Botanical Extracts Market

The global botanical extracts market has witnessed significant growth over the last few years and is projected to register a CAGR of 5.45% during the forecast period. The growth of the botanical extracts market is expected to be driven by the increasing consumption of dietary supplements across the globe. Botanical extracts are also used in the production of several food & beverage products, especially functional beverages. However, the limited supply of raw materials and price fluctuations may hamper the growth of the global botanical extracts market during the forecast period. Increasing consumer preference for organic food & beverages acts as a lucrative opportunity for the key players in the global botanical extracts market.

Botanical extracts are available in powder and liquid form and their use is increasing in food & beverage processing, especially functional beverages. Ginger, gingko biloba, bilberry, ginseng, and green tea extracts are used as ingredients in the production of several functional beverages. Ginkgo biloba contains high levels of antioxidants and increases blood flow by promoting the dilation of blood vessels. Ginseng is a preferred botanical extract by manufacturers of beverages due to its several health benefits. Ginseng minimizes the risk of certain cancers and it reduces the chances of inflammation.

The demand for functional beverages has been increasing at a high pace across the globe over the last few years. Functional beverages are being marketed as products that have additional ingredients to provide a wide range of health benefits. Due to the presence of ingredients like minerals, vitamins, herbs, amino acids, antioxidants, and bacteria, these products have beneficial effects on the body such as improved immunity, heart rate, digestive health, hydration and electrolyte replenishment post exercise, and intestinal flora and gut function. According to MRFR analysis, the global functional beverages market was valued at USD 170.12 billion in 2018 and is projected to register a substantial CAGR of 6.75% during the forecast period of 2019 to 2025.

Botanical extracts also find widespread application in several food products, including baked goods, confectionery, dairy products, and meat products. Chamomile, honey, baobab, and berry extracts are used in the production of baked goods, while the extracts of ginger, saffron, sage, and peppermint are preferred by manufacturers of confectionery.

Thus, the widespread use of botanical extracts in several segments of the food & beverage industry is expected to drive the growth of the market during the forecast period.

The demand for organic products is exceptionally high in developed regions such as North America and Europe. Consumers in these regions are aware of the adverse impact of chemicals on health. This increased health consciousness has led to a preference for products with minimal or no chemicals. Rising health consciousness and consumer inclination toward healthy and nutritional food products are driving the demand for organic food & beverages in Europe and North America. Consumers are also concerned about the impact of chemicals on the environment, resulting in a shift to organically cultivated and processed products. Consumers are willing to pay a premium for healthy food products, propelling the adoption of organic botanical extracts in the food industry. As per the Forschungsinstitut für Biologischen Landbau (FiBL), the research institute of organic agriculture, organic food sales in Europe were worth EUR 30.7 billion (USD 34.2 billion) in 2016, which reflected a market growth of 11.4% from 2015. The demand for organic food & beverages is also increasing gradually among consumers in emerging economies in Asia-Pacific. Apart from food & beverages, the demand for organic personal care products has been surging over the last few years which, in turn, is accelerating the growth of the organic botanical extracts market.

The inclination toward organic ingredients in food & beverage and personal care products presents market players with lucrative opportunities for growth.

The demand for botanical extracts has been increasing at a high pace across the globe. There are several botanical extracts available in the market, with ginger, cinnamon, cardamom, clove, nutmeg, rosemary, pepper, parsley, and thyme the most widely used by manufacturers of food & beverages, personal care products, and nutraceuticals. Soil and climatic conditions play vital roles in the production of fruits, vegetables, herbs, and spices. Specific temperature requirements are essential for the optimum production of herbs and spices, fruits, flowers, and tea leaves. Climatic conditions, therefore, greatly affect crop production with natural disasters, including hurricanes, landslides, and floods and hostile weather conditions, adversely affecting the overall production of raw materials. Moreover, the production of certain botanical extracts is limited to a few countries. For instance, ginger is mostly cultivated In China, India, Thailand, Indonesia, Bangladesh, the Philippines, South Korea, and Sri Lanka. The production of ginger is low in North America and Europe, making market players based in these regions dependent on imports. On the other hand, the production of cinnamon is limited to Sri Lanka, Indonesia, China, Vietnam, the Netherlands, the US, Germany, and France. According to the United Nations Food and Agriculture Organization (FAO), Sri Lanka accounted for 28% of the total cinnamon exports in 2018. The prices of botanical extracts depend on availability and import and export tax rates, which vary from country to country.

Thus, the prices of botanical extracts fluctuate due to limited availability and high tax rates across the globe, hindering the growth of the market.