It is important in the context of our business and in the personal care market as a whole to reconfirm that an essential oil is defined as a “natural volatile oil extracted from a specific botanical source and having the characteristic odour of the plant or other source from which it is extracted.”
Essential oils have become an important part of everyday life and their use continues to grow. They are multifunctional, used in many applications across a number of industries; as fragrances in personal care, household and industrial; as flavourings in food, beverage and pharmaceutical; for their therapeutic properties in aromatherapy, wellness, veterinary and animal healthcare; even for their antibacterial and antimicrobial actions.
With the ever-developing world and increasing consumer-led demand, essential oil requirements across all markets but especially in the personal care market are calculated to grow with a compound annual growth rate (CAGR) of between 9% - 10% for the period 2014 to 2022. For essential oils, this will see the market value reach US$ 11.5 billion in 2022 from what was US$ 5.5 billion in 2014 when annual production was calculated at 160,000 metric tonnes.
The rise in consumer-led demand for natural and organic ingredients in multifunctional personal care products that support a healthy life style is encouraging, for both the essential oil and personal care markets. New product development based on natural or organic themes are a core growth focus for both brand owners and manufacturers. However, in light of what may be seen as all-round positivity within the markets, the short-term scenario may be somewhat different and it is inevitable that essential oil production will fall significantly below that of demand. As a consequence, market drivers of volume and value will come into force as the supply / demand ratio becomes unbalanced. Limited availability with demand in excess of supply will force raw material prices in an upwards direction, the tendency also that while prices rise, they very rarely return to pre-rise levels. The tight supply and higher pricing will be a major concern for manufacturers as natural and organic raw material shortages can then bring unintended consequences with quality
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