ROCKVILLE, MD, September 2, 2026 — DSM-Firmenich’s construction of a new production facility in Parma, Italy, scheduled for completion in the first quarter of 2027, is adding capacity for concentrated powder flavors, reaction flavors and functional blends through an encapsulation-enabled production process. The investment provides a concrete commercial signal for the expanding use of encapsulation in food ingredient applications, particularly where manufacturers need better protection, handling and release of sensitive ingredients.

The development comes as food manufacturers increasingly use encapsulation to protect volatile flavors, aromas, vitamins, probiotics and lipid-based ingredients from oxygen, moisture, processing stress and premature release. According to Fact.MR, the Food Ingredient Encapsulation Systems Market is estimated at USD 1.25 billion in 2026 and is projected to reach USD 2.932 billion by 2036, expanding at an 8.9% CAGR during the forecast period.

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Why is encapsulation capacity becoming a commercial priority?

DSM-Firmenich said its Parma facility will use an automated production setup and an encapsulation process designed to enable liquid flavors to be incorporated into dry blends. The company expects the facility to create more than 100 jobs and serve customers across Europe, India and the Middle East.

That investment matters beyond flavor production. Encapsulation increasingly sits between ingredient functionality and manufacturing efficiency: suppliers must protect the active material while also ensuring that the finished ingredient can be stored, transported, dosed and released under actual processing conditions.

Fact.MR's analysis indicates that spray drying is projected to hold 37.0% of the technology segment in 2026, reflecting its ability to convert liquid feeds into stable powders at commercial scale. At the same time, heat exposure remains a constraint for sensitive cores, making carrier selection and processing conditions critical during scale-up.

Which applications are creating the strongest demand?

Functional beverages are projected to represent 29.0% of the application segment in 2026. These products bring together flavors, vitamins, minerals and lipid-based ingredients that can face stability and dispersibility challenges in aqueous formulations.

Flavours & aromas represent another major demand center, with a projected 30.0% share of the core-material segment in 2026. Encapsulation can reduce the premature loss of volatile compounds and help control when flavor components are released during storage, preparation or consumption.

The combination of beverage formulation growth and greater investment in encapsulation capacity points to a shift in how food manufacturers evaluate ingredient suppliers. Buyers increasingly need evidence of retention, dispersibility, release behavior and shelf-life performance rather than simply the encapsulation technology itself.

Analyst perspective

S.N. Jha, Principal Consultant at Fact.MR, said:

“Encapsulation is bought as a formulation system, not as a stand-alone coating step. Buyers have to match the core ingredient with the shell, process temperature, storage conditions and required release point. Spray drying remains practical because it is scalable, but suppliers still need to prove retention, dispersibility and release in the finished food.”

He added that the commercial advantage will increasingly depend on systems that reduce reformulation requirements while maintaining flavor or nutrient performance throughout processing and shelf life.

Market Snapshot

2026 market value: USD 1.25 billion.
2036 projected value: USD 2.932 billion.
Forecast CAGR, 2026–2036: 8.9%.
Absolute opportunity: USD 1.682 billion between 2026 and 2036.
Leading technology: Spray drying, with a projected 37.0% share in 2026.
Leading core material: Flavours & aromas, with a projected 30.0% share.
Leading shell material: Carbohydrate-based systems, with a projected 41.0% share.
Leading application: Functional beverages, with a projected 29.0% share.
Highest CAGR among listed country markets: United States at 10.99% from 2026 to 2036.
What's driving near-term demand?

The commercial pipeline is being reinforced by supplier investment. DSM-Firmenich broke ground on its Parma facility in June 2025, with completion scheduled for Q1 2027. The site is intended to expand production capabilities for concentrated powder flavors and functional blends and incorporates an encapsulation process designed for dry-blend applications.

Regulatory and formulation requirements are also influencing purchasing decisions. In Europe, ingredient suppliers must work within EU requirements covering vitamins and minerals, while Japan's food-labeling framework places emphasis on ingredient identity and documented functionality. These conditions increase the importance of consistent ingredient performance alongside processing compatibility.

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About the Report

The Fact.MR study examines food-grade encapsulation systems across Technology, Core Material, Shell Material and Application. Technologies covered include spray drying, fluid-bed coating, emulsion/coacervation, extrusion encapsulation and liposome/nano systems.

The analysis covers flavours & aromas, vitamins & minerals, probiotics, and oils & lipids as core materials. Shell systems include carbohydrate-based, protein-based and lipid-based materials, while applications include functional beverages, bakery & confectionery, dairy and dietary supplements.

Key companies assessed include Balchem Corporation, Ingredion Incorporated, DSM-Firmenich AG, BASF SE, Kerry Group plc and Sensient Technologies Corporation.

For additional details on the study, scope and forecast, see the Fact.MR market study. Fact.MR's research approach combines primary interviews, secondary research, data triangulation and market-specific forecasting models; its methodology is described in Fact.MR's research methodology.

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About Fact.MR

Fact.MR is a market research and consulting firm providing industry intelligence across consumer goods, food and beverages, healthcare, technology, chemicals and materials, industrial goods and other sectors. Its research process combines primary industry interviews with secondary data, company information, government sources and industry publications to develop market estimates and forecasts.

Fact.MR operates as an initiative of Eminent Research and Advisory Services, with offices listed in Rockville, Maryland, United States, and Dublin, Ireland.

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Disclosure: This release is based on FMI syndicated research. Market figures represent estimates and forecasts available as of the publication date and may be revised as additional information becomes available.