Fats and Oils Market Size, Share, Industry, Forecast and outlook (2024-2031)

Fats and Oils Market is Segmented By Type (Fats, Oils), By Application (Food, Animal Feed, Industrial), By Source (Animals, Vegetables), By Region (North America, Latin America, Europe, Asia Pacific, Middle East, and Africa) – Share, Size, Outlook, and Opportunity Analysis, 2024-2031

Fats and Oils Market Overview

Fats and Oils Market is expected to reach at a CAGR of 4.08% within the projected years (2024-2031)

Fats and oil are also referred to as triacylglycerols, and are esters of glycerol including three fatty acids, and derived naturally in both plants and animals. They produce an essential part of a healthy diet as they are high in essential fatty acids (EFAs) that offer insulate organs, energy, and transport A, K, D, and E vitamins through the blood. Subsequently, they are utilized largely in the food and beverages (F&B) industry to improve the texture and flavor of various food products. Moreover, they are also used in the making of animal feed, biodiesel, oleochemicals, and pharmaceuticals. Apart from the food industry, vegetable oils and fats are also progressively utilized for various industrial applications, including soaps, paints, detergents, oleochemicals, and biodiesel.

Fats and Oils Market Scope

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Fats and Oils Market Dynamics

The growing intake of processed food products is expected to drive the market growth

The growing intake of processed food products is one of the major factors propelling the growth of the global fats and oils market in the upcoming years. Moreover, encouraging government policies to reduce the environmental effect of fossil fuels and supporting the application of biodiesel are positively motivating the market growth.

Additionally, the increasing inclination for oleochemicals than petrochemicals for the manufacturing of paints, soaps, varnishes, lubricants, and detergents has also fueled the growth of the market. A significant number of initiatives have been developed by the governments of numerous countries to encourage the production and use of vegetable oils, resulting in market growth. The Renewable Energy Directive has had a major impact on the European Union's use of vegetable oil for biofuel (RED). This directive, which was created in 2009, aims for renewable energy to account for 10% of total energy consumption in road and rail transportation by 2020. This aim must be implemented by EU member states (countries), as well as their national regulations and incentives, such as blending mandates. Palm oil accounts for roughly 20% of biodiesel (fatty acid methyl ester) and renewable diesel (hydro-treated vegetable oil) production in the European Union. The other significant feed-stocks for producing diesel substitutes are rapeseed, also used in cooking oils, and animal fats.

Fats and Oils Market Segmentation Analysis

By application, the food segment accounted for the largest market share of the global fats and oils market in 2020 

In the coming years, the food segment is expected to be the most dominant application segment. This is due to the increasing global demand for food. Fats and oils are used in a variety of items in the food industry, including chocolates and confectioneries, bakery products, processed foods, and dairy products. They impart desirable characteristics to a variety of dishes and contribute to the tenderness of the shortened cake. Fats also help to build texture in cakes by aerating the dough. As a result, they are predicted to have a greater market share.

Based on source, vegetables segment is expected to dominate the market. Sunflower, rapeseed, soybean, palm, cottonseed, and coconut vegetable oils are widely used in food applications, which has fueled the market for vegetable-sourced oils. Low-fat, low-cholesterol, and low-calorie features associated with vegetable oils are growing in popularity in the market. The market for vegetable oils has also been driven by the variety of uses of vegetable oils in food as well as other industries such as pleo-chemicals, animal feed, and energy and biomass.

Fats and Oils Market Geographical Share

Asia Pacific is the largest market for fats and oils with a share of nearly YY% in global sales value in 2020

By geography, Asia Pacific accounted for the largest share in 2020 and is anticipated to be the dominating regional market within the projected year. India, China, Malaysia, and Indonesia are characterized by higher processed food & edible oil utilization, growing consumer awareness regarding health & wellness, and growing disposable incomes. Latin America and North America have exhibited a major shift towards alternative industrial use of fats & oils in the past few years. Biodiesel made from fats & oils, coupled with other pharmaceutical and chemical applications is extensive in countries including Argentina, the U.S., and Brazil. North America was accounted for the second-largest market share of the fats and oils market, owing to rising demand from various applications such as food as well as chemical, pharmaceuticals, and industrial application.

Fats and Oils Market Companies and Competitive Landscape

The global fats and oils market is highly competitive with the presence of many manufacturers. Some of the major players of the market include Associated British Foods PLC, Cargill Inc., Archer Daniels Midland Company (ADM), Wilmar International Limited, Ajinomoto Co., Inc., and United Plantations Berhad, among others. They have strengthened the market through their product offerings. Continuous innovation to introduce new products, with functional benefits is the key competitive factor in the market. For instance, in June 2021, Associated British Foods PLC has announced the acquisition of Unilever's Mazola and associated brands in North America. In February 2019, Cargill Incorporated launched palm oil shortening line ‘PalmAgility’, designed especially for baked products. The product claims to be creamier and smoother in texture as compared to regular palm oil shortenings.

COVID-19 Impact: The market witnessed a negative impact 

The global supply and demand for fats and oils has shifted as a result of the coronavirus crisis, with increased price uncertainty. According to the top vegetable oils producers in the region, such as Wilmar International and Mehwah Group, palm oil, which is the most widely produced type of oil in the world, has suffered as demand has dropped around the world, trade has been disrupted, and production has been hampered in Indonesia and Malaysia. Efforts were being undertaken in various countries to keep the market stable. Exports to China fell by 57 percent in January 2019-2020, according to the Indonesian Palm Oil Producers Association (GAPKI). Governments in countries including India, China, and the United States granted exemptions to the sector, allowing them to operate at a reduced capacity during the lockdowns. The continuity of operations allowed these organizations to mitigate the significant damage as manufacturing continued. Distribution and production of these products were also damaged as a result of government-imposed lockdowns and short-term shutdowns of numerous manufacturing facilities; however, the market is expected to recover in the coming years.