Fats and Oils Market: Driving Growth Through Rising Demand and Innovation
MarketsandMarkets™, 22 Sep 2025
The global fats and oils market is poised for significant growth, projected to rise from USD 271.8 billion in 2024 to USD 323.7 billion by 2029, representing a robust CAGR of 3.6% during this period. This growth is primarily driven by economic development and increasing urbanization, which are fueling higher consumption of vegetable oils worldwide.
Rising Vegetable Oil Consumption in Developing Countries
Developing nations are expected to see a sharp increase in vegetable oil consumption. According to the FAO, annual per capita consumption of vegetable oils is anticipated to reach 21 kg in 2025, up from just 11 kg in the least developed countries. This stark difference highlights how economic growth impacts diets and access to essential nutritional resources.
On a global scale, over one-third of all arable lands are now cultivated with vegetable oil crops, and these areas continue to expand, as reported by the International Union for Conservation of Nature (IUCN) in 2024. This surge is fueled not only by demand for direct human consumption but also by industrial applications, including biodiesel production, cosmetics, and animal feed. Major oil crops, such as soybeans, palm, sunflowers, and canola, have become critical to both global food security and economic growth.
Sustainable and eco-friendly cultivation practices are becoming increasingly essential, as producers seek to meet the growing population’s needs without compromising environmental protection.
- Rising Urbanization and Economic Growth: As urban populations grow, lifestyle changes are driving higher consumption of processed foods and edible oils. Economic growth in emerging markets is also increasing purchasing power, enabling consumers to spend more on a variety of cooking oils and fats.
- Increased Health Awareness: The global shift toward healthier eating habits is encouraging manufacturers to introduce low-trans-fat and functional oils. Consumers are increasingly seeking oils that not only enhance flavor but also offer health benefits, such as olive oil, avocado oil, and omega-rich oils.
- Expanding Food & Beverage Industry: The growth of the foodservice sector and packaged foods is contributing significantly to fats and oils demand. From bakery products to snacks and ready-to-eat meals, fats and oils remain essential ingredients in diverse culinary applications.
Emerging Trends Shaping the Fats and Oils Industry
- Shift Towards Plant-Based and Sustainable Oils: Environmental concerns and sustainability initiatives are encouraging the adoption of plant-based oils and alternative fats.
- Innovation in Functional Oils: Companies are focusing on fortifying oils with vitamins, antioxidants, and other functional compounds to meet health-conscious consumer needs.
- Supply Chain Optimization: Advanced logistics and cold-chain technologies are improving distribution efficiency, ensuring fresher products and reduced wastage.
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Palm Oil: The Versatile Vegetable Oil
Among vegetable oils, palm oil stands out as the second dominant type, widely used across a variety of products from shampoos and cosmetics to packaged foods and biofuels. Its popularity stems from its favorable texture, taste, odor, consistency, and long shelf life, as well as its affordability and versatility. Palm oil supplies 40% of the global demand for vegetable oil while using less than 6% of the land compared to other oil crops.
According to the European Palm Oil Alliance (2022), rising demand for palm oil in food, feed, and fuel sectors, coupled with cost efficiency and high productivity, continues to drive production. Additionally, sustainable public procurement presents significant opportunities for increasing demand for VSS-compliant (Voluntary Sustainability Standards) palm oil.
Initiatives like the collaboration in Colombia between Fedepalma, Solidaridad Network, and industry investors such as Grupo Hada and Alianza Team are building a more sustainable local market for palm oil. These efforts support local producers, stimulate the economy, and promote environmentally responsible practices.
Regional Insights: Europe’s Growing Role
Europe ranks as the second dominant region in the fats & oils market, after North America. The continent’s strong consumption is fueled not only by culinary use but also by the growing application of used cooking oil (UCO) in biodiesel production. Transport & Environment reports that Europe imports 80% of its used cooking oil, with 60% coming from China, highlighting the region’s reliance on global supply chains for sustainable biodiesel feedstock.
Europe also produces sunflower oil, coconut oil, and other niche oils, which are highly valued both domestically and internationally due to their versatile applications in food and industry.
Leading Fats and Oils Companies:
Several major companies lead the fats & oils market globally, including:
- ADM (US)
- Wilmar International Ltd (Singapore)
- Cargill, Incorporated (US)
- Bunge (US)
- Kuala Lumpur Kepong Berhad (Malaysia)
- Olam Agri Holdings Pte Ltd (India)
- Manildra Group (Australia)
- Mewah Group (Singapore)
- Associated British Foods plc (UK)
- United Plantations Berhad (Malaysia)
These companies operate extensive production facilities and distribution networks across North America, Europe, South America, and Asia Pacific, offering versatile products with broad applications. Their strong market presence is backed by robust business strategies, diverse service offerings, and wide geographical reach, enabling them to maintain a significant share in the global fats & oils market.
Key Questions Addressed by the Fats and Oils Market Report:
Q1. What is the fats & oils market?
Answer: The fats & oils market encompasses the production, distribution, and consumption of edible and industrial fats and oils derived from plants, animals, or synthetic sources. These include vegetable oils (such as soybean, palm, and sunflower oil), animal fats, and specialty oils used in food, cosmetics, and industrial applications.
Q2. What is the current market size and growth forecast?
Answer: The fats & oils market is projected to grow from USD 271.8 billion in 2024 to USD 323.7 billion by 2029, reflecting a Compound Annual Growth Rate (CAGR) of 3.6%. Growth is driven by rising urbanization, population growth, and increasing demand for vegetable oils and healthy fat alternatives.
Q3. What factors are driving the growth of the fats & oils market?
Answer:
- Increasing urbanization and disposable income, boosting food consumption.
- Growing awareness of healthy dietary fats and functional oils.
- Expansion of processed and convenience food industries.
- Technological advancements in oil extraction and refining.
Q4. Which regions dominate the fats & oils market?
Answer: Asia-Pacific is a key market due to its large population, extensive agriculture base, and rising consumption of edible oils. North America and Europe also hold significant market shares, driven by demand for healthy and specialty oils.
Q5. What are the challenges faced by the fats & oils market?
Answer:
- Volatility in raw material prices (palm, soybean, and sunflower).
- Environmental concerns related to palm oil production and deforestation.
- Regulatory challenges regarding trans fats and labeling standards.
Q6. What opportunities exist in the fats & oils market?
Answer:
- Development of specialty oils for health-conscious consumers.
- Expansion of processed food and convenience food segments in emerging markets.
- Adoption of sustainable and certified oils to meet environmental and ethical standards.
Q7. Who are the major players in the global fats & oils market?
Answer: The key players in the market are ADM (US), Wilmar International Ltd (Singapore), Cargill, Incorporated (US), Bunge (US), Kaula Lumpur Kepong Berhad (Malaysia), Olam Agri Holdings Pte Ltd (India), Manildra Group (Australia), Mewah Group (Singapore), Associated British Foods plc (UK), United Plantations Berhad (Malaysia), Ajinomoto Co., Inc. (Japan), Fuji Oil Co., Ltd. (Japan), Oleo-Fats (Philippines), Borges Agricultural and Industrial Edible Oils, S.A.U. (Spain), K S Oils Limited (India), CSM Ingredients (US), SD Guthrie International Zwijndrecht Refinery B.V. (Netherlands), Musim Mas Group (Singapore), Richardson International Limited (Canada), and AAK AB (Sweden).
Q8. What trends are shaping the future of the fats & oils market?
Answer: Emerging trends include plant-based diet adoption, technological advances in processing, growth in biodiesel production, demand for functional and specialty oils, and increased focus on clean label and sustainable products.
Q9. What is the future outlook for the fats & oils market?
Answer: The market is expected to continue growing steadily due to urbanization, increasing disposable income, and rising awareness about healthy dietary fats. Innovation in specialty oils and sustainable practices will likely drive future growth.
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