Published August 2016
This report provides an overview of the markets for naturally derived hydrocolloids. These are water-soluble polymers extracted from plant or animal sources, or generated in fermentation reactions. Native (unmodified) and modified starches account for the great majority (95%) of the market by weight; smaller-volume, higher-priced materials such as gelatin, guar gum, casein, xanthan gum, gum arabic, and carrageenan make up the remainder.
In 2015, Asia was responsible for 60% of total hydrocolloid consumption, with China alone accounting for almost half (46%) of the demand. In contrast, the Americas and EMEA (Europe, the Middle East, and Africa) accounted for the bulk of consumption in the (much smaller) nonstarch hydrocolloid market. Together, the Americas and EMEA consumed 60% of nonstarch hydrocolloids.
The following pie chart shows world consumption of hydrocolloids, including starches:
China will drive future market growth. In 2020, China is expected to account for 70–75% of the increase over 2015 market volumes. Chinese hydrocolloid consumption is expected to rise by 5.0% per year through 2020, exceeding the world average annual growth rate of just over 3%. All other regions will see slower growth. In North America, Central and South America, EMEA, and Japan, consumption will increase at low rates (0.4–2.0% per year); in India and Other Asia and Oceania, consumption will grow at a moderate pace (2.4–3.0% per year).
Paper and board production is the largest end use for starches. They serve as binders, sizes, and coatings in the paper-making process; starch-based adhesives are essential to the manufacture of corrugated cardboard, paper bags, and envelopes.
Food applications are second in importance for starches, but they represent the single most important end use for many other hydrocolloids. Pectin serves as a gelling agent in jams, jellies, and marmalades; gum arabic inhibits sugar crystallization in soft drinks; locust bean gum maintains ice cream's creamy texture by controlling ice crystal formation, to give just a few examples.
The hydrocolloid market has a reputation for volatility but this is somewhat undeserved. Raw materials for various hydrocolloids are periodically in short supply as a result of weather or political disruptions, but only one hydrocolloid—guar gum—has experienced major fluctuations in supply and demand in recent years. In this case, demand for guar gum surged because of the dramatic expansion of hydraulic fracking activity in the United States. The collapse of crude oil prices at the end of 2014 led to a reduction in drilling activity and lower consumption of guar gum. Additionally, in the food sector, processors have reformulated many products, replacing guar gum with other hydrocolloids. In the energy sector, the use of guar-free slickwater fluids—cost-effective alternatives to guar-thickened fracking fluids—is increasing.
Overall demand for hydrocolloids will track growth in major end-use industries, including paper, food, oil and gas production, and pharmaceuticals. Hydrocolloids are versatile materials with a wide range of applications.