Ethyl Alcohol (Ethanol) Market - Growth, Trends, COVID-19 Impact, and Forecast (2021 - 2026)

Market Overview

The ethyl alcohol (ethanol) market size is projected to register a CAGR of over 5% during the forecast period (2021-2026).

The market was negatively impacted by COVID-19 in 2020. Beverage manufacturers are affected by the shortage of labor and raw materials essential for the production process. The demand is also expected to be affected by the uncertainties in consumer demand as pandemics have surged healthy food habits, and consumers are focusing on home dining as several governments have initiated preventive measures such as banning mass gatherings, especially in restaurants.

• Over the short term, major factors driving the growth of the market studied are the rising demand for ethanol as biofuel, growing to use in beer production and food processing, and stringent government policies to restrict the usage of fossil fuels. On the flip side, an increase in awareness about the ill effects of alcohol consumption and the advent of hybrid electric vehicles are likely to hamper the growth of the market studied.
• The fuel segment dominated the market, and it is likely to grow during the forecast period, owing to increased practice of ethanol blending with gasoline across the world.
• The surging demand to produce ethanol from corn and sugar is likely to provide opportunities for the market studied during the forecast period.
• North America dominated the market across the world due to increasing regulations and rising demand for the food processing industry.

Scope of the Report

Ethyl alcohol (ethanol) is a clear, transparent liquid widely used in fuel and alcoholic beverages like beer, wine, or brandy. The market is segmented on the basis of grade, purity, application, and geography. By grade, the market is segmented into food grade, industrial grade, pharmaceutical grade, and lab grade. By purity, the market is segmented into undenatured ethanol and denatured ethanol. By application, the market is segmented into industrial solvent, fuel/fuel additive, bacteriacide/disinfectant, beverages, personal care, and other applications. The report also covers the market size and forecasts for the ethyl alcohol (ethanol) market in 15 countries across major regions. For each segment, the market sizing and forecasts have been done on the basis of volume (million liters).

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Key Market Trends

Fuel Segment to Dominate the Market Demand

• Ethanol is gaining support for application as fuel, owing to its renewable source and eco-friendliness with lower emissions. Ethanol has a higher octane number than gasoline, providing premium blending properties.
• Low-octane gasoline is blended with 10% ethanol to attain the standard 87 octane. Carbon monoxide production from ethanol fuel is significantly lower when compared to gasoline engines.
• Moreover, for the past several years, refiners have been adding ethanol to fuel, as it burns cleaner than pure gas, which helps in cutting the carbon footprint. Additionally, the use of ethanol as a fuel helps to reduce oil dependency.
• According to the Ministry of Petroleum and Natural Gas, India, the country has preponed the target of achieving 20% ethanol-blended fuel by five years and now to complete the target by 2025. The country needs 4 billion liters of ethanol for 10% ethanol blend, and for 20% ethanol blend, the country needs 1,000 crore liters of ethanol, which will cost approximately INR 65,000 crores.
• European countries are majorly using 5% ethanol-blended fuel. The region is focusing on reducing the carbon dioxide emission from transportation through 10%-20% ethanol blending based on the countries' infrastructure.
• In California, ethanol replaced methyl tertiary butyl ether (MTBE) as a gasoline component. E10, one of the most common blends, contains 90% gasoline and 10% ethanol in order to oxygenate the fuel and reduce emissions.
• In Brazil, fuel ethanol consumption is driven largely by an ethanol blending mandate and lower prices relative to gasoline. However, the country’s fuel ethanol prices are not competitive with fuel ethanol from the United States, primarily on account of higher agricultural feedstock costs, especially along with the Brazilian coastal areas.
• Hence, all such trends in the market are likely to drive the demand for ethanol for fuel application during the forecast period.

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