Food-Grade Alcohol Market Size (2024 – 2030)

The global food-grade alcohol market was valued at USD 2.5 billion and is projected to reach a market size of USD 3.52 billion by the end of 2030. Over the forecast period of 2024–2030, the market is projected to grow at a CAGR of 5%

Pure, additive-free ethyl alcohol suitable for human consumption is known as food-grade alcohol. It is sometimes referred to as extra-neutral alcohol (ENA), food-grade ethanol, non-denatured alcohol, and grain alcohol. Strict guidelines govern the production and processing of food-grade alcohol to guarantee that it is devoid of dangerous chemicals and contaminants. It can be found in tinctures, culinary goods, and personal hygiene products. In the past, the market had steady growth. This was used for imparting flavor in the food & beverage industry. Presently, the market has been seeing a surge due to diversity in applications in the culinary industry. In the future, with a focus on health and technological advances, an immense boost is anticipated.

Key Market Insights:

India's ethanol consumption is expected to reach 6.3 billion liters in 2023, a 14.02% increase over the previous year.

The amount of isopropyl alcohol sold worldwide in 2022 was estimated to be 2.3 million metric tons. By 2030, it is anticipated to reach 2.88 million metric tons.

Alcoholic beverage sales at home are projected to bring in $1,070 billion by 2024, while sales outside the house are projected to bring in $670.6 billion.

A minimum of 60% ethanol should be included in alcohol-based hand sanitizer.

Between 70 and 95 percent of perfume bottles contain alcohol, usually referred to as ethanol or ethyl alcohol.

Food-Grade Alcohol Market Drivers:

The expansion of the food & beverage industry is facilitating the acceleration.

Over the years, there has been significant economic progress in countries in North America, Asia, and the Middle East. Urbanization has changed the standard of living, raising the disposable income of the public. A lot of people are frequently going out to new restaurants, hotels, and other eateries. Investments in the number of wineries have drastically increased. This has augmented the need for processed food, beverages, and other food products, which has resulted in the development of the food-grade alcohol market. Gourmet food products are well-liked and received by the public. This substance is used in various cooking products as a preservative, flavor enhancer, and food extract to create a unique taste. These factors have changed the landscape of the market.

The advantage offered by food-grade alcohol is increasing its demand.

Food-grade alcohol is a solvent that is safe for use with humans and has been classified as a Generally Recognized as Safe (GRAS) chemical by the FDA. It is prominently used because of its flexibility. This is non-denatured and harmless, having water as an ingredient. It is a solvent that is suitable for use in extraction, blending, and other food-safe processes involving food components. Besides, it is a natural preservative that can be used to increase the shelf life of food items because of its antibacterial qualities. Moreover, it gives some drinks and sweets a unique texture and improves their tastes. Moderate use of food-grade alcohol may have possible health advantages. Furthermore, this is a reasonably priced item.

Food-Grade Alcohol Market Restraints and Challenges:

Health concerns and intense competition are the main issues that the market is currently facing.

Regular consumption of food-grade alcohol, commonly referred to as ethanol, can be hazardous and poisonous. The skin may become dry, cracked, peeled, and itchy after coming into repeated contact with ethanol. Secondly, alcohol can cause depression in the eyes, upper respiratory tract, and central nervous system. Thirdly, ethanol use during pregnancy may result in spontaneous abortion, developmental abnormalities, or birth malformations. Fourthly, long-term ethanol usage can damage the nerve system and glands, as well as develop liver cirrhosis. Moreover, drinking alcohol raises the prevalence of colorectal and breast cancer. Besides this, problems like hunger, digestive concerns, and unhealthy weight gain are associated with frequent consumption. Apart from this, many manufacturers can go for other available products that are synthetic substitutes or other natural options that have superior performance to food-grade alcohol. These alternatives might be cost-effective, available, and more effective. Businesses need to stand out in the market by differentiating their product to tackle this obstacle.

Food-Grade Alcohol Market Opportunities:

Innovations in product development and formulations provide the market with an ample number of possibilities. Advanced extraction technology, bioengineering methods, and sustainable sourcing procedures may be utilized by manufacturers to create new, eco-friendly, and superior goods that satisfy consumer demand. Secondly, integration with digital technologies can be beneficial. By using fields like AI, ML, and data analytics, it is possible to get insights about predictive analysis, reduce manual errors, avoid the repetition of tasks, streamline operations, and optimize performance. Thirdly, the increasing demand for natural and clean products presents an opportunity. A strictly regulated and controlled method is used in the production of food-grade alcohol to guarantee its purity and safety for human use. Usually made from natural materials like grains or fruits, the alcohol is distilled several times to get rid of any contaminants or dangerous ingredients. Manufacturers can capitalize on this to target customers looking for natural and sustainable options.

 FOOD-GRADE ALCOHOL MARKET REPORT COVERAGE:

Food-Grade Alcohol Market Segmentation: By Source

• Grain

• Molasses & Sugarcane

• Fruits

• Others

Molasses & sugarcane are the largest sources. Because sugarcane molasses is a byproduct of processing sugar cane and contains high amounts of fermentable sugars such as glucose, sucrose, and fructose, it is utilized as a raw material for the manufacturing of food-grade alcohol. It's also reasonably priced and widely available. Moreover, molasses has a high concentration of vitamins and minerals, making it an excellent feedstock for fermentation, and it often doesn't need further medium supplementation. Saccharomyces cerevisiae yeasts are the most widely utilized microorganisms for fermentation because they can convert sucrose from molasses into glucose and fructose. Furthermore, it makes use of sugar manufacturing waste that would otherwise be thrown away. It is made from renewable resources like sugarcane and sugar beet, making it eco-friendly. Grains are the fastest-growing category. Because grains form the foundation of many alcoholic drinks, including vodka, gin, and whiskey, they are utilized to manufacture food-grade alcohol. The spirits sector uses grain alcohol because of its high purity and taste neutrality. The beverage sector frequently uses grains like wheat and barley.  

Food-Grade Alcohol Market Segmentation: By Product Type

• Ethanol

• Polyols

Ethanol is the largest and fastest-growing product type. The rise in alcohol production around the globe is the reason for the demand. Various sugar, fruit, and starch sources, including sugar cane, sweet sorghum, maize, wheat, potatoes, and so on, can be used to make ethanol, commonly known as grain alcohol. Among these, maize starch is widely utilized to make ethanol since it is a widely available raw material. Both wet and dry milling techniques can be used to manufacture ethanol.

Food-Grade Alcohol Market Segmentation: By Function

• Coatings

• Preservatives

• Coloring & Flavoring Agents

• Others

The coloring & flavoring agent segment has the largest market share in 2023. Because of its superior solvent qualities, which enable it to efficiently extract and retain essential oils, tastes, and colors from a variety of natural materials, food-grade alcohol is frequently employed as a coloring and flavoring agent. Alcohol aids in the dissolution of flavor compounds and guarantees a consistent distribution of such compounds throughout the final product when employed in the manufacturing of flavor extracts, such as almond or vanilla extract. This results in a more consistent taste. Furthermore, food-grade alcohol evaporates fast, preserving the intended aromas and colors without changing the finished product's texture or integrity. This makes it a crucial component in the production of delicious, aesthetically pleasing, and high-quality food products. Coatings are the fastest-growing category. Food-grade alcohol forms a layer that dries quickly because it evaporates quickly. This is especially helpful in the baking and confectionery sectors, where maintaining product quality and appearance requires a quick coating setting. As a preservative, alcohol can help coated items last longer on the shelf by preventing the formation of mold and germs. This is particularly crucial for goods that must be kept in storage for a long time.

Food-Grade Alcohol Market Segmentation: By Application

• Beverage

• Food

• Pharmaceuticals & Healthcare

• Personal Care

• Others

The beverage industry is the largest application. Food-grade alcohol is ethyl alcohol that is pure and has no additions, making it suitable for human use in drinks. It serves as a basis for distilled spirits, such as vodka and rum, in drinks. The emergence of microbreweries that offer craft beers has also been aided by the growing desire for unusual tastes and drinks. The personal care application is the fastest-growing. For many years, people have utilized alcohol as a natural preservative. Natural cosmetics employ high-proof food-grade alcohol as part of their preservative system to keep creams, lotions, serums, shampoos, and hair conditioners fresh. Fragrances can be fixed using alcohol. Furthermore, it cleanses the skin.

Alcohol may carry nutrients to the skin when mixed with plant oils, herbs, and plant emulsifiers.

Food-Grade Alcohol Market Segmentation: Regional Analysis

• North America

• Asia-Pacific

• Europe

• South America

• Middle East and Africa

North America has the largest market share in 2023. The United States and Canada are at the forefront. Because of their lifestyle, the people in this area are more likely to eat processed and convenient meals. This calls for an improvement in the food processing sector to use ethanol that is suitable for food. The desire to consume sugar-free, low-calorie goods has increased along with understanding health risks. Companies in the food and beverage sector have developed products, including smoothies, soft drinks, and yogurts, with fewer calories or without added sugar to satisfy this expanding demand. Asia-Pacific is the fastest-growing market. Because ethanol is being used more and more in the manufacturing of alcoholic drinks, the market for it is growing. Owing to the increasing popularity of alcoholic beverages, ethanol is finding new uses. The food & beverage sector has been seeing an increased use of this compound. The beauty and wellness industry is another major contributor, as people are prioritizing their skin needs. It is projected that rising per capita income, population growth in countries like China, Japan, and India, and easy access to raw resources will drive the market.

COVID-19 Impact Analysis on the Global Food-Grade Alcohol Market:

The viral epidemic impacted the market in many ways. Lockdowns, restricted travel, and social isolation were all part of the new normal. Logistics, transportation, and supply chain management were impacted by this. This had an effect on trade operations as well as imports and exports. The majority of manufacturing facilities were halted. Restaurants and hotels were ordered to close due to guidelines. Furthermore, a shortage of funds caused a delay in the introduction of new partnerships and products. Research and medical-based applications received the most funding. A great deal of uncertainty prevailed, and many people experienced job losses. However, on the other hand, the market saw an increase due to the demand for hand sanitizers. These disinfectants became crucial to preventing the contamination of the virus. They were used in practically every possible place. Ethanol is one of the main ingredients found in these cleaners. Besides, this compound was used in the pharmaceutical and healthcare sectors to produce wipes and other essential sanitary products. E-commerce helped in the sale of these hygienic products. Post-pandemic, the market has picked up owing to the relaxation of rules and regulations.

Latest Trends/ Developments:

The beauty and wellness industry has been using food-grade alcohol in many of its products, augmenting revenue generation. Creams, lotions, serums, shampoos, and hair conditioners are naturally preserved by using high-strength food-grade alcohol. It can also be used as a solvent to facilitate the skin's absorption of other healthy components. Additionally, alcohol can accelerate product absorption and give goods a lighter, more refined feel. Moreover, alcohol may be used as a disinfectant to get rid of any bacteria or other germs that might be in skincare formulas, extending the shelf life and safety of the product. Alcohol may also give products like toners and astringents a lightweight, fast-drying texture in certain formulas. However, companies need to stick to the recommended guidelines and dosage to prevent skin disorders. Clean labeling and transparency of the product are encouraged to avoid repercussions.

Key Players:

1. Archer Daniels Midland Company (ADM)

2. Cargill, Incorporated

3. Roquette Frères

4. MGP Ingredients, Inc.

5. Grain Processing Corporation

6. Wilmar International Limited

7. Manildra Group

8. Sigma-Aldrich Corporation (Merck KGaA)

9. Cristalco

10. Greenfield Global Inc.