Global lactic acid & polylactic acid (PLA) market is growing at a CAGR of 18.7% and is expected to reach US$3831.3 mln by 2016, as per MarketsandMarkets. The PLA Market is being driven by increased sustainability and reduced dependence on oil-based products as there is no other commercially equivalent or better bio plastic alternative available currently. Further technical advancement in production capabilities and enhancing properties of polymers will be fueling the growth. PLA has been seen as an alternative for polyethylene terephthalate (PET) due to its mechanical properties such as low impact strength, hardness, stiffness, and elasticity. The major hurdle that is currently inhibiting the growth of the market is supply limitations, and prices of PLA that are more than the fossil fuel-based polymers. The global Poly Lactic Acid market was estimated to be worth US$1194 mln in 2010. Packaging is the largest application market for PLA, accounting for 60% of the overall market in 2010. Europe and North America are the biggest markets for PLA; whereas Asia-Pacific is one of the fastest growing markets. The growth in the market of Asia-Pacific is expected to be fueled by countries such as Japan, India, China and Thailand. As per Markets and Markets, today, public concern regarding the environment, increasing desire of manufacturing companies to develop more sustainable products, limited fossil fuel resources, and climate change are important reasons for governments and companies to find substitutes to crude oil-based products. Bio-based plastics present huge potential to reduce the dependence on fossil fuels and the related environmental impacts. In recent years, PLA has emerged as one of the most popular bio-degradable plastics available in the market. PLA finds major applications in the food packaging industry, especially in frozen foods, ready-to-eat meals, and cutlery. Increasing awareness regarding the environmental consequences by the use of conventional plastic packaging is expected to drive the demand for PLA in the near future. This surge in PLA demand is expected to reflect in demand for lactic acid, as PLA is the largest application market for it. The technical developments in emerging bio-based plastics have substantially improved the properties of novel bio-based plastics such as heat resistance of PLA, enabling a much wider range of applications. Europe is the most dominant market for PLA while Asia-Pacific, owing to significant domestic demand, is expected to be the fastest growing market in the next five years. Cost competitiveness against alternatives is a key challenge for industry participants along with the growing mismatch in the supply demand scenario. The global PLA market is currently witnessing supply restraints as there are only a few major suppliers on a global platform. However, market players are increasingly focusing on increasing production capacities; especially in the Asia-Pacific region owing to the cheap availability and wide abundance of starting raw materials such as sugarcane, sugar beet, and tapioca in the region for lactic acid production. Growing demand for PLA is expected to drive the lactic acid market in the near future. Lack of supply capabilities on the part of market players is perceived to be a key issue for the lactic acid market in the near future. The global lactic acid market is dominated by North America, accounting for 35.8% of the overall market in 2010. Europe and Asia-Pacific are the second and third largest markets for lactic acid; accounting for 29.9% and 29.2% of the overall market respectively in 2010. Industrial applications are the largest for lactic acid, accounting for 42.4% of the overall market in 2010. In the last few years, industrial applications have surpassed food and beverages as a leading application for the consumption of lactic acid. This has primarily been a result of strong growth in the PLA and solvents markets for which lactic acid is the primary raw material. The various applications for PLA include packaging, textiles, electronics and medical. The key players include NatureWorks LLC (USA), Purac (The Netherlands), Pyramid Bioplastics Guben GmBH (Germany), Archer Daniels Midland Company (USA) and Henan Jindan (China). As per SRI Consulting, the United States continues to be the largest consumer of lactic acid, followed by Western Europe and China. The United States surpassed Western Europe as the largest consumer of lactic acid in 2001-2002 with the commissioning of NatureWorks' polylactic acid (PLA) plant in late 2001. In mid-2009, NatureWorks expanded its PLA capacity in the United States with an additional 70,000 ton unit. In 2008, PURAC started up a 100,000 metric ton lactic acid plant in Thailand. In the last several years, lactic acid consumption for industrial applications has surpassed the food and beverages industry as the leading market for lactic acid. This shift is expected to continue as growth rates for industrial uses will be much higher than growth rates for other uses. This is a result of the continued high growth of PLA applications. It is expected that by 2013, industrial applications will account for more than half of global lactic acid use. The following pie chart shows world consumption of lactic acid, its salts and esters: In recent years, Asia has become nearly equivalent to Western Europe as a consumer of lactic acid products. All three major regions-the United States, Western Europe and Asia (driven mainly by China)-will continue to show strong annual growth at 7%, 9% and 5.5%, respectively, in the next few years. Globally, lactic acid consumption will continue to increase significantly, at about 7% pa from 2008 to 2013. Growth in demand for lactic acid, its salts and esters in industrial applications will be driven mainly by lactic acid-based biodegradable polymers and, to a lesser degree, lactate solvents. The use of polylactic acid, especially in the plastics packaging, container and cutlery markets, is being highly promoted because of its environmentally friendly characteristics. Environmental benefits include product biodegradability; composting of waste by-products from PLA production; growth in the use of plant-based materials, which reduces carbon dioxide in the atmosphere; and the potential energy saved vs conventional polymer production. In the United States, PLA demand for industrial applications such as fibers, containers and packaging is expected to continue to increase. Likewise, demand for PLA will increase significantly in Western Europe, mainly for packaging uses. The main obstacles to large-scale use of biodegradable lactic acid-based polymers in packaging applications are cost, environmental legislation concerning waste disposal and composting, and consumer attitudes and behaviors concerning the environment. Also, there is ongoing debate about the true amount of energy (often in the form of fossil fuels) consumed to produce PLA from raw materials such as corn. With large-scale production, prices are expected to continue to decline; however, lactic acid-based biodegradable polymers are expected to remain more expensive than commodity polymers in the near future. The food and beverages market will also continue to drive lactic acid growth. In the United States, lactic acid will continue to be used mainly as an acidulant but will also continue to grow in the ready-to-eat meat industry. However, growth will depend on the prevailing economic situation. Likewise, growth in this market for Western Europe and Japan will be moderate. In China and other Asian courntries, growth in the food and beverages market will be stronger as lactic acid will continue to be used in local foods, as well as food fortifiers and pH adjusters. Pharmaceuticals and personal care products have become an important market for lactic acid, its salts and esters. This market will continue to increase steadily in the United States and Western Europe, while China will experience stronger growth in this area. Uses include intravenous solutions, shampoos, soaps, anti ageing alpha-hydroxy skin creams and moisturizers.