Increasing Demand For Natural Ingredients And Clean Label Products to Drive the Essential Oils Market

The global essential oils market size is estimated to be valued at USD 8.8 billion in 2022 and is projected to reach USD 15.3 billion by 2027, recording a CAGR of 11.8% in terms of value.

The market is growing due to its wide application and increased awareness among consumers globally. Essential oils are being used in new domains as they have various health benefits and less known side effects. The North American region dominates the global essential market, owing to the growing trends of having a healthy lifestyle and consumers being more aware of the ingredients being used in their products. Furthermore, growing applications of essential oils have increased the R&D and new product innovations which are expected to drive the global market in the forecasted period.

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Natural and organic products have high demand across a variety of consumer products, especially within the food and beverages industry. Consumer demand for healthy, natural ingredients is in tandem with the rise in demand for health-consciousness among consumers and sustainability quotient. European companies are launching new natural health products, while some are replacing synthetic ingredients with natural ones in product formulations. European consumers are inclined towards complementary and alternative medicines, stimulating the demand for natural ingredients. Western European countries have the most opportunities for exporters of natural ingredients for health products in developing countries. Natural ingredients used in health products have functional and active properties, a prime reason for its demand. Besides, there is a definite surge in demand for natural ingredients in the cosmetics industry.

Most consumers in developed countries have been looking for food products, without any inclusion of artificial additives, due to the associated long-term adverse health effects. Manufacturers are inclined toward the usage of natural flavoring agents, preservatives, and sweeteners as they are the key ingredients used to make the food tasty and to extend the shelf-life of the product. The European demand for essential oils is strong. Increasing competition for these natural ingredients from emerging markets and pressure on raw material production spur European importers to search for new sources. With the growing awareness of health products, consumers are increasingly looking for less processed and more natural foods & beverages. This is being reflected in the clean label movement spreading across the packaged food industry across the globe.

Clean label is the new norm among consumers today. “Being Green” is turning out to be a lifestyle more than just a habit. The willingness to pay more for recognizable ingredients is strongest in the US, highlighting the importance of clean and clear labeling in the American market. Asian consumers also put a very high value on the quality of their food and are willing to pay a premium for the best ingredients, even though average incomes are lower. Mislabeling is a challenge still affecting industry growth; however, companies are focusing on mitigating this concern by improving product labeling and inculcating higher transparency. Demand for natural ingredients used in cosmetics and toiletries is growing, a trend expected to continue.

Growing consumer awareness of natural cosmetics and the desire of cosmetics companies to replace synthetic ingredients with natural variants are the main drivers of this growth. The top six products, in terms of opportunities for developing countries, are shea butter, coconut oil, avocado oil, frankincense essential oil, patchouli essential oil and licorice extract. Taking clean labels to the next level, Symrise expanded its footprint of natural capabilities in North America in 2019 by manufacturing botanical and vanilla extracts and distillations in Teterboro, New Jersey. In a continuous bid, Symrise launched a series of citrus essential oil replacers in 2017. In another instance, doTERRA launched several new essential oil products and diffusers, including three new wellness programs aimed at wellness. The new product offerings combine sustainably sourced pure essential oils.

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key players in this market include Cargill, Incorporated (US), DSM (Netherlands), Givaudan (Switzerland), International Flavors & Fragrances Inc. (US), Sensient Technologies Corporation (US), Symrise (Germany), Robertet SA (France), MANE (France), doTERRA (US), NOW Foods (US), Lebermuth, Inc. (US), BIOLANDES (France), Norex Flavours Private Limited (India) and India Essential Oils (India).