The global essential oils market size was valued at USD 18.6 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 7.4% in terms of revenue from 2021 to 2028. The market is expected to be driven by increasing demand from major end-use industries, such as food and beverage, personal care and cosmetics, and aromatherapy. Unlike most conventional medicines and drugs, essential oils have no major side effects. Such traits of the product are projected to be the major driving factor for market growth.
Increasing consumer awareness regarding natural and organic personal care products and food and beverages has forced the manufacturers to shift their focus from synthetic to natural products which have acted as one of the major forces impacting the global essential oils market. Several health benefits related to essential oils are projected to drive their demand in pharmaceutical and medical applications.
Rising demand for organic products is another factor influencing consumer trends. Further implementation of regulations favoring the use of environmentally friendly ingredients in the cosmetics and food and beverage industry has awakened people's interest to seek products made from natural ingredients. The industry has witnessed a sharp increase in demand for 100% plant-based products that are devoid of synthetic fragrances and animal-derived components. As a result, the majority of the population is turning to organic products to gain health benefits.
Key raw material suppliers include Essential Oils Company, Kao Chemicals, The Fragrance Foundation, The Chemical Company, and Phoenix Aromas and Essential Oils, LLC. Companies such as Biolandes, India Essential Oils, Young Living Essential Oils, and others have integrated their operations to provide raw materials as well as manufacture the final product in order to cut down on raw materials procurement and operation costs. This also helps companies to cater to the other industries served by the raw materials such as perfumes and deodorants and food and beverages.
Rising demand for oranges, lemon, corn mint, and other similar crops owing to the increasing population is expected to push prices even higher over the forecast period. Global water scarcity, natural disasters, and other factors created a food shortage in recent years leading to high prices for basic commodities and crops. Prices of other plants and crops have increased tremendously in recent years owing to supply shortfall, climate changes, overpopulation, and decreasing arable land leading to higher oil prices. Consumers are increasingly being pressurized to shell out massive amounts per ounce of oil to gain the benefits of these products.
The orange oil segment dominated the market for essential oils and accounted for a revenue share of 9.5% in 2020. This is attributed to its usage for improving low libido, lowering PMS-related health problems, and fighting hypertension on account of its blood-dialing property. High vitamin C content coupled with the antioxidant property of orange oil helps in reducing dark spots and wrinkles, which is the major driving factor for its demand in the personal care industry.
Lemon oil is expected to witness considerable growth over the forecast period due to its usage in detergents, perfumes, and soaps and can also be blended in DIY household cleaners. It is primarily used as a detoxifying agent and disinfectant for treating sore throats and flu. The astringent properties of lime oil help cleanse congested and oily skin. When diffused in the air, this oil is said to relieve apathy, depression, and mental fatigue.
The davana oil segment is anticipated to witness the highest CAGR of 16.9% in the coming years. This is attributed to its extensive utilization for producing natural perfumes and flavoring agents. Antiviral, stimulant, nervine, and antiseptic properties of the oil make it suitable for use in various medical applications. Davanone, a sesquiterpene ketone, is the main molecule responsible for insect deterrent benefits as well as aromatic benefits of the essential oil.
The spa and relaxation segment dominated the market for essential oils accounted for the largest revenue share of 46.4% in 2020. This is attributed to the increasing number of consumers are visiting spa centers for aromatherapy and massage purposes to rejuvenate physically, emotionally, mentally, as well as spiritually. Personal care emerged as the largest application segment under the spa and relaxation segment in 2020. Key players in the personal care industry are introducing innovative technologies to incorporate essential oils into their product lines.
The food and beverage segment is projected to witness the most significant CAGR over the forecast period. This is attributed to the growing focus of food and beverage manufacturers on increasing product shelf life without compromising the quality. Rising consumer preference for natural products over synthetic ones and ascending demand for superior quality food products are factors prompting food and beverage manufacturers to include healthy essential oils in their offerings. Basil, fennel, lemon, cassia, and peppermint emerged as the most popular essential oils for food and beverage applications owing to their suitability for internal use.
Medical emerged as one of the most significant application segments of the market in 2020. The segment is projected to witness growth over the coming years owing to the increasing application scope of essential oil and floral extracts in the medical sector. The growth of the nutraceutical sector and the increasing popularity of integrative medicine emerged as other major factors driving the market for essential oils. Essential oils contain complex, volatile chemical compounds, which are known for their antifungal, antibacterial, anti-inflammatory, and antiviral properties.
The direct selling segment accounted for a revenue share of 44.0% in 2020. Increasing awareness among people regarding essential oil has given rise to more retail sales, especially through convenience stores. However, top players such as doTerra and Young Living Essential Oils have adopted multi-level marketing strategies to expand their business and improve their sales.
Furthermore, most of the importers and wholesalers have launched websites for online sales, along with their existing over-the-counter sales. Distribution channels for selling the products are likely to become complex as some sellers focus purely on online sales to increase their geographic reach. In line with this, they attract and recruit several consumers as independent distributors by offering compensation plans and providing attractive discounts as well as gifts.
Europe dominated the market for essential oils and accounted for the largest revenue share of 49.2% in 2020. The region is predicted to dominate the market in the coming years. This is attributed to the presence of developed end-use industries along with rising awareness regarding the benefits of essential oils amongst consumers. The presence of organizations such as the European Federation of Essential Oils (EFEO) has benefitted the industry growth in Europe. EFEO was formed to promote and safeguard the interests of stakeholders across the market value chain. The organization is also involved in discussions with the EU Commission and the EU Parliament to introduce or amend legislation about essential oils. Such trends have benefitted market growth in the region.
Asia Pacific is expected to witness the highest CAGR of 8.4% in the market for essential oils over the predicted years. This is attributed to suitable weather conditions for agriculture, low-cost labor, and ample availability of raw materials. Furthermore, a shift in consumer preference toward healthy and nutritional food and beverages and other food products in China and India is anticipated to provide lucrative growth opportunities for the global market players in the Asia Pacific market. China dominated the market in the Asia Pacific in 2020. Huge demand for Chinese fragrances coupled with the presence of a large consumer base for the skincare market is expected to propel the demand for essential oils in the country.
In the Middle East and Africa, the market for essential oils has been observing remarkable growth since the past few years owing to increasing local demand for these oils. The demand for consumer goods is directly related to the growing population and rising standard of living. The regional market is likely to ascend at a healthy growth rate in the coming years owing to the presence of untapped market opportunities and ongoing developments in the medical, food and beverage, and spa and relaxation industries.
Companies are focusing on upgrading their production technologies to minimize resource consumption and maximize output. Improved profitability through optimizing the value chain and re-structuring the business process are major strategies focused upon by market players. Companies undertake pilot projects for cultivating crops that are not previously grown in the field to obtain innovative raw materials for the development of new solutions
An increase in production capacities to cater to the increasing demand from several end-use industries is observed by players such as Taksago International and Robertet Group. Players are also focusing on significant investments in R&D activities to develop an environmentally friendly production process and reduce the pressure on natural resources from which key ingredients are derived. Some of the prominent players in the essential oils market include:
Takasago International Corporation
Flavex Naturextrakte GmbH
Synthite Industries Ltd.
International Flavors & Fragrances Inc.
Norex Flavours Private Limited
BMV Fragrances Pvt. Ltd.
MOKSHA LIFESTYLE PRODUCTS
Market size value in 2021
USD 20.28 billion
Revenue forecast in 2028
USD 35.5 billion
CAGR of 7.4% from 2021 to 2028
Base year for estimation
2017 - 2019
2021 - 2028
Volume in tons, revenue in USD Thousand, and CAGR from 2021 to 2028
Volume forecast, Revenue forecast, company ranking, competitive landscape, growth factors, and trends
Product, application, sales channel, region
North America; Europe; Asia Pacific; Central America; South America; MEA
U.S.; Canada; Mexico; Germany; U.K.; France; China; India; Japan; Taiwan; South Korea; Singapore; Australia
Key companies profiled
Takasago International Corporation; Symrise; MANE; Flavex Naturextrakte GmbH; Firmenich SA; Synthite Industries Ltd.; ROBERTET GROUP; International Flavors & Fragrances Inc.; Givaudan; Falcon; Norex Flavours Private Limited; BMV Fragrances Pvt. Ltd.; VedaOils; MOKSHA LIFESTYLE PRODUCTS; Ultra International; VidyaHerbs
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This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2028. For the purpose of this study, Grand View Research has segmented the global essential oils market report on the basis of product, application, sales channel, and region:
Product Outlook (Volume, Tons; Revenue, USD Thousand, 2017 - 2028)
Application Outlook (Volume, Tons; Revenue, USD Thousand, 2017 - 2028)
Food & Beverages
Meat, Poultry & Seafood
Snacks & Nutritional Bars
Spa & Relaxation
Makeup and color cosmetics
Cleaning & Home
Sales Channel Outlook (Volume, Tons; Revenue, USD Thousand; 2017 - 2028)
Regional Outlook(Volume, Kilotons; Revenue, USD Million, 2017 - 2028)
Middle East & Africa
b. The global essential oils market size was estimated at USD 18.6 billion in 2020 and is expected to reach USD 20.28 billion in 2021.
b. The global essential oils market is expected to grow at a compound annual growth rate of 7.4% from 2021 to 2028 to reach USD 35.5 billion by 2028.
b. Europe dominated the essential oils market with a share of 49.2% in 2020. This is attributable to easy feedstock availability and the presence of major industry players in the region.
b. Some key players operating in the essential oils market include DoTerra; Young Living Essential Oils; Essential Oils of New Zealand; The Lebermuth Company; NOW Foods; India Essential Oils; Flavex Naturextrakte GmbH; Ungerer and Company, Inc.; and West India Spices Inc.
b. Key factors that are driving the essential oils market growth include rising awareness regarding the health benefits of naturally sourced oils along with an increasing number of people showing an inclination towards aromatherapy.
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The COVID-19 pandemic and subsequent halt in manufacturing activities shall have an impact on the supply availability of a variety of renewable chemicals. Furthermore, current disruption in trade shall also gravely impact the availability of chemical stocks in import-dependent countries. The report will account for Covid19 as a key market contributor.