Fragrances are used in a wide variety of products such as perfumes, deodorants, cosmetics, wet-wipes, air fresheners, soaps, shaving creams, floor cleaners, detergents, candles and hair and body oils. They contain a variety of ingredients that are used to either provide refreshing aromas or mask unpleasant odours. These include a variety of plant-based ingredients such as derivatives from flowers, fruits, leaves, seeds, tree barks, spices, etc. and chemical and petroleum-based ingredients such as alcohols, aldehydes, esters, terpenes and musk chemicals.
The fragrance ingredients market is highly fragmented due to presence of several players at the local level. These players often enjoy benefits of low costs of fragrance extraction and governmental policies that aim to boost local industries. However, these players also lack the capital and resources to conduct extensive R&D, which is a key market requirement.
Some of the key global players in the fragrance ingredients market include Fermenich International, BASF, Mane, International Flavors & Fragrances, Frutarom Industries, Robertet Fragrances, Givaudan, Godavari Biorefineries, Eternis, Treatt, Harmony Organics, Vogele Ingredients, YingYang Aroma Chemical Group, Symrise, Kalpa Sutra Chemicals, Kdac Chem and Ventos.
R&D into safe fragrance ingredients has been a key focus of manufacturers in recent years as harmful effects of several chemical-based products are being steadily realised through scientific research. This has increased public awareness about the need to limit the use of such ingredients, besides also propelling governments to ban some of these ingredients from finished products. Some key ingredients have been banned by several countries in recent years include atranol, phthalate and chloroatranol.
Concurrently, manufacturers have also been focussing their efforts on increasing the proportion of natural ingredients in their products and on eliminating the chemical component all together. However, manufacturers also face limitations with regards to access to natural products and the capability to extract these derivates in required volumes.
The increased focus on R&D and cost-intensive extraction technology has given an edge to global manufacturers in recent years. In the long run, this has the potential to reduce market fragmentation if national governments adopt a more globalised approach towards the market.
Drivers of the Fragrance Ingredient Market
Increasing disposable incomes have been a key market driver of the fragrance ingredients market, especially in the cosmetics and toiletries segments. Increasing use of scented candles for aromatherapy too has driven the market. In terms of demography, the young and appearance-conscious working population has been the key market driver.
Impact of Covid-19
The Covid-19 pandemic is likely to have a negative impact on the market since the economic crisis being witnessed throughout the world will result in reduced disposable incomes and large-scale job losses. These job losses are most likely to pinch the young population hardest.
In term of policy formation, governments will be tempted to adopt protectionism to reduce economic interdependency and promote local players. This is likely to throw expansion plans of key global players awry.
The European regional segment has been enjoying the largest market share due to consolidated patterns of the use of scented cosmetics, toiletries and cleaners. Europe being the manufacturing hub for perfumes and other luxury items has also been a reason for Europe’s dominance on the market.
The North American regional segment has been the second largest segment for the fragrance ingredient market, but pre-Covid-19 projections had speculated that will be overtaken by the East Asian regional segment due to China’s growing economy and positive population dividend.
Notably, South Asia, led by India and the Southeast Asian nations, has a higher growth rate and larger youth population than East Asia, but global players operating here are constrained due to governmental policies favouring local industries. Latin America has also seen robust growth in recent years, mainly led by Brazil, Mexico and Argentina, where demand for scented soaps and cosmetics in on the rise. Middle East and Africa and Oceania are the other key regional segments.
The fragrance ingredient market can be segmented based on the following:
By End-use Industry
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The report is a compilation of first-hand information, qualitative and quantitative assessment by industry analysts, inputs from industry experts and industry participants across the value chain. The report provides in-depth analysis of parent market trends, macro-economic indicators and governing factors along with market attractiveness as per segments. The report also maps the qualitative impact of various market factors on market segments and geographies.