Industrial Alcohol Market Size, Share & COVID-19 Impact Analysis, By Type (Ethyl Alcohol, Methyl Alcohol, Isopropyl, Isobutyl Alcohol, and Others), By Source (Sugar & Molasses, Grains, Corn, Fossil Fuels, and Others), By Application (Personal Care, Chemical Intermediates, Food Industry, Pharmaceutical, Fuels, and Others), and Geography Forecast, 2020-2027

The global industrial alcohol market size was USD 111.26 billion in 2019 and is projected to reach USD 241.42 billion by 2027, exhibiting a CAGR of 11.7% during the forecast period. North America dominated the industrial alcohol market with a market share of 38.64% in 2019.

Technological advancement and the growing pharmaceutical industry, along with the increasing application of industrial alcohol as chemical intermediaries, are expected to favor the growth of the market.  The growing adoption of ethanol as a fuel in transportation applications is driven by increasing automobile usage across the globe.  

The growing application of the product in industries as solvents such as perfumery, printing inks, and paints & coatings is driving the market growth. The growing demand in the pharmaceutical industry for manufacturing and processing medicines such as vaccines, antibiotics, iodine solutions, decongestants, and others is driving the demand for advanced products during the forecast period. Industrial alcohol plays a significant role in the manufacturing of extracts and flavors, candy glazes, food dyes, yeast, animal feed supplements. The growing food demand owing to the increasing population is further supporting the market growth.

COVID-19 Impact: Surging Demand for Hand Sanitizers Leads to Shortage of Industrial Alcohols

The pandemic has led to a medical crisis that has propelled the need for adequate hygiene and further increased the demand for hand sanitizers to control the spread of infection in healthcare institutions and public places. The surge in demand for hand sanitization products is leading to high demand for these alcohols, thereby, leading to market growth. Ethanol concentrations having 60% to 95% have been deemed safe and effective for disinfection purposes by the FDA, CDC, and the WHO. The pandemic has increased awareness regarding proper sanitization, disinfection, and safety practices.

The surge in demand has further led to a short-term shortage in the supply of these alcohol products. The availability and purchase of substandard products on market are creating ongoing health safety concerns that will negatively affect market growth. To overcome the shortage, many companies have increased the production capacity that is anticipated to, lead to market growth.

LATEST TRENDS

Growing Adoption of Eco-Friendly Ethanol Production Methods to Propel Demand

The growing concern over environmental safety and pollution has led the companies to adopt greener sources for the production of ethanol. Pure ethanol is biodegradable and non-toxic in nature and easily breaks into harmless substances when used. Chemicals are added to ethanol to produce superior quality ethanol fuel. However, the combustion of ethanol fuel made from biomass such as sugarcane and corn is considered carbon-neutral because it absorbs CO2 during the burning process of ethanol.

The U.S. government is supporting efforts of the producers that are using environmentally friendly methods for manufacturing ethanol that uses less amount of energy compared to the conventional fermentation processes. The methods that use cellulosic biomass require less cultivation, pesticides, and fertilizer.

Advancement in biotechnology has led to the development of using biomass from bacteria to produce eco-friendly ethanol. Genetically engineered E-coli bacteria have been used to transform plant sugar into ethanol. This technological advancement is expected to increase the use of ethanol that will compete with fossil fuels. This further eliminates the need for ethanol fuel subsidy by the government owing to the cheaper prices of bioethanol compared to fossil fuels. The use of waste for producing ethanol aids in the reduction of pollution within the environment. This growing trend is expected to increase the demand for ethanol that is expected to lead to market growth.

DRIVING FACTORS

Growing Adoption of Bioethanol Shall Aid in the Growth of Market

Bioethanol is commonly used as a biofuel for transportation to reduce the effects of greenhouse gases (GHG). The growing world population and the increasing industrialization are leading to high demand for energy. This has resulted in the increasing cost of crude oil and natural gas over years now. The rising awareness about climate change and the surging adoption of renewable resources has led to the development of bioethanol. Biofuels are renewable energy sources that have supported the market demand for fuel that aids in reducing pollution levels across the globe.

Alternative fuel methods are preferred due to uncertainty in energy security, increasing fuel prices, along with the continual rise in the CO2 emission levels. The need to reduce GHG emissions is the reason for the adoption of wastes such as molasses and sugar beet pulp. They have major advantages such as reduced cost of waste disposal. Moreover, the affordability of the product reduces the production cost of ethanol.

Various countries have increased ethanol production such as Thailand (cassava), India (using sugar cane), China (corn), France (sugar beet), Canada (wheat), and others. The conversion of cellulosic material into ethanol leads to fermentation processes. Further, this process converts the energy crops into bioethanol, while leading to higher ethanol yields. The technological breakthrough aiming to develop effective conversion of agricultural and forestry for the production of bioethanol is positively supporting the market growth.

RESTRAINING FACTORS

Rising Environmental Concerns May Hinder the Market Growth

The production of industrial alcohol through fossil fuels has a significant environmental impact due to water depletion and pollution. During the process of the formation of alcohol, various toxic chemicals are required as raw materials. Then these toxic chemicals are released into the atmosphere that harms the ecosystem. The stringent government regulations over the environmental concerns are a restraining factor over the production of industrial alcohol that limits the market growth. Moreover, the high production cost of isopropyl and isobutyl is expected to hinder the market growth to some extent.

SEGMENTATION

By Product Analysis

Ethyl Alcohol Segment to Hold a Dominant Share in the Market

On the basis of product, the market is segmented into ethyl alcohol, methyl alcohol, isopropyl, isobutyl, and others.

Ethyl alcohol has a primary application in many cosmetics and beauty products. Ethanol is added as an astringent to aid in the cleansing of the skin. In addition to this, it is used as a preservative in lotions and other skincare products to ensure the binding of ingredients and keeping it together. It has application in households, additives, food ingredients, and as fuel in transportation.

Methyl alcohol is a highly versatile chemical having a wide application for industrial purposes in the chemical industry. Methanol is an energy carrier that is adopted as fuel for electricity generation. It offers an environmentally friendly fuel source option that is considered a promising resource for clean energy.

Isopropyl alcohol is used with water as a rubbing-alcohol antiseptic. It is further used in the manufacturing of lotions and other cosmetic products. For industrial applications, it is used as a solvent for drugs, gums, and shellacs. The growing applications for various industries are supporting the market.

By Source Analysis

Corn Segment to Dominate the Market Share

On the basis of source, the market is categorized into sugar & molasses, grains, corn, fossil fuels, and others.

The dry-milling process is used to grind the corn into flour and later ferment it into ethanol with other co-products. Wet-mill plants are primarily used to produce sweeteners, along with ethanol. The wet mills separate protein, starch, and fiber in corn through processing to produce ethanol. Corn being the major provider of ethanol dominates the market for industrial alcohol.

Molasses is a microbiological energy source that aids in the growth of bacteria, yeast, and mold, which are beneficial for the production of alcohol. Molasses fermentation is a biological process in which molasses is converted into cellular energy that eventually produces ethanol. The demand for ethanol is increasing day by day due to its versatile application and utility. The rising demand for the production of ethyl alcohol through the fermentation process is anticipated to bode well for the growth of the market.

By Application Analysis

Fuel Segment to Hold the Major Share in the Market

On the basis of application, the market is segmented into personal care, chemical intermediates, food industry, pharmaceutical, fuels, and others.

The fuel segment is expected to dominate the market due to the growing demand for fuel from the automotive industry. Alcohols such as ethanol have a major application as a fuel for transportation. Several U.S. automobile manufacturers are producing ethanol that enables vehicles to run on a type of gasoline, containing a mixture of 85% ethanol and 15% gasoline.

The product is used as a solvent for personal care products such as analgesics and mouthwashes. The pharmaceutical industry adopts ethanol & methanol, and other alcohols for hygiene, medical wipes, and sanitation purposes. The spread of the global pandemic has also caused a high demand for alcohol to be used in sanitizers as way for protection from the spread of the disease. Ethanol is used as an antidote when the patient suffers due to ethylene glycol or methyl alcohol poisoning.

These alcohols are used as chemical intermediaries in the chemical industries. They are widely used as a solvent due to the ability to dissolve compounds of both polar and nonpolar nature.

REGIONAL INSIGHTS

North America stood at USD 42.99 billion in 2019 and is anticipated to showcase significant growth during the forecast period.  The increasing adoption of ethanol as a fuel for transportation applications is surging the market growth. The Environmental Protection Agency (EPA) has various arrangement programs for supporting green and sustainable products produced from renewable energy sources. The increasing adoption of automobiles is substantially surging the demand for ethanol fuel that aids in total cost reduction. Japan has 500 million liters of biofuel target, a minor percentage of which is imported. Japan began importing corn ethanol from the United States in July 2019 to meet their target consumers. This allows the U.S. in producing ethanol from corn to meet up to 44% of the estimated ethanol requirement.

Under regulatory standards of the U.S. Food & Drug Administration, ethanol production plants are required to comply with the requirements set by the Food Safety Modernization Act (FSMA). These preventive controls provide assurance to consumers around the globe about American ethanol co-products with safe feed ingredients. These factors are anticipated to lead to significant growth in the North American industrial alcohol market.

Asia Pacific industrial alcohol is expected to hold the maximum share in the market that can be attributed to the increasing adoption of the product in the fuel and food industry. Countries within the region are rapidly developing due to various government initiatives and the increasing foreign investments in the industrial sector. China being a major producer of ethanol supports the fuel demand from automotive and additives in the food industry analysis. The increasing population has led to the growing food demand, which in turn propels the demand for alcohol and is considered to be the factor supporting the growth of the market.

The region further exhibits high growth due to economic growth and increasing urbanization in countries such as China and India.  These countries have the highest potential for growth due to the extensive availability of agricultural land and cheap labor. The major factors driving the pacific industrial alcohol market growth is the increasing demand for personal care and cosmetics products. Thereby, increasing the awareness regarding maintaining a hygienic environment during the pandemic.

The European region is experiencing significant industrial development for the past few years. The increasing investment by European Union for R&D in the automobile and healthcare sector is the main factor driving growth. According to the European Automobile Manufacturers Association (ACEA), Europe manufactured about 20% of the total motor vehicles in 2019. The region being a major hub for the automobile industry leads to a high demand for fuel, which in turn is expected to support the market growth. Moreover, adopting environmentally friendly methods to produce automotive fuels substantially increases the product demand leading to regional market growth.

Latin America is expected to experience substantial growth during the forecast period. Brazil is the second-largest producer of ethanol and has a major influence on the growth of the market. The rising imports and exports in the region is surging the demand for ethanol as fuel.

The Middle East & Africa is a major producer of oil and petroleum. In addition to this, it is a major raw material provider for the manufacturing of alcohol. This is expected to contribute to market growth in the region.

KEY INDUSTRY PLAYERS

Joint Ventures and Capacity Expansion are the Key Strategic Initiatives Implemented by the Companies

Major players operating in the industry are Cargill, Incorporated, Cristalco, Green Plains Inc., Raizen Energia, and others. Companies are involved in capacity expansion, new product launches, joint ventures, acquisitions, and partnerships to gain a competitive edge in the market. For instance, Cargill produces and commercializes ethanol for industrial applications that include extractants, solvents, antifreeze, and intermediates. The company further provides both 96% and 99% ethanol, with or without the adoption of denaturants.

In November 2019, Flint Hills Resources Pine Bend refinery announced an investment worth USD 400 million into the development of new technologies and equipment for upgrading and helping improve efficiency, increase production, and lower emissions.

Grain Processing Corporation (GPC) announced the expansion of ethyl alcohol production capacity to meet the increasing customer demand for beverage and industrial alcohol. The $48 million expansion project will focus on increasing alcohol production at their Iowa plant.

Greenfield Specialty Alcohols Global is a producer and supplier of high-value ingredients and additives that are vital to businesses and help to lower carbon emissions.  It has specialty plants and R&D centers that look after supply chain performance and customer relationship development.

LIST OF KEY PLAYERS PROFILED:

• Cargill, Incorporated (U.S.)


• Cristalco (France)


• Green Plains Inc. (U.S.)


• Raizen Energia (Brazil)


• MGP Ingredients (U.S.)


• Sigma Aldrich (U.S.)


• The Andersons Inc. (U.S.)


• Greenfield Specialty Alcohols (Canada)


• Grain Processing Corporation (U.S.)


• Flint Hills Resources (U.S.)


• Other Key Players

KEY INDUSTRY DEVELOPMENTS:

• In July 2021 – Deepak Nitrite Limited a wholly-owned subsidiary of Deepak Phenotics Limited, expanded its capacity of production of Isopropyl Alcohol (IPA) at its manufacturing facility situated at Dahej, Gujarat from 30,000 Tonnes Per Annum (TPA) to 60,000 TPA. The capacity addition will also help in further reducing dependence on imports of IPA and it will contribute towards ‘Atmanirbhar Bharat’.


• In July 2020 – Green Plains Wood River LLC installed a separate 25-million-gallon facility engineered and constructed by ICM, Inc. to produce FCC Grade alcohol for domestic and export markets and expects to upgrade the production process to produce USP Grade alcohol over the next four to six months. This expansion will enhance company’s production capabilities at Wood River, further demonstrating its continued commitment to help meet the increased customer demand for high purity alcohol


• In May 2020 – ​As part of a programme to expand phenol production capacities at its plant in Płock, PKN ORLEN has purchased a licence and basic engineering design package for an isopropanol unit. If the project receives a go-ahead, PKN ORLEN will be the world’s fifth company to implement this innovative technology. In the future, this expansion is estimated to add an impressive PLN 1.5bn to annual operating profit.


• In April 2020 – Seqens is a major European player in high value oxygenated solvents through its Solvents & Phenol Specialties Business Unit. It plans to invest in a second production plant for isopropanol (IPA) on the Roussillon chemical platform, France. With this expansion, Seqens’ global annual production capacity of IPA will increase by more than 70%. The new unit, with a capacity of 50.000 metric tons per year, is planned to start up in 2021 and will benefit from an optimized production process based on the experience gained on Seqens’ first production unit as well as competitive access to raw materials and energy to be supplied by the platform.

REPORT COVERAGE

The industrial alcohol market research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, sources, applications, and products. Also, the report offers insights into market trends and highlights vital industry developments. In addition to the factors mentioned above, the report encompasses various factors that have contributed to the growth of the market over recent years.

Report Scope & Segmentation