Gelatin

Global Gelatin Market Outlook

• The global market size 586 KT (2022), and it is expected to grow at a steady rate of 7–8 percent, due to increased demand from food and pharmaceutical industries

• The food industry (66 percent) is the major end-use industry of gelatin, followed by the pharmaceutical industry (34 percent). The increasing demand from these two industries is likely to be met by the decreasing gelatin usage in the photographic industry

• Supply and demand go hand-in-hand in this industry, with no significant gap, with all suppliers operating at ~90–95 percent of their installed capacities to meet the demand

Market Drivers and Constraints 

• Drivers: Demand from end-use industries, substantial growth in Asia, and lack of availability of potential substitute (plant-derived HPMC)

• Constraints: Fluctuations in the supply and demand of raw materials and consumer concerns related to safety and social aspects of animal-derived gelatin

Global Gelatin Suppliers

• The gelatin industry is highly consolidated (the top seven suppliers hold 65–70 percent market share). Hence, buyers do not have much bargaining power

• However, the global food and pharma industries buy large volume of gelatin, allowing them a slight negotiating bandwidth

Global Demand by Application

• Pharmaceutical-grade gelatin is expected to show a growth rate of 6–7 percent between 2023 and 2027. The food & beverage industry is expected to lose its share marginally to the pharmaceutical & nutraceutical industries by 2027.

Key Applications and its Downstream Growth Projections

Food & beverage Industry

• Drivers: Increased demand for processed food
• CAGR: 2–3%

Pharmaceutical (mainly Rx, OTC, health & nutrition capsule) Industry

• Drivers: Growth in the global pharmaceutical & nutraceutical markets
• Pharmaceutical gelatin is considered more lucrative, since its price is higher than that of the food grade gelatin (by 5 percent)
• CAGR: 6–7%

Technical/Photography

• Drivers: Demand from fertilizers, detergents, ink-jet paper, etc
• CAGR: 0–1%

Demand from Alternative industries

• Gelatin demand in the pharmaceutical industry is expected to grow with the highest CAGR. The usage of gelatin in pharmaceutical industry, including capsules manufacturing, nutraceuticals manufacturing, sports nutrition manufacturing, medical and biomedical application, are the major demand drivers

• Increased demand from pharma, the food industry would only be marginally affected, due to the advantage of high procurement volume

• However, the pharmaceutical industry would have to shell out more, in case of a sudden surge in demand from the food industry, on account of low volume purchase, compared to the food industry

Gelatin Cost Structure

Cost of raw material contributes to ~50–60 percent of the total cost of gelatin production, thus having a direct impact on the cost of gelatin, however, it varies with the type of raw material and regions.

• Raw material is the major contributor to the cost of gelatin. It typically accounts for ~45–55 percent of the production cost. In addition to the animal bone or hide, hydrochloric acid and lime are also necessary for manufacturing bovine gelatin

• The manufacturing process is labor intensive, requiring ~90 man-hours for producing a ton of gelatin

• The typical profit margin in the gelatin industry is ~10 percent

Gelatin Sourcing Strategy

Raw materials sourcing strategy by gelatin manufacturers

• The production cycle of bovine bone gelatin is ~3–6 months compared to one month for hide and porcine hide-derived gelatin

• Hence, during the raw material shortage, the production of hide-derived gelatin can only be affected. Bone-based gelatin production would have an impact only during prolonged shortage of raw material

Gelatin sourcing by pharmaceutical companies

• The top global pharma companies purchase gelatin in less quantity, which is used for tableting and stabilizing vaccines

• Leading food/pharma suppliers engage with 2–3 global gelatin majors, while preferring to source locally to cater regional demand

Gelatin sourcing strategy by capsule manufacturers

• Every top capsule manufacturer partners with all the top bovine gelatin manufacturers, thereby ensuring robust and high quality supply of bovine gelatin

• The demand of gelatin in the photographic industry is expected to come down, so some volume can be transferred from its photographic usage to manufacture hard capsule in pharmaceuticals. The bovine bone gelatin production is expected to increase by 5–10 percent in the near future, due to its increasing consumption in food & pharmaceutical industries. Hence, the market has adequate capacity of gelatin to meet the demand

• During cases where there has been a shortage of raw material, gelatin suppliers manufacture customized blends of various gelatin sources (like bovine hides with bones)