The creation and utilization of fundamental oils is an older than god industry. This sector stems for the people’s desire to have both taste as well as nutrition in the same dish. Also, their wish to look pretty and presentable also makes the market for fundamental oils wider.
Early utilization of herbs, blossoms, leafy food flavours changed up a generally tasteless and uninteresting eating routine and energized the utilization of nutritious items that may, in some way or another, have been squandered. So, the geniuses of the world had a wonderful idea. They decided to use these herbs as scents that would make the men and women of our world smell better. As the history itself is evidence, the trick was a fantastic one.
India has no dearth of scents and flavours, due to which the perfume industry has that much more to experiment with. Marketing strategies have greatly benefitted due to the widespread variety at their disposal.
Perfumes as luxury accessory buys are one of the most popular must-have items on the aspirational buyers’ list as well. According to industry estimates, the size of the total domestic luxury perfume market is around Rs 600-700 crore and is growing at a rate of 20-25 % year-on-year.
The market has significantly been overwhelmed by the composed players. Despite the fact that, there have been strict principles and directions detailed by the government, little and medium undertakings typically influence through them because of absence of appropriate controls over the market players. Greater players, then again are more inclined to take after the standards and controls appropriately because of opportune examining of the organizations and to keep up their altruism. Likewise, the legislature has enabled numerous global players to set up their assembling offices in our country.
Flavor and Fragrance advertising in India has thrived in the last five years from FY’2010 to FY’2015 on the grounds of new plans and in addition to dynamic inventory network administration. The market has been overwhelmed by the worldwide producers baited by the brilliant development prospects of nourishment, home and individual care enterprises in India. The surfacing of worldwide players into the market has opened up the world for us.
Most importantly, the changing tastes and preference of the general public has given a lot of heat to this industry. At one point of time, the only essence in demand was vanilla. It remained the favourite flavour for most people. Later on, people shifted their tastes. Today, anything and everything is available in a squirt bottle. So, people can have their pick when it comes to the way they want to smell on any given day. Flavours like vanilla, butterscotch, outlandish flavours, like blackcurrant, kesar and others are all in demand. These essence are also in high demand among the various dessert parlours who want to make their dishes smell and taste a certain way. Even cosmetic manufacturers make use of essential oils and flavours to make their products seem more diversified. All of this is a clear indication of how widespread the essential oil and perfume industry is. All one needs is some capital, some entrepreneurial knowhow, the zeal to proceed forward and a flare for innovation. The field of essential oils and perfumes will certainly reward you.
India fragrance market has showcased a steady growth during the span of last five years FY’2010-FY’2015. The expanding product lines due to significant technology advancements and growing importance towards personal grooming and appearance coupled with increasing consumer spending on beauty and wellness products has contributed to the growth of the market. Out of all the fragrances, the floral fragrance is most popular due to varied uses ranging from perfumes, colognes to home cleaning products. Hot and humid climate conditions and increasing population of working class has propelled the fragrance market in India. The fragrance market has significantly grown during the span of last five years FY’2010-FY’2015, at a CAGR of 10.0%. During FY’2015, ~% of the total fragrance production has been consumed in the personal wash products and rest is converted to other fragrance derivatives such as Beauty Care, Hair Care, Household and Air Care and Fabric care products. The market for fragrance products is dominated by organized players namely SH Kelkar, IFF, Givaudan, Firmenich and others. The market for fragrance is expected to flourish at a significant CAGR of 14.2% with the revenues from sales of fragrance products marked at USD ~ million by FY’2020.
Essential Oil Market
Essential Oil Market is expected to reach $11.188 million by 2022, with a CAGR of 8.7% from 2016 to 2022. Essential oils, also known as volatile oils/aetherolea/ethereal oils, are derived from leaves, stems, flowers, bark, roots, or other parts of a plant. Essential oil is obtained from various herbs and plants, such as orange, eucalyptus, corn mint, peppermint, citronella, lemon, lime clover leaf, and spearmint, using distillation methods such as steam and water distillation. An essential oil contains volatile aroma compounds and real essence of the plant from which it is derived. Essential oils are primarily used in cosmetics & toiletries, food items and beverages.
Essential oil extracted from orange due to its exceptional medical benefits including anti-inflammatory, antiseptic and antidepressant
France, Italy and Germany are major essential oil producers in the Europe region. Increasing popularity of essential oil in aromatherapy and pharmaceuticals supporting various essential oil production in America and Europe region. U.S. and Canada are major essential oil market in the American region. Strong potential of essential oil production and rising application of essential oil in cosmetics and personal care supporting market growth among the various regions in the world.
The essential oils industry is developing at a very fast face. The industry is continuously involved in product innovations to meet up consumer demands. The key players are continuously putting their efforts to bring up new oils for the consumers. The research & development still remains the major focus area for the industries to differentiate their products in the competitive market. Product promotions and active social media still remains the same mode of promotional strategy for the key players currently operational in the market. The leading market players in the Global Essential oil market primarily are Young Living (U.S.), doTerra (U.S.), Biolandes (France), The Lebermuth Co., Inc.(U.S.), Sydney Essential Oils (Australia), Shiv Sales Corporation (India) and Shaanxi Guanjie Technology Co., Ltd (India)
Key players are more focusing on expansion of essential oil business across the globe which is contributing around 40% of strategy share. After expansion, key players are acquiring companies to strengthen their presence and to get edge over increasing competition. R&D, partnership and product launch contributes equally (~10%) in strategic share of key players in essential oil market.
Global Industry Overview
The Global Essential Oils Market is poised to grow at a CAGR of around 32.2% over the next decade to reach approximately $128.20 billion by 2025. Some of the prominent trends that the market is witnessing include increasing investments in research & developments, growing market for aromatherapy, and raising focus on natural products.
Based on product type the market is categorized into tea tree oil, spearmint oil, rosemary oil, peppermint oil, lemon oil, lime oil, orange oil, geranium oil, jasmine oil, lavender oil, clove leaf oil, cornmint oil, eucalyptus oil, citronella oil, and other product types. Further, other products divided into lavandin, coriander, cederwood, basil, litsea cubeba, & lemongrass oil, mandarine, patchouli, and tea tree oil. By method of extraction the market is segmented by cold press extraction, carbon dioxide extraction, distillation, solvent extraction, and other extraction methods.
The Fragrance & Flavor (F&F) industry overall includes fragrances, flavors, essential oils, aroma chemicals and specialty aroma ingredients. The Food, Home, & Personal Care Industries are the largest consumers of flavors & fragrances. The beverages and confectionery industry segment drive the world flavors market and likewise increasing demand for cosmetics, household, and personal care products drives the fragrance industry.
Trends indicate that the world F&F demand including, essential oils, natural extracts, and aroma chemicals will rise 4.4% a year to reach $26.5 billion in 2016. The increasing consumer interest in natural products will drive value demand forward, as natural flavor and fragrance ingredients tend to be more expensive. Increasing packaged food manufacturing, and consumption of convenience products requiring higher flavor usage, will also drive faster growth especially in developing countries. Rising personal consumption expenditures in emerging economies is will stimulate use of Home & Personal Care products contributing to industrial growth.
The fragrances market can be segmented according to the different types of fragrance ingredients manufactured, which are:
- Synthetic aroma chemicals
- Essential oils (including absolutes, concretes and resinoids)
- Natural aromatic molecules (including nature-identical)
The flavours market can be segmented into:
- Natural and synthetic flavours
- Herbs and spices
- Flavour enhancers.
The fragrance industry includes four types of companies: major fragrance houses, regional fragrance houses, small fragrance suppliers, and commodity suppliers. The major fragrance houses like IFF, Givaudan and Quest International compete against one another for the largest customers and account for approximately 50 percent of the worldwide fragrance sales. The remaining 50 percent of the market is very fragmented and is split amongst the other relatively smaller suppliers. Commodity traders and basic ingredient suppliers also constitute competition for the fragrances division but only with respect to sales of natural and synthetic ingredients.
The flavour industry includes two types of companies: global flavour suppliers and local flavour suppliers. The trend toward consolidation continues with the top five global suppliers accounting for approximately 50% of total flavour sales. The localized nature of preferences for many flavour products, however, can be seen in the more than 500 local suppliers, rendering flavours competition typically a much more local affair than in fragrances.
Aroma chemicals are often the raw materials of flavours and fragrances. Aroma chemicals are organic chemicals derived from the conversion of petrochemicals, fractionation of turpentine, or isolation of natural sources. Large fragrance houses generally manufacture those ingredients in which they have a true competitive advantage and can keep the cost of raw materials as low as possible. The larger companies (IFF and Givaudan) within the fragrance industry are vertically integrated back into fragrance ingredients or aroma chemicals. Integration provides a low cost, reliable raw material supply for the fragrance business. Moreover, ingredient businesses of larger size and scope can be instrumental in the creation of successful compound fragrance formulations. Accordingly, ingredients not made in-house are purchased from various suppliers: the three most distinct raw material categories are naturals, synthetics, and intermediates.
- The late 1990s have been a period of enormous consolidation among the food products companies. They are attempting to use their large size to increase purchasing power. Pricing inefficiencies among larger and smaller customers are being scaled back. Moreover, the retailers of food have taken pricing power from the food companies. The food retailers too have consolidated. Frost & Sullivan does not view these trends as favorable for the flavour and fragrance companies.
- The packaged food companies in turn have lost brand-pricing power. Both the number of private label brands of the major food retailers has increased and the quality of the offerings has also risen. Accordingly, Frost & Sullivan believes that price pressure is likely to be a normal state of affairs in the United States and in Europe. Market share gains will depend largely on product innovation.
- The growth opportunities are primarily in the Asia-Pacific region as well as in South America. From a qualitative standpoint there is reason to be optimistic concerning Asia Pacific growth. Asia Pacific represents more than one-half of the world’s population. Spending power has reached Western levels in only 20% of 3.2 billion people. Consumers are only beginning to purchase convenience foods. Quick Service restaurants, such as McDonald’s and Pizza Hut, represent a fraction of food consumption. Moreover, the food production is relatively primitive, and the companies cannot yet avail themselves of more modern food production technology. Accordingly, there is room for the introduction of higher value flavour compositions in the market. In general terms, there appears to be an exporting of food flavours from Asia back to Europe and the United States and an exporting of flavour production technology from the United States and Europe to Asia Pacific.
Perfume Industry in India
The fragrance market in India is small in comparison to those in developed countries, but it has the potential to develop into one of the biggest in the years to come. The opportunity in this sector is more and it has a middle class of 100 million people with growing disposable incomes. At the same time, improved efficiencies in the supply chain, product and process innovation and higher aspirations amongst consumers are driving a boom in the FMCG sector.
The company like Titan Industries has stepped into perfume market with its SKINN range. Vini Industries with FOGG has already dominated the market with its varied perfume range. The study has been focused to understand the scope of perfume in the Indian Market and factors affecting the perfume buying behavior of consumers.