Gelatin
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Gelatin Market Outlook

• The global gelatin market size was 392 KT in 2017, and it is expected to grow at a steady rate of 2–3 percent, due to an increased demand from food and pharmaceutical industries
• The food industry (64 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 players operating at ~90–95 percent of their installed capacities to meet the demand
• Consolidated nature and complexity involved in sourcing raw materials, along with regulatory concerns, have impacted the gelatin market. However, difficulty in switching to other excipients, like HPMC, make it the preferred excipient for capsule manufacturing

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 players hold 65–70 percent in 2015). 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 4–5 percent between 2017 and 2020. The food & beverage industry is expected to lose its share marginally (2–3 percent) to the pharmaceutical & nutraceutical industries by 2020

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: 4–5%

Technical/Photography

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

Demand from Alternative industries

• Historically, a sudden surge in demand has never occurred from the food or pharmaceutical industries, resulting in a supply chain disruption
• In case of an 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

Global Trade Dynamics

• The US is a net importer of gelatin, and it majorly imports from Brazil, China, and France. Their major export destinations are Canada and Mexico
• Europe majorly exports to the US, Japan, and other developing nations. They import from Brazil and China
• China is a net exporter with the US and Korea as major export destinations, while India preferred destinations, such as the US and Japan
• India exports ~30–35 percent to other markets, including the US, Europe, Japan, and it is also dependent on imports

Global Exports

• Brazil is a major producing nation in LATAM and exports globally. In Europe, France and Germany are the major countries of production. In Asia, China is the major exporter, followed by India

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 materials.