Why is the Clean-label Ingredients Market Rapidly Growing?

Organisations must rethink supplier relationships, sourcing strategies and compliance with regulations as the clean-label ingredients market continues to experience significant growth.

This creates greater demand for organic, sustainable and non-GMO ingredient sourcing, requiring cost management and supplier vetting.

Procurement teams can effectively mitigate risks by adopting strategic partnerships and transparent supply chain practices.

A recent report from Future Market Insights highlights how the clean-label ingredients market is predicted to experience rapid growth as demand for organic and natural food products continues to rise. 

It highlights how this market is expected to grow to US$212.4bn by 2035.

This is due to a combination of consumers becoming more aware of dietary choices, increasing consumer demand for natural food ingredients and a need for greater transparency in food labelling. 

Nandini Roy Choudhury, Client Partner at Future Market Insights, states: “The increasing consumer preferences for non-GMO and organic food additives have encouraged manufacturers to reformulate their products, leading to an upsurge in demand for clean label ingredients.”

Key drivers

Procurement teams are facing greater pressure to maintain traceability, sustainability and compliance with clean-label standards while sourcing organic and natural ingredients.

Organisations must ensure transparency in supply chains and work with certified suppliers to maintain trust in the dynamic clean-label ingredients market. 

Not only do procurement teams need to maintain supply chain stability and cost efficiency but they must ensure ingredients continue to meet evolving regulatory requirements (eg. additive-free and non-GMO).

Companies are encouraged to work with ethical suppliers to drive sustainable sourcing, align with ESG goals and reduce carbon footprints. 

Procurement teams must balance quality, cost and sustainability whilst meeting changing regulatory landscapes and customer expectations to meet the rise in the clean-label ingredients market. 

Regional differences

Future Market Insights indicate that several countries are experiencing varying levels of growth in their clean-label ingredients market.

The UK emerges at the forefront of the clean-label food trends, with a 23.3% CAGR. This growth is due to a greater consumer demand for transparency, strict industry clean label movement regulations and an intense organic food culture. 

However, Brazil’s clean-label market is growing at a slower pace than other regions due to the fact there is a slower adoption of the awareness of natural food ingredients and the impact of the clean-label industry on food manufacturing. 

Procurement teams that operate globally - or wish to expand their operations across the world - need to remain aware of regional differences in clean-label market growth to under the differing supply chain dynamics, regulatory requirements and consumer preferences.

FMI indicates that US and India (which are both 15.8% CAGR) are experiencing a greater demand for flexible sourcing strategies due to urbanisation and changing consumer preferences.

Organisations face potential supply disruptions, compliance difficulties and reputational damage if ignore local supply chain challenges, preferences and regulations.

As the clean-label market continues to grow, procurement teams must craft region-specific procurement strategies to secure effective risk mitigation, cost efficiency and compliance with sustainability goals.

How will this impact the future of procurement?

Procurement teams will need to focus on organic, additive-free and natural ingredients whilst enhancing supplier traceability and transparency to effectively cope with the rise of the clean-labels ingredients market.

Organisations will begin to adopt long-term contracts and diversify suppliers to manage the increased costs for clean-label materials.

Future Market Insights highlights how this significant growth will require procurement teams to embrace both sustainability and technology - such as blockchain for traceability - to align with corporate ESG goals and manage the difficulties of clean-label supply chains. 

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