Global Alcohol Ingredients Market Size and Share Outlook - Forecast Trends and Growth Analysis Report (2024-2032)

Alcohol Ingredients Market Overview

Alcohol ingredients refer to materials that are deployed to produce alcoholic beverages like wine and beer, among others. The ingredients are typically used in the processing of alcoholic beverages. They also impart flavour, texture, colour, and aroma, to alcoholic beverages. Yeast and enzymes are some of the most crucial alcohol ingredients.

With the evolving consumer trend of alcohol ingredients market and the rising popularity of beer and wine among women and young consumers, the demand for alcohol with health benefits is growing. The growing demand for seasonal flavoured beers, such as spiced and citrus beers, among others, is driving the market for alcohol ingredients. Moreover, the growing trend of consumption of better-for-you alcoholic drinks, in the wake of the COVID-19 pandemic, is leading to the development of alcoholic beverages with low-calorie and low-sugar alternatives, thereby driving the industry growth.

As the growing health consciousness is leading to reluctance in the consumption of alcoholic beverages, especially among the Gen-Z population, the launch of flavoured alcoholic beverages is skyrocketing. This, in turn, is surging the demand for innovative alcohol ingredients and propelling the growth of the market.

Read more about this report - REQUEST FREE SAMPLE COPY IN PDF

Alcohol Ingredients Market Trends

Rise of Hybrid Drinks

The rising popularity of hybrid drinks like hard kombucha is increasing the demand for alcohol ingredients and fuelling the growth of the alcohol ingredients industry. Mate Maker, a hard kombucha brand, was launched in California through a collaboration between beverage industry veterans and the Grammy-winning band RÜFÜS DU SOL, highlighting the beverage's growing appeal. Established beverage companies have also entered the hard kombucha market. For example, Anheuser-Busch-backed Kombrewcha increased its alcohol content and revamped its packaging to appeal to a broader audience.

The trend toward mindful drinking has increased demand for low-alcohol beverages like hard kombucha. Consumers are seeking alternatives that offer a balance between enjoyment and health consciousness. While hard kombucha contains probiotics and antioxidants, experts advise moderation due to its alcohol content. The health benefits of probiotics in hard kombucha are still under research, and excessive consumption may negate potential advantages.

Growth of Mindful Drinking

The emerging trend of mindful drinking is increasing the demand for alcoholic beverages with low alcohol content, which is augmenting the demand of alcohol ingredients market. For instance, Generation Z and Millennials are leading the shift toward mindful drinking. A 2022 IWSR Drinks Market study reported that sales of no- and low-alcohol beverages increased by more than 7% in volume across key global markets, with Millennials being the most likely consumers of these products.

Major beverage companies are introducing non-alcoholic versions of popular drinks. For example, Diageo has launched Guinness 0.0, Gordon's Gin 0.0, and Captain Morgan's 0.0 to cater to the growing demand for non-alcoholic alternatives. Moreover, initiatives like "Dry January" and "Sober October" encourage temporary abstinence from alcohol, promoting awareness of drinking habits and supporting the mindful drinking trend.

Industry News

September 2024

Bacardi Breezers is expanding its offerings in the Indian market with the introduction of new Mango Peach and Watermelon flavours, which contain a delightful summery sweetness in a fizzy, alcoholic beverage.

September 2024

Netflix Japan was set to launch a canned cocktail along with new and returning streaming series. This beverage is a collaboration between Netflix Japan and Suntory's Horoyoi brand, which is famous for its ‘sours’ fizzy shochu cocktails available in fruity or sweet flavours that are popular in Japan and often found in convenience store alcohol selections.

Opportunities in Alcohol Ingredients Market

The growing demand for alcohol with innovative flavours is surging the market growth. As yeast and yeast-derived compounds are integral to the aroma and flavour of alcoholic beverages like beer, brewers are optimising them to develop new flavours, which is driving alcohol ingredients demand.  Brewers are exploring genetically engineered yeast strains to enhance flavour profiles. For instance, certain strains have been developed to produce tropical fruit flavours like pineapple and guava, offering new taste experiences without additional flavourings.

Research further indicates that yeast can modify hop-derived compounds during fermentation, a process known as biotransformation. This interaction can enhance or alter hop aromas, leading to more complex and desirable flavours in beer. Brewers' pursuit of unique and appealing flavours drives demand for specialised yeast strains and fermentation techniques, leading to a more diverse and dynamic beverage industry.

Alcohol Ingredients Market Restraints

In France, the consumption of wine has experienced a significant decline, nearly halving since the 1970s. This reduction has resulted in overproduction challenges in regions such as Bordeaux and Languedoc. The decrease is mainly due to evolving dietary preferences and a growing inclination towards alternative beverages. The rising trend of non-alcoholic drinks is notably influencing traditional alcohol markets and impacting the overall alcohol ingredients demand growth. For instance, Augustiner Bräu, Munich's oldest brewery, has launched its inaugural alcohol-free pale lager, igniting discussions among beer aficionados.

In the United States, the increasing popularity of hard seltzers and ready-to-drink cocktails has contributed to a downturn in beer consumption, which has negatively impacted barley farmers who provide essential ingredients for beer production. Additionally, companies like LVMH are facing difficulties within their cognac sector due to economic challenges in major markets such as China and the United States, which in turn affects the demand for specific alcoholic components.

Alcohol Ingredients Market Dynamics

The growing interest in non-genetically modified (GMO) development techniques, such as selective breeding to enhance the performance of yeasts while bolstering the health benefits of alcoholic beverages is predicted to fuel the industry growth.

Selective breeding involves crossbreeding yeast strains to combine desirable traits without genetic modification. This method allows brewers to develop yeasts that improve fermentation efficiency, flavour profiles, and health-related properties of beverages, further impacting the alcohol ingredients demand forecast. In 2021, Renaissance BioScience developed a non-GMO breeding platform to create novel lager yeast strains. This innovation enables the production of beers with unique flavours and enhanced health attributes, catering to both global and craft beer markets.  Lallemand Brewing has employed selective breeding to develop yeast strains that enhance beer flavour and quality. Their approach focuses on non-GMO methods to meet consumer preferences for natural products.

Read more about this report - REQUEST FREE SAMPLE COPY IN PDF

Alcohol Ingredients Industry Segmentation

“Alcohol Ingredients Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Ingredient Type

• Yeast 
• Enzymes
• Colourants
• Flavours and Salts

Market Breakup by Beverage Type

• Beer
• Spirit
• Wine
• Whiskey
• Brandy

Market Breakup by Region

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

Alcohol Ingredients Market Share

By Ingredient Type Insights

The demand for yeast in alcohol is expected to grow at a CAGR of 10.2% in the forecast period, whereas the demand for colourants is anticipated to grow at a CAGR of 8.4% in the same period. As per the alcohol ingredients industry analysis, yeast is a fundamental component in the production of alcoholic beverages, as it converts sugars into alcohol and carbon dioxide through fermentation. The most commonly used yeast species, Saccharomyces cerevisiae, plays a crucial role in producing beer, wine, and spirits.

Companies are innovating with colourants to create unique beverage experiences. For instance, brands are experimenting with botanical extracts and natural pigments to enhance the visual appeal of cocktails and other alcoholic drinks.

By Beverage Type Insights

The popularity of spirit is expected to grow at a CAGR of 10% between 2024 and 2032 whereas whiskey and brandy alcohol ingredients market share is expected to exhibit CAGRs of 10.5% and 8.9% during that time period. The spirits segment encompasses a wide range of distilled beverages, including vodka, rum, gin, and tequila. This segment is witnessing significant growth due to increasing consumer interest in premium and craft spirits. The demand for unique flavours and high-quality ingredients is driving manufacturers to innovate, leading to a rise in the use of specialised alcohol ingredients.

The whiskey segment has shown remarkable expansion, particularly in markets like the United States and Europe. The resurgence of interest in traditional and craft whiskeys has led to increased production and consumption.

Read more about this report - REQUEST FREE SAMPLE COPY IN PDF

Alcohol Ingredients Market Regional Analysis

North America Alcohol Ingredients Market Drivers

The market in the USA is expected to grow at a CAGR of 7.0 in the forecast period. The North American market is benefiting from a surge in craft beer production and the rising popularity of innovative alcoholic beverages. As of 2022, there were around 9,552 operating craft breweries in the USA, reflecting a growing interest in unique and high-quality products, which increases alcohol ingredients market opportunities.

The demand for premium and craft spirits is driving ingredient innovation, with manufacturers increasingly sourcing unique ingredients to cater to diverse tastes. This trend is expected to continue as consumers seek distinctive drinking experiences.

Asia Pacific Alcohol Ingredients Market Trends

The regional market is expected to grow at a CAGR of 12.0% in the forecast period. The markets in India and Japan are anticipated to witness a CAGR of 10.2% and 5.3% between 2024 and 2032. Countries like China and India are experiencing a significant rise in the number of breweries and distilleries and boosting the growth of the alcohol ingredients market, driven by urbanisation and changing social norms that favour alcohol consumption in social settings.

In India, the craft beer industry is growing, with numerous microbreweries opening in cities like Bengaluru and Mumbai. This expansion increases the need for quality malt, hops, and yeast.

Europe Alcohol Ingredients Market Dynamics

The European market is anticipated to grow at a CAGR of 7.1% between 2024 and 2032. The growth of alcohol ingredients in countries such as Germany and Italy is expected to be 11.6% and 9.8% in the forecast period, which can boost the alcohol ingredients market revenue. Europe's market is driven by its rich tradition of alcohol production and consumption. The region's emphasis on quality and premium products fosters a robust demand for high-quality ingredients.

Additionally, the rise of craft distilleries in countries like the UK and Germany has increased the demand for unique botanicals and speciality grains.

Latin America Alcohol Ingredients Market Opportunities

The market in Latin America is expected to witness a CAGR of 8.9% in the forecast period. The demand for alcohol ingredients in Brazil is anticipated to grow at a CAGR of 11.5% between 2024 and 2032, contributing to the alcohol ingredients market value.  The region's rich cultural heritage surrounding traditional alcoholic beverages is fostering interest in unique local ingredients, further driving the demand for alcohol ingredients tailored to regional tastes. In Mexico, the tequila industry is investing in agave cultivation to meet global demand, boosting the need for agave-based ingredients.

Middle East and Africa Alcohol Ingredients Market Analysis

In the Middle East and Africa, the market for alcohol ingredients is growing due to expanding hospitality sectors and changing social attitudes towards alcohol consumption. Countries like South Africa are experiencing increased interest in craft beer and premium spirits. As regulations around alcohol consumption evolve in some Middle Eastern countries, there is potential for increased alcohol ingredients industry revenue as more consumers gain access to alcoholic beverages.

In regions with alcohol restrictions, there's a growing market for non-alcoholic malt beverages, prompting investments in malt and flavouring agents. South Africa's wine industry is also expanding, with investments in vineyards and production facilities, increasing the need for wine-making ingredients.

Innovative Startups in Alcohol Ingredients Market

Startups are addressing the demand for convenience by offering cocktails in cans. This product in the alcohol ingredients market allows consumers to enjoy consistent flavours without the hassle of mixing drinks, catering to a growing trend among young consumers who prefer ready-made options for social gatherings. New companies are pioneering products like India's first aged 100% agave spirit that is additive-free. This aligns with the increasing consumer interest in healthier alcoholic options, emphasising clean labels and natural ingredients.

CleanCo

Founded in 2019 and based in London, CleanCo specialises in producing low-calorie and alcohol-free spirits. The company aims to cater to consumers who want to enjoy the social aspects of drinking without the negative effects of alcohol. CleanCo offers a range of non-alcoholic alternatives to popular spirits such as gin, tequila, and rum. With over €10.6 million in funding, CleanCo has positioned itself as a leader in the low- and no-alcohol segment, appealing to a demographic increasingly concerned with health and wellness.

Aircohol

Established in 2022 and based in Oulu, Finland, Aircohol is an innovative startup that produces drinkable alcohol using carbon dioxide (CO2) through its proprietary Aircohol® technology. This process allows distilleries and breweries to create sustainable beverages while significantly reducing their carbon footprint. The startup has raised over €2.8 million to further develop its technology and expand its product offerings. By leveraging sustainability as a core aspect of its business model, Aircohol is well-positioned to tap into the growing consumer demand for eco-friendly products in the beverage industry.

Competitive Landscape

The report presents a detailed analysis of the following key players in the global alcohol ingredients market, looking into their capacity, market shares, and latest developments like capacity expansions, plant turnarounds, and mergers and acquisitions. Companies have been investing in the development of natural flavourings and colourants that cater to the increasing consumer preference for clean-label products. Similarly, some market players have recently opened a new flavour production facility in China to capitalise on the rising demand for diverse beverage flavours, particularly in the Asian market.

Key Industry Players

Archer Daniels Midland Company

Founded in 1902, ADM is a global leader in agricultural processing and food ingredient manufacturing. The company operates in sectors such as oilseeds processing, corn milling, and nutrition, producing products like oils, sweeteners, and animal feed.

Cargill, Inc.

Established in 1865, Cargill is one of the largest privately held corporations in the United States, specialising in food, agriculture, financial, and industrial products, and services. The company operates in various sectors, including grain and oilseed trading, animal nutrition, and food ingredient production.

Koninklijke DSM N.V.

Founded in 1902, DSM is a Dutch multinational corporation active in health, nutrition, and materials. The company produces nutritional ingredients, speciality food ingredients, and high-performance materials for various industries.

Other major players in the market are Doehler Group SE, Chr. Hansen A/S, Sensient Technologies Corporation, Ashland Global Specialty Chemicals Inc., and DDW, Inc., among others.

Recent Developments

April 2024

Mockly Inc., based in New Orleans, has introduced a new line of ready-to-drink mocktails called Madame L’Orange, which features 52% less sugar than typical offerings. This product is part of Mockly’s “Second Line” collection and includes flavours like smoked orange and cinnamon.

April 2024

Ocean Spray has expanded its product offerings into the cocktail sector with the introduction of its new line of Cocktail Mixers, which includes flavours like Cosmo, Strawberry Margarita, and Rum Punch. These mixers are crafted for versatility, enabling consumers to effortlessly prepare cocktails at home by merely incorporating their choice of spirit.