Global Market Outlook on Essential Oils 

  • Sustainability strategies were initiated by controlling carbon emission and by-product/waste utilization. Currently, companies engage in sustainability activities by partnering with various stake holders in the E.Oil supply chain
  • Companies mostly engage with distributors along with major flavor houses like IFF, Symrise, Firmenich, Givaudan etc. This is done to dilute the supply risk in E.Oils sourcing, which is a critical element due to supply restriction and high quality requirements

 essential-oils-global-market-sizeIndustry Overview-E.Oils

  • Global E.Oil production is estimated to be in a growth-trend, of 3.82 percent, and it is primarily driven by the growth of few key essentials oils such as orange oil, mint oils, clove oil, and patchouli oil
  • The global E.Oil market is set to grow at a CAGR of 3.82 percent, from 143,000 tons in 2015 to an estimated 160,000 tons in 2017, and an amount equivalent to $ 11.67 billion by 2022 
  • In terms of demand, Asia Pacific is expected to witness the highest growth, of ~ 9percent, from 2015 to 2022 
  • Orange oil leads the segment, by market share (~ 29 percent in 2014-2015), and projected growth (~ 9percent/year). Food & beverages’ leads all application segments with over 30 percent
  • Europe and Asia Pacific leads in terms of market share (over 40 percent in 2014-2015) and projected growth (~ 9percent/year) 
  • Growing consumer awareness is a key driving factor for the global E.Oil market over the speculated period. A major shift from synthetic to natural additives is seen due to the growth in the organic products industry 
  • Growing use of E.Oil in the preparation of natural flavors and fragrances on account of their increasing demand across key end-use industries is also expected to fuel the market growth

Market Drivers 

Increasing consumer awareness about the medical and relaxing properties of E.Oils are the key driving factors of the market. This trend is supported by various government policies intended at improving the environment Key Takeaway Back to TOC

Increasing Demand

  • High consumer awareness and their increasing demand for natural organic ingredients is expected to increase the demand for E.Oils 
  • Retail companies are also investing in E.Oil based products, thereby driving demand 
  • Demand for lemon oil is expected to increase by a CAGR of 10–13 percent per annum until 2018, significantly driven by high consumer awareness 
  • The cosmetics market in Russia is estimated to reach over $ 15 billion in 2015. The cosmetics market is an important driver for lavender oil demand
     

Government Policies 

  • Sri Lanka, which was earlier the top producer, was overtaken by countries like Indonesia, China, and Vietnam. Sri Lanka still has monopoly over the “true cinnamon” grade, supplying 85–90 percent of the global share (27 percent) 
  • The country, to regain its position, has proposed LKR 250 million in its budget in 2016 for the Spice Council to undertake a branding exercise, lease out underutilized fertile government land and to strengthen Cinnamon ResearchSources: Supplier Websites, Beroe Analysis 
  • Increasing consumer awareness about the medical and relaxing properties of E.Oils are the key driving factors of the market. This trend is supported by various government policies intended at improving the environment Key Takeaway Back to TOC
     

Market Constraints 

Weather fluctuation and seasonality, along with quality issues arising due to poor harvesting and processing techniques adopted in the major producing belts are major constraints of the industry

End-use Industry Analysis

  • Essential oils are mostly used in the F&F industry, and the industry is expected to grow at the rate of 4 percent against  demand growth of 2.9 percent. The presence of large-volume buyers in this segment may push suppliers to increase their product portfolio.
  • Essential oils are mostly used in the F&F industry, and the industry is expected to grow at the rate of 4 percent against  demand growth of 2.9 percent. The presence of large-volume buyers in this segment may push suppliers to increase their product portfolio
  • The global F&F market is expected to grow at a CAGR of 3.5–4 percent from 2015 to 2018, and is anticipated to create a similar demand trend in essential oil consumption 
  • Currently, less than 10 percent of the essential oil is used in the personal care segment. FBT and pharmaceutical industry drives the major share of the essential oil business 
  • Essential oils are now extensively studied as an alternative for antibiotics in poultry due to apprehensions around the overuse of antibiotics and added health benefits. Example is Cargill's ongoing research of using essential oils derived from thyme, cinnamon and oregano as non-medicated feed additives