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Mentha Oil expected to gain over revival of demand from international trade despite dip in domestic demandAugust 16, 2022
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Mentha Oil market report transcript
Mentha Oil Global Market Outlook:
MARKET SIZE (2019) $6.8 Billion
Availability (2019–2024) 150,000 MT
(Expected to grow at a CAGR of 8.8 percent)
Prices have historically been fairly volatile. India has emerged in recent years as a major hub for the export of mentha oil and its derivatives, placing exporters at risk of high costs subject to sudden and unpredictable price changes. The value chain participants will restrict this pricing risk on the MCX platform as a result of a liquid futures contract on the exchange.
On the MCX, the trend for mentha oil futures was mixed. While the July contract fell as arrivals were anticipated to rise due to favorable weather conditions, the June contract increased on strong demand at domestic spot markets.
The contract for June delivery was up 3.92 % or Rs. 41.50 from its previous closing price of Rs. 1057.50, trading at Rs. 1099.00. The contract for July delivery was down 0.57 % or Rs 6.10 from its previous closing price of Rs 1061.20, trading at Rs 1055.10. On MCX, the contract's open interest was 628 lots.
Expenditure growth in this market might reach more than USD 300 million if it continues to expand at a CAGR of more than 5% from 2019 to 2024. As a significant element in the creation of confectionery goods including chewing gums, candies, and peppermint, mentha oil is being used in the food and beverage sector.
The easy access to synthetic menthol, which is also mentha oil's less expensive substitute, will, however, restrain demand growth in the mentha oil market throughout the course of the projection year.
The product is used extensively in end-user industries like aromatherapy, personal care and cosmetics, pharmaceuticals, and food and beverage, which is projected to drive market growth. The market is expanding as more individuals realise how important health and relaxation are.
Increased consumer interest in the spa and leisure trend, as well as expanding acclaim for aromatherapy, massage oils, and personal care products, have all contributed to the sector's expansion.
The sector is anticipated to advance as a result of additional variables like increased disposable incomes and a growing consumer preference for natural items made with organically derived ingredients. Additionally, the development of social media and countless manufacturer promotional initiatives are promoting market expansion.
Key Market Drivers
Increasing demand for natural products
Awareness regarding health and wellness
Porter's Analysis on Mentha Oil
Mint oil is produced at the farm level in many parts of India where the capacities are split into numerous players.
Highly fragmented industry with intrusion of many middle men and distributors
Barriers to New Entrants
Entry of players at Tier II raw material level is feasible as those are built up with middle men.
High capital cost and processing skills restrain new entrants in the market.
Intensity of Rivalry
Supplier market of natural menthol is highly consolidated with top 5-8 players holding > 80 percent f the market share.
Quality of the product defines the competition and remains the key differentiating factor.
Threat of Substitutes
Natural menthol is usually replaceable by synthetic variants,
In the past two years, use of synthetic menthol were high owing to the huge price differential between the duo.
Currently the price gap is widening with a difference of USD 14 per kg.
Buyer power of natural menthol is high for pharmaceutical buyers as they buy huge volumes while CPG firms have medium buyer power.
As quality determines the cost of the product, buyer power remain low to medium.