Sustainable Palm Oil Market to grow by USD 2.75 Billion (2024-2028), driven by trans-fat-free products demand, with AI driving market transformation - Technavio
The sustainable palm oil market is set to grow by USD 2.75 billion at a CAGR of 5.24% between 2023 and 2028. The rising demand for eco-friendly palm oil, coupled with stringent palm oil regulations, is driving market expansion. Increasing consumer awareness of the environmental impact of palm oil production has led to a shift towards certified palm oil and responsible palm oil sourcing. Companies are implementing palm oil certification programs to ensure sustainability across the palm oil supply chain. Additionally, innovations in green palm oil production and the use of sustainable palm oil in biofuels are shaping industry dynamics.AI-Powered Market Evolution Insights. Our comprehensive market report ready with the latest trends, growth opportunities, and strategic analysis- View Free Sample Report PDF

Market Segmentation
The sustainable palm oil market is segmented by type, distribution channel, and geography:
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Type
- Edible oil
- Surfactants
- Biofuels
- Others
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Distribution Channel
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Geography
- APAC
- Europe
- Middle East and Africa
- North America
- South America
By Type Insights
The edible oil segment is anticipated to experience significant growth during the forecast period. Palm oil is extensively exported from Indonesia and Malaysia, but its production has been linked to habitat destruction. The biofuels sector's demand for palm oil has surged, resulting in the expansion of palm oil plantations and further environmental concerns. Fractionated palm oil is widely used in food, beverage, biofuel, and energy sectors.
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Market Dynamics - Drivers, Trends, and Challenges
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Market Drivers
- The demand for trans-fat-free products is a significant driver, as palm oil is commonly used in food, cosmetics, and soap and detergent production. Red Palm Oil and White Palm Oil are popular variants, while Fractional Palm Oil is derived from processing. Companies such as Unilever, Procter & Gamble, and Colgate-Palmolive are key players in the soap and detergent industry. In the confectionery industry, Nestlé, Mars, and Hershey’s focus on sustainable palm oil sourcing to meet regulatory requirements and consumer demand.
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Market Trends
- Advancements in sustainable cultivation methods are emerging trends. Agroforestry, combining oil palm cultivation with various tree species, is being implemented to preserve biodiversity, enhance carbon sequestration, and improve soil health. This practice helps mitigate the negative effects of monoculture plantations, providing alternative income for farmers and promoting ecological resilience.
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Market Challenges
- The rising availability of substitutes for palm oil, such as sunflower oil, soybean oil, and rapeseed oil, presents a challenge to the market. These substitutes are becoming increasingly popular in industries like margarine, ice cream, and pet food. This shift has reduced the demand for sustainable palm oil, particularly in regions like the US. As these alternatives gain traction, businesses need to innovate to meet changing consumer preferences.
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Key Companies & Market Insights
Several companies are using strategies like partnerships, mergers, acquisitions, and geographical expansion to strengthen their presence in the sustainable palm oil market. Notable companies in this space include:
- Asian Agri
- Astra Agro Lestari
- Beiersdorf AG
- Bumitama Agri Ltd
- Bunge Ltd.
- Cargill Inc.
- Clariant AG
- European Palm Oil Alliance
- Felda Global Ventures Holdings Berhad (FGV)
- Ferrero International S.A.
- First Resources Limited
- Genting Plantations Berhad
- Golden Agri-Resources Ltd
- Hap Seng Plantations Holdings Berhad
- IOI Corp. Berhad
- Kuala Lumpur Kepong Berhad
- Musim Mas Group
- Olam Group Ltd.
- Sampoerna Agro
- Sarawak Oil Palms Berhad
- Solidaridad Network Asia Ltd
- Unilever PLC
- United Plantations Berhad
- Wilmar International Ltd.
- ZSL
These companies are increasingly focusing on sustainable palm oil sourcing to meet growing consumer demand for eco-friendly products and comply with stringent environmental regulations.
Recent Developments
- February 2023: Unilever announced an expansion of its sustainable palm oil supply chain in Indonesia to reduce environmental impact.
- January 2023: Cargill Inc. launched new initiatives to improve palm oil sustainability through partnerships with local farmers in Malaysia and Indonesia.
- December 2022: IOI Corp. Berhad received certification for its sustainable palm oil production process, further strengthening its position in the market.
This growth in the sustainable palm oil sector presents opportunities for stakeholders to invest in and contribute to ethical and environmentally conscious production practices.