Fats & Oils Market

According to MarketsandMarkets, the Fats & Oils Market size is projected to reach USD 323.7 billion by 2029 from USD 271.8 billion in 2024, at a CAGR of 3.6% during the forecast. Growing consumer demand for healthier options in their diet and increasing adoption of fats and oils in various foodstuffs are boosting the fats and oils market growth. Better awareness of the nutritional value of specific oils and developments regarding processing and refining techniques act as drivers. Moreover, the expansion of culinary practices and increasing development of functional oils boasting health benefits add to the growth. Long-term investments in increasing production capacity and enhancing supply chains also uphold this growth trend.

For example, Cargill's (US) launch of Gemini Pureit and refinery upgrade in Nellore boosts its position in India's fats and oils market by expanding production capacity and addressing demand in South India. This strategic move enhances supply chain capabilities, reinforces market leadership, and caters to the significant regional consumption of sunflower oil.

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Market Dynamics

Driver: Increasing oilseeds production

The ever-growing global demand for edible oils, important for both food and industrial applications, more than significantly expanded oilseed cultivation. According to the National Research Center in Egypt, oilseed crop areas have surged 82 percent in the last thirty years. Growth is in line with OECD estimates that project worldwide vegetable oil consumption will grow to 249 million metric tons in 2022, steered by dietary changes in the Asia-Pacific region. The bulk of the contributors would be from soybean production, which is expected to reach 41.1 million metric tons by 2030. This shall be driven mainly by top producers, such as the US and Brazil. The agricultural biotechnology innovations, genetically engineered proteins invented at Nanyang Technological University, increase the yield of oil by up to 18 percent. This would complement sustainable practices by meeting increasing demand without boosting the use of land.

Restraint: High price volatility

The fats and oils market faces significant challenges due to price volatility, influenced by factors such as global supply fluctuations, geopolitical tensions, and weather conditions. Variations in weather patterns, including droughts or excessive rainfall, can disrupt planting, reduce yields, and impact supply levels, leading to sudden price changes that disrupt planning for producers, processors, and consumers. Recent trends show a rise in the vegetable oil index by 13.8% from June 2023, despite a decline in oilseed prices due to increased soybean and rapeseed yields. This contrast highlights the market's sensitivity to supply and demand dynamics.

Opportunity : Growth in microencapsulation of fats and oils

This rising trend of encapsulation within the global food industry presents major opportunities in the specialty fats and oils market. The encapsulation process protects sensitive ingredients such as omega-3 fatty acids, milk fat, and vegetable oils by enhancing their stability, shelf life, and functionality. This protects sensitive ingredients from temperature, moisture, and oxidation and makes them quite suitable for use in functional foods, nutritional supplements, and pharmaceuticals. Major players are now increasing their attention toward encapsulation processes using matrices such as whey proteins and casein blends to deliver fat-rich powders for a variety of uses. This evolved process not only helps in the development of better products, but strong demand is also found from growing consumers reaching out for more health benefits.

Challenge: High capital investments in extraction

The extraction of oils & fats from raw materials, such as oilseeds, requires high capital investments. The extraction process involves mechanical extraction, solvent extraction, sparging, and hydrogenation. Due to the high cost of initial setup, new players find it difficult to enter the market. Thus, expensive manufacturing processes are likely to hinder the sales of fats and oils globally.

Extraction of oils from various sources such as seeds, nuts, or fruits demands substantial initial financial outlay to establish efficient extraction facilities and processes. These investments encompass the procurement of specialized equipment, installation of advanced technology for extraction and refining, and compliance with stringent quality and safety standards.

For instance, consider the palm oil industry, where large-scale extraction requires enormous capital to set up palm oil mills capable of processing vast quantities of fresh fruit bunches. These mills need specialized machinery like sterilizers, digesters, and centrifuges, each of which represents a considerable upfront cost. Moreover, ensuring these facilities meet environmental regulations adds another layer of complexity and cost.

FATS & OILS MARKET ECOSYSTEM

Key players within this market consist of reputable and financially robust fats & oils manufacturers. These entities boast extensive industry tenure, offering diversified product portfolios, cutting-edge technologies, and robust global sales and marketing networks. Prominent fats and oils manufacturers are ADM (US), Wilmar International Ltd (Singapore), Cargill, Incorporated (US), Bunge (US), Kaula Lumpur Kepong Berhad (Malaysia), Olam Agri Holdings Pte Ltd (India), Mewah Group (Singapore), Associated British Foods plc (UK), United Plantations Berhad (Malaysia), and Ajinomoto Co., Inc. (Japan).

Vegetable source of Fats & Oils is estimated to dominate market share during the forecast period.

Vegetable sources enjoy the largest share in the fats and oils market due to the intrinsic value in their versatility, health benefits, and wide availability. Vegetable oils, such as soybean, palm, sunflower oil, and others, find broad use in cooking and processing due to consumer preference based on varied uses. They provide essential fatty acids while they are perceived as healthier than animal fats. Moreover, with the advent of improvements in agricultural practices and biotechnology, the production of vegetable oils increased, hence making their supply continuous and at low costs to consumers. Their versatility in food and industrial uses cements their leading market position.

In the application segment, food application is estimated to dominate market share during the forecast period

Food application holds the largest share of the market for fats and oils since it is an integral part of enhancing flavor, texture, and preservation in various food products. Not only this, but also, fats and oils play a huge role in terms of cooking and baking, adding definite desirable properties like crispiness and richness. Apart from this, they also work as carriers for fat-soluble vitamins and flavors, which are important for consumer acceptance. Thus, the growing demand for processed and convenience foods and increasing consumer preference for varied gastronomic experiences further drives food applications domination within this market segment.

The fats & oils market, in the Asia Pacific region is expected to grow at the highest CAGR during the forecast period.

The increasing pace of urbanization processes, rise in disposable incomes, and changing dietary patterns toward processed and convenience foods place the Asia-Pacific region at the top position with the highest CAGR in the fats and oils market. Given the growing population and expanding middle class, there is an increasing demand for edible oils for use in cooking and food processing. Growing fast food consumption and a developing food service industry further add to the growth in the market. Strong economic development and improvement in distribution networks also aid the leading position of the region in the global fats and oils market.

Key Market Players

The key players in the fats & oils market include ADM (US), Wilmar International Ltd (Singapore), Cargill, Incorporated (US), Bunge (US), Kaula Lumpur Kepong Berhad (Malaysia), Olam Agri Holdings Pte Ltd (India), Mewah Group (Singapore), Associated British Foods plc (UK), United Plantations Berhad (Malaysia), and Ajinomoto Co., Inc. (Japan). These market participants are emphasizing the expansion of their footprint via acquisitions and expansions. They maintain a robust presence in North America, Asia Pacific, South America, RoW, and Europe, and they are supported by manufacturing facilities and well-established distribution networks spanning these regions.

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Scope of the Report

Target Audience

• Fats & oils traders, retailers, and distributors.
• Fats & oils manufacturers & suppliers.
• Related government authorities, commercial research & development (R&D) institutions. 
• Regulatory bodies, including government agencies and NGOs.
• Commercial research & development (R&D) institutions and financial institutions.
• Government and research organizations.
• Venture capitalists and investors.   
• Technology providers to Fats & Oils companies.
• Associations and industry bodies.   

Fats & Oils Market:

By Source

• Vegetables
• Animals

By Form

• Liquid
• Solid

By Type

• Vegetables Oils
• Fats

By Application

• Food
• Industrial

By Region:

• North America
• Europe
• Asia Pacific
• South America
• Rest of the World (RoW)

Recent Developments

• In June 2024, Bunge (US) and Olleco (UK) have announced a new joint venture that will take care of the entire lifecycle of edible oils. This new venture will deliver high-quality oils to the food service and food manufacturing markets across Europe—excluding the UK and Ireland—while ensuring used cooking oil collection for reprocessing into feedstock for renewable fuel production. The plan showcases the commitment of both companies to sustainability and the circular economy.
• In December 2023, Kuala Lumpur Kepong Bhd (KLK) (Malaysia) has agreed to the acquisition of 90% stakes in the two Indonesian oil palm companies, PT Satu Sembilan Delapan (SSD) and PT Tekukur Indah (TI), for a total purchase consideration of USD 1.32 billion (RM276.55 million). This strategic move involves the wholly owned subsidiary of KLK, KLK Plantations and Trading Pte Ltd, to purchase a 92% equity interest in SSD for USD 1.26 billion (RM264.13 million) and a 90% equity interest in TI for USD 0.06 billion (RM12.42 million). These transactions conform to the related party transaction with Whitmore Holdings Sdn Bhd, a subsidiary of Batu Kawan Bhd, which, in turn, owns 47.72% of KLK. This move corresponds with the KLK strategy to assure the development of an improved resource base and an increased market presence—hence contributing to sustainable growth and operational efficiency within the global fats and oils industry.
• In November 2023, Cargill (US) has completed a multiyear expansion and modernization project of its soybean processing plant in Sidney, Ohio. The investment in Soy is still another major commitment to processing growing demand for soy products in all key markets. The upgraded facility almost doubled its previous crush capacity, increasing market potential both for local farmers and for feed customers. It will not only increase demand for soybeans but also improve operational efficiency, enabling customers' faster and more efficient unloading and loading processes.

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