The global baking ingredients market is estimated at USD 16.6 billion in 2021 and is projected to reach USD 22.3 billion by 2026, at a CAGR of 6.0% from 2021 to 2026.
There has been a spike in demand for baking ingredients, such as baking soda, baking powder, cocoa powder, and other condiments, as consumers stranded at home due to the Covid-19 lockdown have taken aggressively to baking. Baking ingredient manufacturing companies such as Cargill (US), Kerry Group Plc (Ireland), and many others and retailers have reported a significant increase in the sale of these products since the lockdown compared to the same period last year. With the recent influx of international cafe and bakery chains, on-the-go food has become increasingly popular.
Drivers: Global rise in the consumption of bakery products and confectionery
Bakery products have been serving as basic food items for human nutrition for a long time. The demand for confectionery and bakery products is increasing with the rising demand for convenience food and consumer preference for attractive, tasty & textured delicacies. The easy accessibility, lower price, and nutrition associated with them are the major factors affecting their sustenance in the modern market. Hence, for many consumers, bakery products have become an essential part of their lives. This has bolstered the demand for various baking ingredients that are used to make bakery products, rich in taste and texture.
Restraints: Stringent regulations and international quality standards
Baking ingredients are a mixture of various compounds and are subjected to rigorous health and safety checks based on governmental regulations in different countries. Various studies have been conducted by regulatory bodies to assess the impact of these products on human health. Based on their results, products are classified, and the daily intake allowance (DIA) has been set. International bodies such as the National Food Safety and Quality Service (SENASA), Canadian Food Inspection Agency (CFIA), U.S. Food and Drug Administration (FDA), World Health Organization (WHO), and Committee on the Environment, Public Health and Food Safety (EU) are associated with food safety regulations. These organizations have control over the usage of different chemicals and materials used in food processing, directly or indirectly.
Opportunities: Growing trend of veganism and vegetarianism among consumers
Consumers are becoming sensitive to factors, such as health, sustainability, and social impact while making purchase decisions. The consumption of animal-based foods has raised environmental concerns. Also, some consumers have an ethical objection to using animals in food products. Consumers are encouraged to shift to veganism and vegetarianism due to factors such as animal welfare, environment, and personal health. According to the Good Food Institute, the US retail sales of plant-based foods have increased by 17%, accounting for nearly USD 3.7 billion. The largest market for plant-based foods includes plant-based milk and plant-based meat. The market for plant-based bakery products, such as vegan cake, muffins, bread, buns, is growing, which might increase the demand for vegan baking ingredients.
Challenges: Increase in awareness about health & wellness impacting the consumption of bakery products
Due to the increase in instances of health issues among consumers, the need for finding alternatives in food products that have lower fat and sodium content has increased. Salt and sugar reduction has become one of the key challenges in the food industry. Biospringer (France), a company dealing in the production of leavening agents for the bakery industry, states that nearly 33% of the consumers in the world have “low salt” as one of the primary criteria when making purchasing patterns.
The increase in cases of diabetes and obesity in the population has also become one of the major factors that influence the purchase decisions of products. According to a report published by the World Health Organization (WHO), over 422 million people worldwide have diabetes, particularly in low and middle-income countries. Due to these factors, the demand for bakery products, which are rich in fats and sugar, might reduce significantly. This will definitely cause an impact on the demand for various baking ingredients required in the manufacturing of these items.
Europe holds the largest market for baking ingredients, with an overall 32.4% in the year 2020. According to AIBI bread market report 2012, Europeans on average consumed 58 kgs of bread and bakery products per capita. Bread and bakery products are produced in a number of different ways: by large industrial companies, by traditional smaller-scale bakeries, and by people at home.
Key participants in the baking ingredients market such as Cargill (U.S.), Archer Daniels Midland Company (U.S.), Associated British Foods plc (U.K.), Koninklijke DSM N.V. (The Netherlands), Kerry Group plc (Ireland), and AAK AB (Sweden). Other players include British Bakels (U.K.), Corbion (the Netherlands), IFF (US), and Dawn Food Products, Inc. (U.S.).
