Global essential oil market size was estimated at USD 5.51 billion in 2014. Increasing essential oil penetration in aromatherapy coupled with rising demand for fragrances and flavors in food & beverages is expected to remain a key driving factor for the global market.
Growing consumer preference for natural products has led to the development of novel applications in personal care and beauty products. Rapid industrialization and growing disposable consumer income, particularly in emerging economies such as China, India, Vietnam, and Thailand, are some of the macro factors steering growth.
Rising application scope on account of growing consumer awareness regarding health benefits and negligible side effects associated with essential oil is expected to spur their demand in the medical industry. Growing demand for aromatic flavors and fragrances in cosmetics, perfumes, as well as spa and relaxation applications is expected to fuel the demand over the next six years.
Essential oil is also widely utilized in cleaning & home products owing to its superior antibacterial and antiseptic properties. Customers are keen on specialized products, as various applications require specific characteristics. Products used in food & beverage, medical, and spa applications should be Generally Recognized As Safe (GRAS), which is not necessary when used in other applications.
Exorbitant amounts of plant matter are required to create a single ounce of oil and increasing concerns regarding resource depletion are expected to remain a key challenge for the market participants. Companies have been looking for new avenues for the development of essential oil substitutes created from synthetic compounds, resulting in high demand from ignorant consumers seeking inexpensive products. These factors are also expected to retard the market growth.
U.S. essential oil market revenue by product, 2012-2022, (USD Million)
Orange oil emerged as the largest product segment with a valuation of USD 1,223.5 million in 2014. Growing demand across myriad applications owing to advantageous product characteristics such as antidepressant, diuretic, anti-inflammatory, aphrodisiac, and antiseptic are expected to boost market growth.
Corn mint oil is expected to grow at a CAGR of 9.3% from 2015 to 2022 on account of high menthol content with several health benefits. The segment is expected to witness high demand from medicines, food and beverage flavors, and fragrances. Declining nutrition levels on account of changing lifestyles and hectic schedules are expected to promote the essential oil demand in nutraceuticals and dietary supplements as well.
Other products such as citronella, lime, lemon, basil, chamomile, and lavender are expected to witness high demand due to extensive use in applications including sports equipment disinfection, pet care, air fresheners and odor repellents, insect repellents, and personal care.
The global market can be segmented on the basis of essential oil uses including aromas and flavorings in food & beverages, spa & relaxation, cleaning & home, medical, and others. Food & beverage dominated the application market accounting for over 30% of the overall volume share.
Growing demand for high nutrition diet coupled with favorable government initiatives for promoting industrialization in emerging economies of the BRICS nations is expected to impact positively food & beverage industry growth. The segment is expected to witness the highest CAGR of 9.1% from 2015 to 2022 in terms of market volume.
Spa & relaxation accounted for over 29% market share in 2014 owing to rising popularity of aromatherapy and other procedures. The segment is expected to reach USD 3,634.7 million by 2022 growing at a CAGR of 10.0% over the forecast period.
Other applications such as medical, cleaning & home products where essential oil serves as aromatic compounds and nutritive substitutes for conventional medicines are also expected to witness a sustainable growth.
Europe was the largest market owing to rising awareness and growing demand for natural cosmetics and beauty products, medicines, and nutraceuticals from a vast geriatric population in countries such as France, Germany, the UK, Spain, and Italy. Europe was valued at over USD 2.40 billion in 2014; however, growth is expected to remain stagnant owing to the market saturation. Europe was followed by North America. Rising consumer awareness and high per capita income in countries such as the U.S. and Canada is expected to foster regional growth over the forecast period.
Asia Pacific is expected to emerge as the fastest growing region in the global industry owing to rapid industrialization, rising disposable consumer income, consumer knowledge and awareness along with increasing demand from food & beverage and spa & relaxation industries.
Global essential oil market share is highly concentrated among the top industry players creating high entry barriers for new participants. Oil production is expensive owing to unique attributes and requires high capital investment with advanced equipment, leading to the domination of numerous multinational corporations in the industry. Additionally, companies are largely integrated along the value chain to procure raw materials as well as perform logistics operations.
Major companies operating in the global essential oil industry include Biolandes, Sydney Essential Oils, HRF, The Lebermuth Company, Young Living Essential Oils, doTerra, Essential Oils of New Zealand, Sydella Laboratoire, Farotti Essenze, Moksha Lifestyle Products, West India Spices Inc., Falcon, and Ungerer Limited.
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