Global Ethanol Market By Type (Synthetic, and Bioethanol), By Source (Second Generation, Grain based, and Sugar & Molasses based), By Purity (Denatured and Undenatured), By Application (Beverages, Fuel & Fuel Additives, and Other Applications), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2023-2032 

Report Overview

The ethanol market size is expected to be worth around USD 163.9 Bn by 2032 from USD 102.8 Bn in 2022, growing at a CAGR of 4.9% during the forecast period from 2022 to 2032.

Ethanol (CH2-CH3-OH) is termed a colorless, volatile, and flammable liquid that is produced by the fermentation of sugars. Demand for Ethanol will be driven by the increasing use of the product as a biofuel. Rising alcoholic beverage consumption is another key factor driving the growth of the market.

Ethanol can be produced from both natural and petrochemical feedstocks. In natural processes, natural sugars are fermented in the presence of yeast. Increased shale gas production is increasing ethylene production. As oil production declines and new ethylene capacity comes online, this market is estimated to become congested with ethylene, leading to a slump in ethanol production.

Key Takeaways

Market Growth: In 2022, global ethanol sales reached USD 102.8 billion; they are anticipated to skyrocket to over USD 163.9 billion by 2032 and exhibit a compound annual growth rate of 4.9% between 2023-2032.

Ethanol Source: Biofuel dominates the ethanol market due to increasing demand and use as an eco-friendly energy source, however, industrial ethanol should experience strong growth as well.

By Type Analysis: Ethanol can be divided into synthetic ethanol and bioethanol categories; with synthetic being derived from petroleum while bioethanol becoming dominant over time in market trends.

Source Type Analysis: When considering the value of this market, grain-based products have long dominated it with an overwhelming percentage.

By Purity Analysis: Denatured ethanol is projected to experience the highest compound annual growth rate among its segments with a compound annual growth rate estimated at 3.9% over 2023-2032, thus continuing its market dominance throughout this timeframe.

Application Type Analysis: Due to rising automotive fuel demand and new regulations intended to minimize air pollution, demand has surged for this product that is used in producing gasoline additives that increase the efficiency of gasoline-powered engines.

Drivers: Demand for renewable energy sources, government initiatives promoting biofuels and the need for sustainable alternatives are three primary forces driving the market forward.

Restraints: Regulatory obstacles and competition from other renewable energy sources may hamper ethanol market expansion.

Opportunities: Recent advances in ethanol production technology, increased focus on sustainable energy solutions, and expanding biofuel markets present market players with ample growth prospects.

Trends: Ethanol’s increasing use as an eco-fuel and its integration into various industrial processes is one of the major market developments today.

Regional Dominance: North America held an overwhelming market share for ethanol by 2022 and this dominance is anticipated to persist over time.

Key Players in the Ethanol Market: United Breweries, Aventine Renewable Energy, and AB Miller are three companies leading this space.

By Type Analysis

Based on the ethanol market analysis type, ethanol is characterized as synthetic ethanol and bioethanol. Synthetic ethanol is a petroleum-derived product. Among these segments, the market is dominated by the bioethanol segment.

Synthetic ethanol is produced by the process of hydration of ethane (a petroleum by-product) in the presence of steam and a catalyst such as phosphoric acid.

Bioethanol is derived from biomass by the process of sugar fermentation and hydrolysis and it is an eco-friendly product. Bioethanol is entirely composed of biological products and hence its combustion leads to cleaner emissions such as steam, heat, and carbon dioxide. For petroleum products, bioethanol acts as a substitute.

Therefore, in several countries bioethanol-blended gasoline is mostly preferred. Additionally, bioethanol is used in chemical industries, energy production, and automobiles. These factors are the key factors upsurging the growth of the bioethanol segment.

Source Type Analysis

Considering the values, the grain-based segment dominated the market over the past years holding the largest share value. Increasing the production of ethyl alcohol by using grain-based raw materials is a key factor predicted to boost segment growth. Grain-based Ethanol is mostly produced by the use of a dry mill process, and 1 bushel of corn can manufacture 2.86 gallons of Alcohol.

The sugar and molasses-based sauces segment is projected to increase at a notable CAGR (compound annual growth rate) during the forecast period. Increasing sugar adoption- and molasses-based Ethanol as industrial solvents is a key factor that will increase the market share of sugar- and molasses-based Ethanol in the near future.

By Purity Analysis

Based on this segment, the ethanol market is characterized into Denatured and Undenatured. Denatured Ethanol is predicted to be the fastest-growing segment at a compound annual growth rate (CAGR) of 3.9%. And dominate the market for the forecast period of 2023 to 2032.

This is due to increased demand from the fuel and household chemical industries. It can be combined with other chemicals to achieve desired properties. It is primarily used in formulations used for cleaning and disinfecting indoor and outdoor environments.

Denatured Alcohol is mostly obtained from natural sources like cornstarch and grains, so it is suitable for home use. Other important growth factors are growing awareness of internal hygiene and the noxious effects of synthetic ingredients.

Undenatured Ethanol is a 95% strength product containing no solvents or additives. It is mainly utilized for fuel mixing and other research and industry-associated applications. Industrial applications consist of detergents, adhesives, plastics, chemicals, paints, inks, and thinners.

Application Type Analysis

Based on Application type, the market is segmented into Beverages, Fuel, and Fuel Additives. Among all the segments, the fuel and fuel additives accounted for the largest market share, and the fuel and fuel additives segment dominated the market over the past years.

Increased demand for automotive fuels and changes in regulations to reduce air pollution have increased demand for the product as it is used to make gasoline additives that improve fuel efficiency.

Industrial solvents are one of the growing applications due to their widespread use in major end-use industries. Increased demand from the pharmaceutical, paint, and coatings industries is expected to have a positive impact on overall demand. The future growth of the application segment is highly dependent on macroeconomic factors such as government policies and Federal regulations.

In the personal care industry, Ethanol is the essential ingredient used. It has an astringent property and is mostly used in product formulations like hand sanitizers and skin lotions. Its excellent physical properties and low boiling point make it an important ingredient in the personal care industry.

Key Market Segments

Based on Type

• Synthetic
• Bioethanol

Based on the Source Type

• Second Generation
• Grain-based
• Sugar & Molasses based

Based on Purity

• Denatured
• Undenatured

Based on Application

• Beverages
• Fuel and Fuel Additives
• Other applications (industrial solvents, disinfectants, personal care)

Drivers

Rising Usage of Ethanol as a Biofuel

The application of Ethanol as a biofuel is one of the most important market drivers. The automotive industry has grown rapidly in recent years and faces many challenges in controlling air pollution.

To combat the problem of increasing air pollution from automobiles, Ethanol is blended with gasoline at concentrations of 10% and 15%. Adding Ethanol provides significant benefits in terms of improving fuel economy, improving thermal efficiency, and helping with cold starts in winter. The US and Brazil lead the world in using Ethanol as a biofuel.

Increasing Sales of Premium Liquor

Once considered a premium product, alcoholic beverages containing ethanol are now becoming a staple found in most households around the world. The main trend driving growth is the entry into the market of premium products.

Rising disposable income coupled with increased knowledge of raw materials has increased the demand for premium products. Over the past two years, premium liquor sales increased by 5% to 6%.

Restraints

Excessive Consumption of Alcohol Can Cause Adrs and Psychological Dependence.

Excessive consumption of alcoholic beverages can cause great harm to the human body, especially the liver, an important organ that helps remove toxins from the body. Increase the risk of heart attacks.

Other side effects include memory loss and decreased comprehension, delayed motor response, balance disturbances and ataxia, blurred vision, and sensory disturbances. Increased awareness of these adverse effects could impede demand to some extent, thereby limiting market growth.

Opportunity

A Growing Bacterial And Viral Infection Will Lead to Increased Use of Alcohol

Since the COVID-19 outbreak, the world has been demanding more and more requirements of hand sanitizers and disinfectants. Hence the pharmaceutical industries were demanding the large requirement of Ethanol for manufacturing Alcohol based products.

As the fear of viral infections and mutation of viruses is considerable, the need for the production of alcohol-based products is going to increase. Furthermore, there are certain factors that will drive the ethanol market growth, such as increasing adoption of Ethanol as an industrial solvent, use of Ethanol in hospitals, growing adoption of alcohol-based soaps and Alcohol based sanitizers, and rising consumption of alcoholic beverages.

Regional Analysis

North America dominated the ethanol market in 2022 and is expected to continue its dominance in the upcoming period.

The United States is currently the largest producer of Ethanol. The reason for the market growth in these regions is the ready availability of raw materials and Ethanol required for production in this region. In addition to North America, the Latin American market will witness significant growth in the coming years, driven by the presence of several major ethanol producers in the region.

Asia-Pacific is expected to witness the fastest CAGR from 2020 to 2027, owing to rising fuel consumption and increasing industrial activity. The presence of various industries in the region, coupled with the ever-growing economy, is expected to have a positive impact on market growth. The major application segments expected to drive the market in this region are fuels and industrial solvents.

Latin America is also one of the biggest regional markets because of the huge availability of raw materials coupled with the rising demand for products from the automotive industry. In this region, the changes in environmental regulations are anticipated to positively impact the consumption of Ethanol in end-use industries.

Brazil is the Latin American market leader in terms of alcohol consumption. He is one of the first countries to experiment with mixing Ethanol and gasoline. Many automakers in the country have introduced modifications to accommodate the changes. The country is raising taxes on imported Ethanol, which is anticipated to form a positive impact on the expansion of the regional market.

Key Regions

• North America
  • The US
  • Canada
• Europe
  • Germany
  • France
  • The UK
  • Spain
  • Italy
  • Russia & CIS
  • Rest of Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • ASEAN
  • Rest of APAC
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of MEA

Key Players Analysis

With the increasing acceptance of environmentally friendly products, market participants are looking forward to new growth opportunities.

Recent global market trends are changing the value chain. Manufacturers are now looking at ways to mitigate risk, such as buying shares in resource companies or entering into futures contracts. Initially, the manufacturer relied on his two to three raw material suppliers, which creates risks as contingency plans don’t always work.

Market Key Players

• United Breweries
• Aventine Renewable Energy
• AB Miller
• Archer Daniels Midland Company
• Kirin
• Pure Energy Inc.
• British Petroleum
• Cargill Corporation
• Other Key Players

 Recent Developments

In February 2019, Albioma revealed the commercial commissioning of Saint-Pierre, Reunion Island’s first peak-load combustion turbine (CT), which runs primarily on bioethanol.

In April 2022, The first greenfield grain-based ethanol plant was launched in India (Bihar). It is built with the latest technology and is not going to discharge any waste. Thus this is completely environment-friendly and makes it a zero-liquid discharge plant.

In January 2022, Archer Daniels Midland and Wolf Carbon Solutions company declared a partnership to escalate the decarbonization of ethanol production.

Report Scope