Gum turpentine
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Gum Turpentine Global Market Outlook:

Market Size (2019): $29.5 billion (expected to grow at a CAGR of 6–7 percent from 2019 to 2022)

Cost Drivers: Turpentine, raw material cost (43 percent)

Key Market Drivers (2019):
• Rapidly rising income and increased per capita spending on personal grooming
• Rising demand for natural fragrances, due to health impact

Key Market Constraints (2019):
• High initial and R&D costs in the Flavors & Fragrance (F&F) business
• Weather fluctuations
• Labor shortage

Porter's Analysis on Gum Turpentine

Supplier Power

• Suppliers to fragrance houses have low power, as this industry is fragmented
• Increase in regulation cost, coupled with erratic supplies of natural ingredients, involves a huge cost in mechanizing and accumulating inventory, which will eventually reduce the profit margins of fragrance houses

Barriers to New Entrants

• Technical capabilities and access to raw materials are the key risks for new entrants in the fragrance industry
• Complying several government regulations on safety and sustainability also prevent new entrants to sustain in the market in the long term

Intensity of Rivalry

• The fragrance industry is highly consolidated with the top 10 fragrance houses, which hold around 80 percent of the total supply
• High competition, coupled with maturing markets, is intensifying the rivalry
• Suppliers are attempting to achieve competitive advantage through technological innovation

Threat of Substitutes

• Switching cost will be high, as most fragrances are formulae patented by FMCG clients
• As the personal care fragrance industry is highly dominated by synthetic ingredients, threat of substitution from natural products is low

Buyer Power

• Consumer companies have to completely depend on unique fragrances manufactured by fragrance houses
• Quality and sustained supplies remain the key factors, which reduces switching among suppliers