Market Trends of Specialty Fats And Oils Industry
Growing Demand for Cocoa Butter Equivalents Among Food Manufacturers
- Cocoa is a costly ingredient owing to the fluctuating prices of raw materials. Manufacturers of chocolate or confectionery products are opting for substitutes such as cocoa butter equivalents (CBE) owing to the high prices and fluctuation in demand and supply of natural cocoa butter. Thus, manufacturers prefer low-cost sustainable vegetable fats and oils like cocoa butter equivalents, palm oil, and others. Furthermore, cocoa substitutes also help increase the profit margins of food & beverage manufacturers, thus gaining popularity among manufacturers. Earlier, cocoa butter was the preferred ingredient over cocoa butter equivalent as a fat source.
- However, manufacturers are shifting towards cocoa butter equivalents (CBE) as it helps improve the fat stability and fat composition profile in the end products. Furthermore, Cocoa Butter Equivalents (CBE) provide manufacturers with the ability to achieve consistent product quality by minimizing fat migration in multi-layer products and addressing the softness that can occur due to the presence of milk or nut ingredients.
- For instance, according to Agriculture and Agri-Food Canada (AAFC), the retail sales volume of chocolate confectionery was 140.5 metric tons in 2023 in India. Furthermore, cocoa butter equivalents offer sustainability and flexibility, helping to reduce the cost by 30-40%.
- The growing demand for substitutes for cocoa butter that possess similar chemical and physical properties as cocoa is further propelling the growth of specialty fats in the market. The growing consumption of confectionery products is enabling confectionery manufacturers to use specialty fats as an ingredient to enhance the profile of the end products. For instance, according to the United States Department of Agriculture (USDA), the production volume of palm oil was 77.22 million metric tons in 2022-23.
- In addition, the growing demand for healthy fat products, along with the increasing number of food companies demanding ingredients with healthier fats, is boosting the sales of specialty fats in the market.
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North America Holds the Majority Share
- The increased consumption of processed food products in the region, along with the growing interest of consumers in high-quality products and increasing willingness to pay a premium price for premium-quality products owing to the high disposable income of consumers, is enabling manufacturers to incorporate high-quality ingredients products in processed food.
- For instance, according to the International Monetary Fund (IMF), gross domestic product (GDP) per capita in the United States was USD 80,304.58 in 2023. The rising demand for safe and indulgent bakery and confectionery goods is boosting the sales of specialty oils and fats in the region. The rise in awareness regarding the importance of leading a healthy lifestyle accelerates market growth. The prevalence of various chronic diseases, such as diabetes and cardiovascular diseases, among others, is encouraging people to adopt vegetable oil.
- With a considerable number of consumers opting to replace vegetable and seed oil with olive oil, the sales of olive oil have continued to thrive, while the demand for the latter has experienced a decline. This shift in consumer preferences has resulted in sustained growth in olive oil sales, with vegetable and seed oils losing market share as a consequence.
- According to the United States Department of Agriculture (USDA), in 2021, domestic olive oil consumption in the United States amounted to approximately 423,000 metric tons, an increase from 395,000 metric tons in 2020. In addition to the health and wellness claims, consumers are especially drawn to features that denote a more premium product. These include where and how ingredients are sourced, as well as natural components.
- The demand for specialty fats and oils is surging to manufacture high-value and premium food products. The presence of key market players in the region, along with the increasing number of specialty fats and oils manufacturers investing heavily in research and development to innovate new products to cater to the demand of end-users, is fuelling the market's growth. Furthermore, increasing preference for natural ingredients over synthetic chemicals in the food and beverages industry, along with growing demand for genuine and reliable certified specialty oils to fulfill the labeling claims of the end products, is expected to boost the sales of certified specialty fats and oils in the market.
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