Brewing Ingredients Market Size, Share, Drivers, Growth Opportunities, and Forecast

The global brewing ingredients market was valued at USD 34.5 billion in 2021 and is projected to reach USD 47.9 billion by 2026, growing at a CAGR of 6.8% during the study period. The rise in demand for beers from all over the globe, coupled with increasing consumption of craft beers, will drive market demand and the growth of brewing ingredients globally.

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Increasing demand for low- or zero-alcohol content beer

With changing lifestyles, there is an increase in health awareness. This awareness has created a demand for healthier products in the food and beverage industry. Due to this, the demand for beer with a low-alcohol content is increasing. According to the ADM survey, in 2020, a total of 51% of consumers will be looking for items that contribute to their metabolic health and promote a healthy weight. Low-alcohol products are no longer considered inferior. On the other hand, these products are more in demand, as they offer the taste and experience of alcohol - minus the guilt. Consumers are looking for beers with high protein and other nutritious content and reduced carb, sugar, and alcohol content.

The young population, in particular, is more health aware and looking for healthy beverages that won’t sabotage their health goals and commitments. Heineken USA conducted a survey of millennials in 2020, which showed that 52% of respondents had increased their consumption of alcohol-free beer and mocktails. Another major factor contributing to the increase in demand for zero-alcohol content beer is that it allows consumers to drink in moderation and regularly. The survey also shows that 42% of respondents were likely to choose an alcohol-free beer because it allowed them to drink regularly.

Opportunity: Introduction of new flavors in beer

The increase in beverage consumption has led to intense competition among beer brands, resulting in the introduction of new flavors and increasing beer consumption. There is a growing popularity for craft beers as it offers various flavors besides the regular flavors offered by macrobreweries. The introduction of new ingredients and innovative flavors, combining salty, fruity, and tart flavors, by craft beers, has found increasing appeal among the millennial crowd globally. Some of the macrobrewers are also acting to respond to these changing demands from consumers. For example, Heineken USA, in 2021, launched Dos Equis Lime & Salt variety pack of lager beer. Similarly, Latambarcem Brewery (India), in 2020, launched a new craft beer brand called Maka di that currently serves four brews: Honey Ale, Belgian Tripel, Bavarian Keller, and Belgian Blanche. The introduction of these new flavors is projected to increase sales and consumption of beer. Thus, this is anticipated to provide ample opportunities to players operating in the brewing ingredients market.

By brewery size, the craft brewery is estimated to grow at a higher rate in the brewing ingredients market.

According to the Brewers Association, an American craft brewer is a small and independent brewer, where small breweries have an annual production of 6 million barrels of beer or less. The craft brewing industry contributed USD 82.9 billion to the US economy in 2019, with more than 580,000 employees. The average alcohol by volume (ABV) content of a craft beer is 5% to 10%, but some of the most popular craft beers have an ABV of as high as 40%. On the other hand, beer produced in bulk by macrobreweries has an ABV of 4% to 6% and as little as 2%. Craft breweries offer different flavors, which allow consumers with different tastes to cater to their preferences. These factors are driving the growth of the craft brewery segment in the global market.

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The increasing demand for beers in the Asia Pacific countries drives the region's growth rate at a higher pace.

The Asia Pacific region comprises two high-growth economies: India and China. The drinking preferences of the population in this region are gradually shifting toward an alcoholic culture. The large, increasing population and the growing market mean that the demand for brewing ingredients is still promising. Another factor is the densely populated areas that are not completely tapped by beer manufacturing and brewing ingredient companies. Hence, beer produced by macrobreweries and craft breweries still has a high-growth rate. Moreover, the increasing spending capacity of consumers has led to a surge in demand for craft beers. There has been an emergence of various craft breweries in countries such as India over the last few years.

The APAC region held the largest share of the brewing ingredients market. The demand for different beers with various flavors and different ABV is driven by economic growth, drinking culture in countries such as Vietnam and South Korea, urbanization, and the rise in the purchasing power of consumers.