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The global flavors and fragrances market size was USD 26.50 billion in 2018 and is projected to reach USD 38.56 billion by 2026, exhibiting a CAGR of 4.8% during the forecast period.
Flavors and fragrances are made from lactones, acids, esters, ketones, alcohol, and aldehydes. They are substances added to enhance the value of a product by modifying the characteristics of the solute, like providing pleasant odor or imparting sweet, sour, tangy, and other taste profiles. It is prepared by using essential oils and natural and artificial chemicals to deliver a specific flavor and fragrance.
The preparation of flavors involves a rigorous process. It is either prepared from natural and synthetic chemicals or essential oils like vanilla pods, citruses, and nuts. Natural flavors are prepared from spices, fruits, vegetables, edible yeast, herb, and other plant and animal based materials. Whereas, synthetic flavors are prepared by mixing flavoring agents with alcohol, glycerol, or propylene glycol to formulate the essence. Flavors are used as an additive for enhancing the taste of food & beverages in bakery, snacks, dairy products, sauces, and confectionery.
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Similarly, fragrances are made from natural and synthetic products. For instance, animal substances such as beaver’s castor and musk from deer are used to create attractive natural fragrances. On the other hand, musk ketone and musk xylene are used to synthetically manufacture musk-like fragrance in the laboratory. Fragrances are important to conceal the bad odor in the environment and thus are mainly used in consumer products, including body care, oral care, and home care.
“Development of Novel Flavors and Fragrances-based Products shall Accelerate the Growth of Flavors and Fragrances Market"
Strong growth in the food & beverage industry has led to the innovation of new flavors. Change in taste and preferences of consumers, coupled with the trend of ready-to-eat products, has provided opportunity to manufacturers to come up with innovations to meet consumer demand. For instance, recently, the company ‘Ben & Jerry's’ launched its new ice-cream flavor called 'Netflix & Chill'd’, a vegan version of traditional peanut butter ice cream. Asia-pacific is the fastest-growing region in terms of consumer expenditure on fast foods and ready-to-eat products. This growth is attributed to the availability of food & beverages in shopping malls and selling food through online platforms. Hence, these factors are boosting the flavors and fragrances market.
Another factor promoting the flavors and fragrances market growth is the rapidly growing cosmetic industry. Growing modernization in developing economies augmented the demand for perfumes, cosmetics, toiletries, soaps, and detergents. Further, the rising preference for organic ingredients in the personal care sector led to an increase in demand for natural fragrances. This is because consumption of natural fragrances is perceived to be healthier, safe, and therapeutic. The need for synthetic fragrances is also rising owing to its properties such as long-lasting and strong aroma. The manufacturers of fragrances are developing innovative products to meet consumer demand for differentiating aromas in cosmetics. For instance, in 2019, the company Givaudan launched Sensityl, an active cosmetic ingredient that offers beauty and health benefits for the consumer. Hence, innovation in fragrances will further help in flavors and fragrances market growth.
The increasing use of flavors in the pharmaceutical industry is an attributing factor for flavors and fragrances market growth. The flavors are used as an inactive ingredient in the syrups, suspensions, chewable tablets, and gums. The added flavors overcome the bitter taste of medicine and make it more edible, and transmit a beneficial therapeutic effect. Hence, the rise in demand from pharmaceutical industry shall further lead to an expansion of the flavors and fragrances industry.
“Flavors Segment is Expected to Account for Major Share in the Market”
The flavors and fragrances market is bifurcated into flavors and fragrances, on the basis of type, which is further segmented into natural and synthetic. Amongst the two, the flavors segment holds the dominant market share owing to their significant application in the food & beverage industry. Flavors have the ability to please both the senses of smell and taste, which is the crucial reason for the larger market share as compared to the fragrances segment. In food & beverage industry, flavors are used to elevate the taste of various foods & beverages such as dairy products, sodas, savories & snacks, and desserts. They are also used to mask the characteristic taste of the product and provide them with a more striking and adored taste. For instance, milk has a very bland taste, but dairy products manufacturers add flavors such as rose, saffron, and cardamom, which provide milk and milk products a modified smell and taste.
On the other hand, the use of fragrances for manufacturing cosmetics and home care products has provided a significant boost to the flavors and fragrances market. Fragrances are used to alter the foul smell in the environment by replacing or absorbing the odor molecules in air with fragrant compounds such as esters that smell similar to fruits and flowers. In cosmetics, fragrances give the products a mesmerizing smell that makes it attractive for the consumers. The social convention for good smelling personality is the key reason for the usage of fragrances in cosmetics. On similar grounds, middle and low notes of fragrances are used to manufacture fine fragrances, which provide the user with a long-lasting, and attractive smell. Furthermore, fragrances are used to provide home and floor cleaning products a masked smell, which makes these products bearable to be used inside the house and in closed environments such as industries and institutions, which ultimately results in high flavors and fragrances market share.
Flavors and fragrances are both further divided into natural and synthetic subtypes. Natural flavors and fragrances are obtained by extracting flavors and aromas from natural ingredients such as flowers, fruits, spices, and other plant and animal-based sources. Some of the commonly used natural flavors and fragrances are rose, citrus, and chocolate (cocoa). The demand for naturally sourced food & beverages has witnessed a considerable rise from the young generation, which is expected to create a considerable shift in favor of the natural flavors segment during the forecast period. Fine fragrance manufacturers use natural fragrances to impart a better quality to their product, which is the key reason for the considerable growth of natural fragrances segment of the flavors and fragrances market.
On the other hand, synthetic flavors and fragrances are just flavors and aroma compounds that are synthetically manufactured in the laboratory. These compounds taste and smell similar to natural counterparts, which makes them useful as an alternative to natural sources. As synthetic flavors and fragrances are manufactured in a controlled environment, they have superior control over quality as compared to natural sources, which are affected by various factors of nature.
“Food & Beverage Segment is Anticipated to Exhibit a Significant CAGR During the Forecast Period”
The flavors and fragrances market is segmented into food & beverages, cosmetics & personal care, pharmaceutical, home & floor care, fine fragrances, and others, based on application. Amongst these applications, food & beverage is expected to remain the major application during the forecast period. Flavors are used dominantly in food & beverage manufacturing to provide the food materials attractive taste and smell. Further, the span of usage of flavors has also expanded from just sweets and savories to niche applications like in hot beverages, soups, and tobacco products. The large scale consumption of flavors from food & beverage industry shall be the crucial reason for the growth of flavors and fragrances market.
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Cosmetic and personal care products manufacturers use both, flavors and fragrances, to alter the smell of their products, and to make them attractive to the consumer. Usage of flavors and fragrances creates a sense of presence of the flavor source in the product, which is used as a marketing tactic by the cosmetics manufacturers to project their product to be better than their competitors. Furthermore, oral care product manufacturers increasingly use refreshing flavors and fragrances such as mint and cinnamon-clove, which creates a healthy mouthfeel to the user, resulting in the growth of the flavors and fragrances market.
Pharmaceutical manufacturers use flavors to mask the strong taste profile of medicinal compounds, to make the concoctions and formulations acceptable for consumption. Most of these flavors also act as natural medicine, for instance eugenol, a component in the essential oil extracted from clove is largely used in dentistry to provide relief from toothache. This factor further propels the demand for encapsulated flavors and fragrances in the market.
Many home & floor care products are manufactured using phenol and its derivatives, which have a characteristic pungent smell, which makes their indoor use unacceptable. Thus, the manufacturers of such products add fragrances to make them acceptable for the consumer. The demand for air care products has increased in recent times, owing to concerns of polluted air. Fragrances used in these products replace the odorants present in the air by either diffusing or absorbing them, making the premises inhabitable.
The demand for fine fragrances has increased in the past few years, with strong advertising campaigns carried out by perfumery manufacturers worldwide. Furthermore, the fine fragrances manufacturers are carrying out large scale research to meet the choices of the consumers, which shall result in the growth of flavors and fragrances market during the forecast period.
Flavors and fragrances are used in the manufacture of many other products such as pet-care products, incenses, and tobacco products, which are further creating growth opportunities for the market stakeholders during the forecast period.
Europe occupies a significant flavors and fragrances market share. The key reason behind the lead is the large demand from food & beverage manufacturers, along with an uptake in considerable quantities for the manufacture of fine fragrances and cosmetics in the region. The demand for encapsulated flavors and fragrances for usage in liquor-based drinks have also increased significantly in the recent past, which is expected to further boost flavors and fragrances market in Europe.
North America Flavors and Fragrances Market Size, 2018
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In Asia Pacific, the flavors and fragrances market is dominated by China because of the huge demand for flavors and fragrances from the food and cosmetics industries. But, India and Southeast Asia are expected to witness rapid growth, owing to the surge in demand for flavored products in these countries. Additionally, the development of pharmaceutical industry in the region is expected to provide traction to the market.
North America, on the other hand, is expected to witness median growth in the flavors and fragrances market. The market has reached maturity phase in the region, but demand for manufacture of products such as sodas and canned cocktails is expected to provide growth opportunities to the market. The U.S. is a key consumer for flavors and fragrances in North America, owing to the increasing demand for flavored desserts in the country.
In Latin America, the demand for flavors for the manufacture of beverages have surged in the last few years. Furthermore, the home & floor care products are also in demand in the region, with rising health concerns in the region in the recent past. The flavors and fragrances market in Middle East & Africa, on the other hand, is expected to grow at a considerable rate due to the heavy demand from cosmetics and fine fragrances application in the region.
“Key Market Players to Strengthen their Position in the Flavors and Fragrances Market by using Acquisition and Expansion Strategies”
The flavors and fragrances market is dominatd by a very few, large enterprises, making the market a consolidated one. Some of the key market players are Givaudan, International Flavors and Fragrances (IFF), Symrise AG, and Firmenich SA. These four stakeholders hold about 50% flavors and fragrances market. The key companies in the market have employed a mix of organic and inorganic growth strategies. Givaudan has acquired over five companies since 2018, while Firmenich has started building a new plant in China in 2019.
The key market players have increased their focus on product development to create multiple formulations to match the requirement of their customers. IFF offers over 90,000 individual products to their customers present in over 190 countries. Givaudan, on the other hand, has set up 64 production sites across the globe to suffice to the needs of the consumers in over 145 countries. The flavors and fragrances market manufacturers are employing their experience and expertise to capture the smallest of white space in the market.
A growing trend is observed in the penetration of the flavors and fragrances market for various applications such as food & beverages, cosmetics, personal care, pharmaceutical, fine fragrances, and others.
An Infographic Representation of Flavors and Fragrances Market
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The report provides qualitative and quantitative insights on the flavors and fragrances market and detailed analysis of market size & growth rate for all possible segments in the market. The flavors and fragrances market is segmented by type, application, and geography. Based on the type, the market is classified into flavors and fragrances, which are further individually bifurcated into natural and synthetic. On the basis of application, the flavors and fragrances market is divided into food & beverages, cosmetics & personal care, pharmaceutical, home & floor care, fine fragrances, and others. Geographically, the flavors and fragrances market has been analyzed across five major regions, which are North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. These regions are further categorized into countries.
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Along with this, the report provides an elaborative analysis of the global flavors and fragrances market dynamics and competitive landscape. Various key insights presented in the report are the price trend analysis, recent industry developments in the global flavors and fragrances market, the regulatory scenario in crucial countries, macro, and microeconomic factors, SWOT analysis, and key industry trends, competitive landscape, and company profiles.
Value (USD Billion) and Volume (Million Tons)
Fortune Business Insights says that the market was USD 26.50 Bn in 2018 and is projected to reach USD 38.56 Bn by 2026.
Growing at a CAGR of 4.8%, the market will exhibit considerable growth in the forecast period (2019-2026).
The food & beverage application segment is expected to lead the market during the forecast period.
Development of novel flavors and fragrances-based materials will drive the growth of the global market.
Europe is expected to hold the highest market share in terms of revenue of the market.
Givaudan, Firmenich SA, Symrise AG, and International Flavors & Fragrances (IFF) are the key players in the market and have adopted strategies such as acquisition and capacity expansion for their growth in the market.
Rising demand for natural flavors and fragrances from the cosmetic industry is a vital flavors and fragrances market trend.
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