Essential Oil Future Trends July 10, 2016

Recent studies have suggested that the value of the GLOBAL ESSENTIAL OIL MARKET IS SET TO REACH A STAGGERING USD 11.67 BILLION BY 2022, compared with a current estimated value of USD 5.51 billion. That’s around a 10% year-on-year growth – good news for all you’d assume?

Are we doing enough planning for our future essential oil demands?

This growth is primarily based on a growing consumer awareness regarding the health benefits associated with natural and organic ingredients in personal care, beverages and household products. The continued trend of moving away from synthetic ingredients should ensure that we see year-on-year demand growth but with this trend the risks associated with dealing with natural products also increase. To ensure that we don’t face future supply issues we need to continue to invest in projects at grass roots level, by trying to grow products in different countries and regions to reduce the risks of being dependant on any one area for one product. Only with greater diversity of supply sources will we be able to sustain this anticipated growth, which is why ULTRA CONTINUES TO INVEST IN OUR SUPPLY.

GLOBAL ESSENTIAL OIL MARKET DEMAND WAS ESTIMATED AT 165,000 MT in 2014 with orange oil leading the way accounting for 29.1% of total market volume. Orange oil’s environmentally friendly characteristics make it suitable for use in perfumes, household cleaners and as a biological pest control agent. Also it is expected to be one of the highest growth essential oil products with growth forecasts of 9.7% year-on-year from now until 2022. Bad news considering some of the immediate supply issues we are facing!

It’s not just orange which is facing challenges. Fresh CITRUS FRUIT DEMAND IS GROWING around the world in particular for lemon and limes. Taking into consideration that the oil market is a by-product of the fresh citrus market this could result in less fruits for processing, meaning less oil. Add to this the growing demand across the beverage markets then you can see potential unbalances in the years ahead.

Food & beverages is the dominant segment within the essential oil market commanding a demand share estimated to be over 30% in 2014. Growth of the food & beverages industry, particularly in the Asia Pacific region, is expected to drive this segment forward over the coming years.

Consumer products are going more natural all around the world driving up demand for essential oils!

Another emerging market is the AROMATHERAPY sector in Europe and North America. Moving away from conventional drugs and medicines to alternative, natural remedies has created a huge market expansion with other regions yet to follow. This is also the case with the spa market, particularly in South East Asia, which has accounted for some significant growth in recent years and will continue to do so in future years.

EUROPE IS THE LEADING MARKET FOR ESSENTIAL OILS with a market share exceeding 40% in 2014. This is attributed to a greater awareness amongst consumers regarding health benefits offered by natural and organic products. Asia Pacific is expected to witness the highest per annum growth of 9.2% from 2016 to 2022.

It is interesting that today we have many buyers for many essential oil waiting for new season material expecting prices to fall when most users are at the same time confirming they are experiencing a 10-15% GROWTH IN NATURAL DEMAND.

Meanwhile, on the supply side, there are only a few naturals where you can say plantations and therefore production is actually increasing to meet this demand, especially through any planned and sustainable investments.

So whilst thinking about tomorrow’s supply and how 2016 is shaping up, it Is important to look at the bigger picture and think about our future. The good news is that we all have a future and with market growth there’s plenty of room for all of us. How will you shape your business for the future?