Extra Neutral Alcohol Market Size Forecast to Reach $11.5 Billion by 2026

Key Takeaways

• Extra neutral alcohol contains 96 % alcohol by volume, a colorless food grade alcohol. It has a neutral smell and taste and is extracted from different sources, such as molasses from sugar cane, grains, and so on.
•  According Indian Brand Equity Foundation (IBEF), the global spirits market is forecast to be at 3.19 billion cases by 2021, with whiskey, gin, and tequila expected to make gains of 55.2 million, 7.1 million, and 5.8 million litre cases, respectively, between 2017 and 2021.
• Demand of extra neutral alcohol is increasing because it is high distilled alcohols that contains no impurities and is used for the manufacture of alcoholic beverages like gin can, odorless alcohol, alcoholic fruit beverages and aperitifs. Growing beverages demand across the globe, propels the market demand.
• Extra neutral alcohol acts as an important ingredient in the manufacture of various cosmetics and skin care products because of its properties, as a manufacturing aid in the food industry, and as a carrier of flavours & fragrance.

Extra Neutral Alcohol Market Segment Analysis – By Raw Material

Grain based segment held the largest share of more than 55% in the extra neutral alcohol market in 2020 because grain based materials are used in production of alcoholic beverages such as wine, whiskey, gin, rum, vodka, and more. Grains produce alcohols with excellent quality better than others. Grain based distilleries has been a huge demand for grain based extra neutral alcohol for the fast growing Indian Made Foreign Liquor (IMFL) Industries and for blending in Foreign Liquor outside India which has been a multifold surge in demand for extra neutral alcohol.

Extra Neutral Alcohol Market Segment Analysis – By Application

Potable alcohol segment held the largest share of more than 30% in the extra neutral alcohol market in 2020, and is growing at a CAGR of 6.1% during 2021-2026. There are different grades of alcohol available on the market including fuel grade and industrial grade. Extra neutral alcohol (ENA) is a highly distilled food grade alcohol containing approximately 96 % volume of alcohol. This alcohol is used to make alcoholic beverages such as odorless alcohol (vodka), gin, and rum that are potable. The demand for extra neutral alcohol (ENA) worldwide is being driven by increased demand for alcoholic drinks around the world. According to India Brand Equity foundation (IBEF), global spirits market is forecast to reach at 3.19 billion cases by 2021. However, the consumer goods market in India is expected to reach US$ 103.70 billion by FY21 from US$ 68.38 billion in FY18 at a CAGR of 23.15%. on the other hand, the FMCG sector in India is expected to grow US$220 billion by 2025. Hence, due to higher disposable incomes and changing life style, the consumption of alcohols rapidly increases. However, the intake of alcohol is expected to boost the demand of extra neutral alcohol industry.

Extra Neutral Alcohol Market Segment Analysis – By Geography

APAC dominated the extra neutral alcohol market share with more than 42.7% in 2020 with rise in the consumption of alcoholic beverages in Asian countries. The intake of odorless alcohol, brandy, vermouth, and so on has been higher in European countries but in the last few years it has declined, and rise in Asia Pacific region. India’s overall liquor market grew by an estimated 7% in 2017-18. There are various types of alcoholic beverages available in India, in which beer is the fastest-growing alcohol in the country. According to the Indian Made Foreign Liquor (IMFL) consumption of red wine is accounting with 61% (approx.) in 2020 of total wine consumption in India to 71.6% in 2017. India consumed 0.8% of total wine compared to the rest of the Asian Countries. Thus, the demand for premium alcohols is expected to drive growth in the extra neutral alcohol market in the future.

Extra Neutral Alcohol Market Drivers

Increasing Consumption of Extra Neutral Alcohol

The global demand for extra neutral alcohol (ENA) dominates the potable alcohol in the pharmaceutical industry. It is used for the processing of disinfectants, sprays and syrups as well. According India Brand Equity Foundation (IBEF), Indian healthcare sector is expected to cross US$ 372 billion by 2022 and medical device market expected to grow US$ 25 billion by 2025. Thus, the consumption of alcoholic beverages accounts for a major share of the extra neutral alcohol produced. In the flavours and fragrance industry, dilute ethanol is used to produce distilled vinegar; flavor extracts and concentrates for soft drinks and food products. In addition, ENA also finds industrial use and is utilized in the production of some lacquers, paints and ink for the printing industry, as well as in cosmetics and personal care products such as toiletries, hair spray, and perfumes. Hence, increasing demand of alcohol will be propel the growth of extra neutral alcohol market.

Rising Demand of Alcoholic Beverages

Rising alcohol consumption, increasing disposable incomes, increasing party culture in urban areas around the world, and the proliferation of clubs, lounges, and bars have given the alcohol industry an impetus. A favorable market climate for the allied extra-neutral alcohol industry was subsequently generated by the increasingly rising alcohol industry. According to the National Epidemiologic Survey on Alcohol and Related Conditions, in America around 24 million adults consume more than 74 drinks per week. Thus, the growth of the extra neutral alcohol industry has been fostered by the increasing customer preference for branded liquors over national liquors. In the cosmetic and personal care sectors, the use of extra neutral alcohol as a volatile carrier of flavours & fragrances and solvents has contributed to its use in perfumes and sprays.

Extra Neutral Alcohol Market Challenges

Uncertainty of Extra Neutral Alcohols in Upcoming Years

With new laws and specifications going into force may be difficult for extra neutral alcohol market in coming years. Extra neutral alcohols are ethanol and ethanol is highly flammable and can be dangerous to health and safety if not handled properly will require medical attention. Some of the safety concerns include burns, redness, and rashes if it comes in contact with an open wound on the skin or eyes, it can cause temporary blindness.

Market Landscape

Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Extra Neutral Alcohol Market. Major players in the Extra Neutral Alcohol Market are Illovo Sugar Ltd., NCP Alcohols, USA Distillers, Sasol Solvents, Mumias Sugar Company, Agrochemical and Food Company Ltd (AFCL), Kakira Sugar Works Ltd (KSW), Tag Solvent Products, Swift Chemicals, Greenpoint Alcohols, and among others.