The market for sustainable palm oil was estimated to be worth USD 0.9 billion in 2022. It is anticipated to increase at a compound annual growth rate (CAGR) of 4.50% from 2024 to 2032, from USD 0.95 billion in 2023 to USD 1.359 billion by 2032.
The global sustainable palm oil market is evolving rapidly, driven by growing consumer awareness and stringent regulatory frameworks. Palm oil, derived from the fruit of the oil palm tree, is a highly versatile ingredient found in numerous products, from food to cosmetics and biofuels. However, the traditional palm oil industry has been plagued by environmental and social issues, including deforestation, habitat destruction, and human rights abuses. The shift towards sustainable palm oil aims to address these challenges, fostering a market that promotes environmentally friendly and socially responsible practices.
Market Outlook and Trends
Increasing Consumer Awareness
The demand for sustainable palm oil is largely driven by rising consumer awareness about the adverse environmental impacts of conventional palm oil production. More consumers are demanding transparency and ethical sourcing from the brands they support. This trend is compelling companies to adopt sustainable palm oil and obtain certifications such as those from the Roundtable on Sustainable Palm Oil (RSPO).
Corporate Commitments and Certifications
Major corporations, particularly in the food and personal care sectors, are committing to sourcing 100% sustainable palm oil. Companies like Unilever, Nestlé, and Procter & Gamble have set ambitious targets to ensure their supply chains are sustainable. Certification bodies like RSPO, Rainforest Alliance, and others play a crucial role in verifying compliance and providing consumers with assurance about the sustainability of the palm oil in products.
Segmental Analysis
By Type
- Crude Palm Oil (CPO)
CPO is a primary product obtained from palm oil fruit, used mainly in food products and as a raw material for further processing.
The sustainable CPO segment is growing as manufacturers seek to comply with sustainable practices right from the raw material stage.
- Palm Kernel Oil (PKO)
Extracted from the seed of the palm fruit, PKO is widely used in personal care products, soaps, and detergents.
The sustainable PKO segment is expanding, driven by consumer demand for sustainably sourced personal care products.
By Application
Food & Beverage
Palm oil is a key ingredient in many food products such as margarine, baked goods, and snacks. The push for sustainable sourcing is particularly strong in this segment due to direct consumer consumption.
Personal Care & Cosmetics
Palm oil derivatives are common in personal care items. The beauty industry is increasingly focusing on sustainable palm oil to meet consumer preferences for ethical products.
Biofuel & Energy
The use of palm oil in biofuels is contentious, with sustainability being a critical concern. Efforts are ongoing to ensure that biofuels derived from palm oil do not contribute to deforestation and biodiversity loss.
Industrial
Palm oil is used in various industrial applications, including lubricants and chemicals. Sustainability in this segment involves ensuring that the sourcing does not lead to environmental degradation.
Demand and Market Drivers
Regulatory Support
Governments worldwide are implementing regulations and incentives to promote sustainable palm oil. For instance, the European Union has strict import regulations that favor sustainably produced palm oil. Such policies are critical drivers for market growth.
Challenges in the Sustainable Palm Oil Market
Certification and Compliance Costs
Obtaining sustainability certifications can be costly and complex, particularly for smallholders. The financial and administrative burden can be a barrier to entry, limiting widespread adoption of sustainable practices.
Traceability Issues
Ensuring the traceability of palm oil through the supply chain is challenging. Many producers still face difficulties in maintaining transparency from plantation to product, which is essential for verifying sustainability claims.
Market Fragmentation
The sustainable palm oil market is fragmented, with varying standards and certifications. This lack of uniformity can confuse consumers and complicate efforts for companies to align with sustainability requirements universally.
Market Share and Key Players
The sustainable palm oil market is dominated by a few key players who have committed to and invested in sustainable practices. Major companies include Golden Agri Resources Limited, Hap Seng Plantation Holdings Berhad, SIPEF group Belgium, Kuala Lumpur Kepong, IOI Corporation Berhad, Sime Darby Plantation Sendirian Berhad, New Britain palm oil limited, Wilmer International Limited, Cargill, and Kulim Berhad all of which have significant market shares and influence over industry standards. These companies are also involved in initiatives aimed at improving sustainability across the entire palm oil supply chain.
Regional Overview
Asia-Pacific
The Asia-Pacific region is the largest producer and consumer of palm oil, with countries like Indonesia and Malaysia being the primary hubs. These countries are increasingly adopting sustainable practices due to international pressure and the need to access global markets.
Europe
Europe is a major market for sustainable palm oil, driven by stringent regulatory requirements and high consumer awareness. Countries like Germany, the Netherlands, and the UK have robust demand for sustainably sourced products.
North America
The North American market is growing steadily, with increasing adoption of sustainable palm oil in food and personal care products. Companies in the US and Canada are progressively aligning with global sustainability standards.
Latin America
Latin America is emerging as a significant player, both as a producer and consumer of sustainable palm oil. Brazil and Colombia are notable for their efforts to enhance sustainable production practices.
Africa
Africa’s palm oil industry is still developing, with potential for growth in sustainable practices. Nigeria and Ghana are key countries where sustainable palm oil initiatives are gaining traction.
Browse related reports:
Coconut Oil Market Research Report – Global Forecast till 2030
Ketogenic Diet Market Research Report – Forecast till 2030
Pulses Ingredients Market Research Report – Global Forecast till 2030
About Market Research Future:
Market Research Future (MRFR) is a world-renowned market research company that offers a wide range of services, complete with accurate and precise analysis about diverse markets, sub-markets and target consumers. Our approach is a combination of extensive information and multiple data sources that help provide an exhaustive comprehension about the latest major developments to the client, in addition to future events and what measures and decisions to take on the basis of the same.
Our fast-emerging market research firm is armed with an adept research analysts’ team that focuses on gathering useful data and analytics in terms of economic and technological advances. Our proficient analysts conduct industrial visits in a bid to achieve reliable and accurate information from established market participants. One of our foremost objectives is to keep the client well-versed with all the lucrative opportunities as well as challenges surrounding various global markets. We offer step-by-step guidance to our clients, through consulting and strategic services, enabling them to arrive at a practical and effective decision.
Contact us:
Market Research Future (part of Wantstats Research and Media Private Limited),
99 Hudson Street,5Th Floor, New York, New York 10013, United States of America
PH no.: +1 646 845 9312
