls and deliver added health advantages.
To meet this rising demand, manufacturers have responded by introducing a wide range of functional food and beverage products. These are enhanced with ingredients like vitamins, minerals, probiotics, and omega-3 fatty acids to offer health benefits beyond basic nutrition. From energy-boosting snacks to immunity-enhancing drinks, the market has seen a surge in innovative products tailored to meet diverse consumer needs. For example, in May 2021, the U.S. Food and Drug Administration (FDA) granted Cargill a letter of no objection for its GRAS notification on EpiCor postbiotic. This dried yeast fermentate, proven in clinical trials for dietary supplements, supports gut health and immune function, opening new opportunities for creating products that meet consumer demand for gut-friendly and immune-supporting functional foods.
The growing popularity of functional foods has also driven up the demand for functional ingredients. Manufacturers are increasingly sourcing high-quality, scientifically-proven ingredients that not only boost the nutritional content of their products but also offer functional benefits, such as better digestion, stronger immunity, and improved cognitive performance.
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Probiotics, By Type, Accounted For The Highest Market Share Among Type Segment In 2023.
Probiotics are essential for maintaining human health, primarily by supporting a balanced gut microbiome. This microbiome impacts a range of bodily functions, including digestion, nutrient absorption, immune response, and even mental health. Its effects reach beyond the digestive system, influencing systemic inflammation, metabolism, and overall well-being. The gut is closely tied to the immune system, with approximately 70% of immune activity occurring in the gut-associated lymphoid tissue (GALT). Probiotics help regulate this immune response, enhancing the body’s defense against pathogens and reducing the risk of inflammatory diseases.
Given the significant impact of gut health on overall wellness, probiotics are increasingly recognized as vital functional food ingredients. They are expected to lead the functional food ingredients market due to their diverse benefits and broad health effects. Unlike vitamins, minerals, and proteins, probiotics offer unique advantages by not only aiding digestion and nutrient absorption but also improving immune function, controlling inflammation, and supporting mental well-being through the gut-brain axis.
Probiotics also address specific health issues, such as irritable bowel syndrome, inflammatory bowel disease, and antibiotic-associated diarrhea, which contributes to their market dominance. Their versatility and proven health benefits make probiotics an essential component for maintaining comprehensive health and vitality. Key players in the probiotics market include Cargill, Incorporated (US), Chr. Hansen A/S (Denmark), and A&B Ingredients, Inc. (US).
North America is dominate the functional food ingredients market share.
Consumer awareness and adoption of dietary supplements in the region are exceptionally high. According to the 2023 Council for Responsible Nutrition (CRN) Consumer Survey on Dietary Supplements, 74 percent of U.S. adults regularly use these supplements, indicating widespread mainstream acceptance. This extensive use highlights a strong market demand for functional food ingredients, contributing to the region’s leading position.
North America also benefits from a robust research and development infrastructure in the food and beverage sector. This infrastructure supports innovation and the development of new functional ingredients tailored to consumer preferences. The region’s stringent regulatory framework ensures the safety and effectiveness of these products, enhancing consumer trust and fostering market growth. Furthermore, lifestyle trends such as an increased emphasis on health and wellness are driving the demand for functional food ingredients. Consumers are increasingly seeking products that offer health benefits beyond basic nutrition, which is fueling the demand for functional foods and beverages enriched with ingredients like carotenoids, protein, and amino acids.
Top Functional Food Ingredients Companies:
The key players in this market include Cargill, Incorporated (US), BASF SE (Germany), ADM (US), International Flavors & Fragrances Inc. (US), Arla Foods amba (Denmark), Kerry Group plc (Ireland), Ajinomoto Co., Inc. (Japan), DSM (Netherlands), Ingredion (US), and Tate & Lyle (UK).
Functional Food Ingredients Industry News:
In February 2024, Cargill, Incorporated (US) and ENOUGH (UK) expanded their partnership to innovate sustainable protein options using ENOUGH’s fermented mycoprotein technology. Cargill, Incorporated’s investment, and commercial agreement will boost ABUNDA mycoprotein production, known for its meat-like texture and sustainability. This partnership allows Cargill, Incorporated to tap into the growing demand for alternative protein sources, enhancing its position in the functional food ingredients market and leveraging its global footprint to scale up production efficiently.
In September 2023, BASF SE (Germany) unveiled Product Carbon Footprints (PCFs) for selected human nutrition ingredients including Vitamin AP 1,7 TOC and Vitamin E Acetate 98%. Certified methodology reveals at least 20% lower emissions compared to the global market average. This initiative, under ISO 14067:2018, aids BASF SE in offering a competitive advantage while supporting customer emission reduction goals. By showcasing superior PCFs for functional food ingredients, this initiative not only strengthens BASF’s competitive edge but also enhances its reputation as a sustainable leader in the functional food ingredients market, fostering trust and loyalty among consumers and partners.
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