Food Grade Gases Market Analysis

Food Grade Gases (Global, 2024)

Introduction

Food grade gases play an important role in enhancing food preservation, safety, and quality. CO2, N2 and O2 are used in various applications, such as in modified atmosphere packaging, beverage carbonation, and food freezing. The demand for food grade gases is expected to grow, influenced by the increasing demand for fresher and more natural products and the increasing trend towards more sustainable production and packaging. Furthermore, stricter regulations for food safety and quality are pushing manufacturers to adopt more advanced gases that meet the stricter regulatory requirements. The combination of these factors is shaping the landscape of the food grade gases market, which is of great interest to all parties.

PESTLE Analysis

Political

In 2024, the food gas market will be influenced by various political factors, such as government regulations on food safety and quality. In the United States, the Food and Drug Administration (FDA) has set strict purity standards for food gases. The maximum permissible impurity for some gases is 0.1%. In Europe, the European Union has adopted Regulation (EC) No. 1333/2008, which governs the use of food additives, including gases, ensuring that they are safe and properly labeled. These regulations affect the cost structure and strategies of manufacturers.

Economic

The 2024 market for food gases is shaped by fluctuations in raw material prices and changes in the pattern of spending. The average price of carbon dioxide, the most important food gas, has been reported at about 0.30 per kilogram. This is a 5% increase over the previous year, mainly due to disruptions in the supply chain and an increase in demand from the beverage industry. Also, the global inflation rate is expected to be around 3.5%. This may have an effect on the purchasing power of consumers and on the demand for food products that use food gases for preservation and carbonation.

Social

In 2024, the trend towards sustainable and organic food is driving the demand for food grade gases which conform to these principles. In a recent survey, 60 per cent of consumers were willing to pay a premium for products which were packed in environmentally friendly gases. This has encouraged manufacturers to adopt more sustainable practices, such as using nitrogen and carbon dioxide derived from sustainable sources, which enhances their reputation and meets the expectations of health-conscious consumers.

Technological

In 2024, the most important technological developments in the food gases market will be in the areas of gas production and application. In terms of production, the efficiency of the air-separation processes has increased by 20%, reducing costs and the environmental impact of the production. In addition, smart packaging that uses food-grade gases to extend shelf life is becoming increasingly common. It is estimated that by 2024, about 15% of new food products will use this technology, which will increase food safety and reduce food waste.

Legal

The regulations affecting the food-grade gases market in 2024 include a strict compliance with food safety and environment regulations. The Food Safety Modernization Act (FSMA) in the United States requires food manufacturers to implement preventive controls, which include proper use of food-grade gases in food processing and packaging. Non-compliance with this rule can result in a fine of up to $1,000,000, which demonstrates the importance of complying with the law. The European Union’s REACH regulation requires manufacturers to register the chemicals used in food-grade gases, which further complicates the regulatory environment for manufacturers.

Environmental

In 2024, environmental concerns will have an increasingly important effect on the food gases market, especially in terms of the carbon footprint of the gases. The annual carbon dioxide emissions from industrial processes are estimated at 2,500,000,000 metric tons, which is causing the regulatory authorities to impose stricter emissions limits. In order to meet these requirements, many companies are investing in carbon capture and storage, and an estimated $500 million has been spent on research and development in this area. Not only are the environmental concerns being met, but this trend also reflects the growing demand from consumers for sustainable food production.

Porter's Five Forces

Threat of New Entrants

The barriers to entry in the food-grade gases market are moderate, because of the need for specialized equipment and compliance with strict hygiene regulations. The initial investment required is high, but the growing demand for food-preservation and packaging solutions may attract new entrants. However, established players with a strong distribution network and brand awareness are a threat to new entrants.

Bargaining Power of Suppliers

“The suppliers of food-grade gases are relatively numerous, and the raw materials needed for their manufacture are plentiful.” “And this abundance reduces the bargaining power of the suppliers, since the manufacturers are free to choose between them.” “And the presence of suppliers in different regions weakens the suppliers’ power still further.”

Bargaining Power of Buyers

The food manufacturers and wholesalers in the food-grade gas market have significant bargaining power due to the availability of many suppliers and the ability to negotiate prices. As they seek to maintain their profit margins, they use their buying power to bargain for lower prices and thus exert more influence on suppliers.

Threat of Substitutes

Compared with the alternative methods of preservation by refrigerating and chemical means, food grade gases are far superior. The unique advantages of extending shelf life and preserving the quality of the product have made it difficult for substitutes to be developed. However, with the development of technology and changes in the preferences of consumers, new methods of preservation may be developed in the future.

Competitive Rivalry

The food grade gas market is characterized by intense competition among established players, which in turn leads to innovation and price competition. The companies seek to differentiate their products and services, which leads to aggressive marketing and investment in R & D. The growing demand for food safety and quality drives the companies to further enhance their offerings.

SWOT Analysis

Strengths

• High demand in the food and beverage industry for preservation and packaging.
• Regulatory compliance ensuring safety and quality of food grade gases.
• Technological advancements improving efficiency in gas production and application.

Weaknesses

• High production and transportation costs associated with food grade gases.
• Limited awareness among small-scale food producers about the benefits of food grade gases.
• Dependency on a few key suppliers for raw materials.

Opportunities

• Growing trend towards sustainable and eco-friendly packaging solutions.
• Expansion of the food and beverage sector in emerging markets.
• Increasing consumer demand for convenience foods requiring effective preservation methods.

Threats

• Intense competition from alternative preservation methods and technologies.
• Regulatory changes that may impact production processes and costs.
• Economic fluctuations affecting the overall food industry and consumer spending.

Summary

In 2024, the food-grade gases market is characterized by strong demand from the food and beverage industry, bolstered by regulatory compliance and technological advancements. However, high production costs and a lack of awareness among small and medium-sized manufacturers may limit growth. Opportunities are available for sustainable packaging and the expansion of the market in developing regions, while competition and regulatory changes are the main risks. Strategically, the industry should focus on education and innovation.