Food Grade Alcohol Market Study Update: Stakeholders to Widen Application Scope Amid Covid-19 Outbreak

Apr 03,2020

Food & beverage companies across the globe, from café and restaurant owners to processed food manufacturers and retailers continue to feel the impact of coronavirus outbreak. As world the continues to learn more about the novel viral disease, consumers are taking comfort that food supply is safe and wholesome, owing to well-proven food safety regulations and practices. This is leading to surge in demand for some shelf-stable convenience foods as well as pre-mixed/RTD alcoholic drinks. However, numerous businesses are buffeted by regulations and changes along the food supply chain, such as shortages in supermarkets and low foot traffic or closures of bars and restaurants.

As with many industries, the food grade alcohol market has been hit by the Covid-19 pandemic leading to slump in demand from consumers and labor shortages due to shutting or reducing production capacity. Moreover, various beverage and alcohol ingredient manufacturers announced to halt their production and abandon their performance forecast for 2020, as Covid-19 continues to spread uncertainty about the short-term future among global F&B companies.

In 2019, the food grade alcohol market remained in good shape, mainly assisted by increased demand for alcoholic beverages, widespread application in food & non-alcoholic beverages and personal care & cosmetic products, and new product launches. As the situation evolves amid Covid-19 outbreak, the effects are causing a ripple effect throughout the marketplace. In addition to calling for governments to provide support and guidance, businesses are preparing for effects on demand, production, transport, and logistics. Furthermore, stakeholders are rushing to steps to adapt their offerings in the face of new landscape.

Food Grade Alcohol Market Players Pivot to Producing Hand Sanitizer as Covid-19 Intensifies

Alcohol and medicine have been intertwined with each other for centuries. Ethanol, a food-grade alcohol, is extensively used as an antiseptic and solvent in medicines. In the wake of Covid-19, consumers have been emptying store shelves of clinical hand hygiene products, such as hand sanitizer, and causing shortages. As the demand increases and supply slumps, many food-grade alcohol manufacturers are taking part in the production of hand sanitizer. Favorable guidance from the Food and Drug Administration (FDA) for the production of alcohol-based hand sanitizer during the ongoing public health emergency is further working to the advantage of market players. In order to keep the business operation and do their part to combat of disease, hand sanitizer appears as a logical product for food-grade alcohol manufacturers to produce.

Food Grade Alcohol Market - Mapping the Road Ahead

While coronavirus is expected to have relatively low impact on food-grade alcohol sales as compared to other products, many companies are raising their concerns over the future in line with effective shutdown of bars and restaurants. However, the demand for food products with food-grade alcohol as a key ingredient is unlikely to show a sign of slowing post supply chain normalization which will play an instrumental role for the market growth. In 2019, global sales of food grade alcohol reached US$ 3.2 Bn, with ethanol accounting for high share than polyol.

Steady demand for food products with improved shelf life and the trend of convenience unaffected by the recent outbreak of diseases will continue to contribute to demand for food grade alcohol. In addition to wider availability, manufacturers are finding new scope of applications, particularly in personal care and hygiene products, thereby opening a new window of growth opportunities. Although Asia Pacific leads the global adoption of food grade alcohol, stakeholders are likely to relocate their supply chain out of China for recovery of their losses during the pandemic. 

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