Specialty food ingredients are growing in popularity around the world. These ingredients provide a diverse range of features and functions, catering to consumer demands for products that offer health benefits, are vegetarian or vegan, are sustainable, and much more. As people become increasingly concerned with their own health after the introduction of COVID-19 and with the state of the environment, specialty food ingredients will become more important than ever.
Types of specialty food ingredients include functional ingredients, starches, sweeteners, flavors, preservatives, colorants, proteins, emulsifiers, and many more. They are used for purposes such as improving the taste, look, and texture of a food or beverage, adding nutrition, creating vegan substitutes for other foods, and preserving products, among other applications. Their wide variety of uses and the growing demand for vegan, nutritional, and “clean” products help contribute to demand in this industry. Starch in particular has uses in many industries, including textiles, bioplastics, paper, and medicine.
Specialty Food Ingredients Industry Overview
The global specialty food ingredients industry was valued at nearly $100 billion in 2022 and is expected to grow at a compound annual growth rate of over 5% by 2030. These specialty ingredients are in growing demand not only in the food and beverage industry but in sectors such as pharmaceuticals and personal care as well — different ingredients can serve multiple beneficial purposes in medicine and provide desirable qualities in personal care products at a time when consumers are looking for natural and clean formulations.
The food and beverage industry is of course the largest market for specialty food ingredients, accounting for 70% of total revenue, but demand is on the rise from the personal care and pharmaceutical sectors. Clean-label products are becoming increasingly popular with consumers across industries who are looking to reduce their consumption of and exposure to artificial additives. Half of US consumers, for example, actively seek out food products with natural ingredients. In particular, customers are looking for foods and beverages with added fiber, protein, vitamins, or probiotics.
The specialty food ingredients market can be broadly categorized into sensory and functional ingredients, with the sensory category holding the larger portion of the market at around 59% in 2022. Sensory ingredients include flavors, enzymes, colorants, and emulsifiers. As customer expectations for packaged and convenience foods rise and competition becomes more intense, demand for sensory ingredients is expected to rise.
Consumers are also increasingly seeking out things that use natural colours over artificial ones in products from confectioneries and bakery items to meat, dairy, seafood, and beverages. They’re also looking for foods and beverages that use alternative sweeteners. These preferences are helping to boost the demand for specialty food ingredients in general and the sensory segment in particular.
Asia-Pacific accounted for a third of the global specialty food ingredient market in 2022, driven by high populations and the popularity of convenience food. Europe and North America followed, with North America expected to see growth over the coming years as the demand for natural, healthy, plant-based products continues to rise.
How Sustainability is Impacting the Specialty Food Ingredients Industry
Climate change and other environmental concerns have led many governments, companies, and consumers to work towards a more sustainable existence. New regulations and evolving consumer demands mean that sustainable practices and products are becoming increasingly important for companies to stay in business and remain competitive. There is therefore an increasing amount of innovation taking place across industries, including in the food ingredients sector.
Consumers expect transparency from companies in terms of their supply chains, materials, and processes. They are increasingly aware of greenwashing practices and have higher expectations of the businesses they choose to buy from, making sustainability an important factor in their purchasing decisions. This means companies are increasingly turning to locally sourced ingredients and those with long-term viability. These expectations are also helping to drive the growing demand for plant-based alternatives in the industry.
Improving efficiency is another way of making operations more sustainable. Strategies such as reducing waste, cutting down on unnecessary ingredients, and streamlining the production process can all help cut down on energy usage, emissions, and costs.
Innovations in the Specialty Food Ingredients Industry
As demand for environmentally friendly specialty ingredients increases, businesses are creating new products to meet a variety of needs, from new vegan proteins to natural substitutes for artificial additives and ingredients that offer new or better functionalities.
Plant-Based Egg Substitutes
French company The Very Co. has developed a sustainable plant-based line of egg and butter substitutes. With egg production creating significant carbon emissions, combined with egg shortages due to factors such as avian flu outbreaks, the company’s plant-based products have a lower impact on the environment while catering to the continuing demand for vegan products. The replacement egg product is called Nomelet and will be sold as a powder, which is more stable and easier to store and transport, costing less and creating fewer emissions in transit. Nomelet’s ingredients include yellow peas, cornflour, and potato protein.
Making Byproducts Productive
Another French startup, Green Spot Technologies, is creating food ingredients out of food waste by upcycling byproducts. The company takes waste from juice, wine, beer, and ketchup manufacturers, fermenting it, and drying it to create ingredients that can be used to add flavor, color, and texture to food products.
Meanwhile, Olam Food Ingredients (OFI) is using a byproduct from coffee bean processing to create a new food ingredient. The company takes coffee cherry fruit that has been recovered from the production process to create soluble cascara powder. This product has a flavor profile described by OFI as “reminiscent of caramel, honey, raisins, and butterscotch.” This makes it a versatile flavoring product for items such as beverages, snack bars, ice cream, confectioneries and more. It also reduces waste generated by the coffee production process and could provide coffee farmers with more revenue.
A New Vegan Casein
Ingredients manufacturer Fooditive is developing a vegan form of casein, a protein typically found in milk and dairy products, to be used in meat and dairy alternatives. Functionally identical to dairy casein, the product is completely animal-free, developed from a bacterial strain through precision fermentation. Footitive is currently seeking approval for the product, which is says is sustainable, nutritious, and close to the original in terms of taste and texture. The company has completed manufacturing trials and is ready to begin production at scale in Europe once the product has received approval as a Novel Food in the EU.