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The global essential oils market size was USD 8.74 billion in 2020. The global impact of COVID-19 has been significant, with this oil witnessing a positive effect on demand across all regions amid the pandemic. COVID-19 has boosted the demand for aetheroleum oils across the aromatherapy and personal care industry. Based on our analysis, the global market exhibited a higher growth of 14.08% in 2020 than the average year-on-year growth during 2017-2019. The market is expected to grow from USD 9.62 billion in 2021 to USD 18.25 billion in 2028, growing at a CAGR of 9.57% during the 2021-2028 period.
Essential oils are non-water soluble liquids containing unstable aroma compounds of the plants. The global market is majorly propelled by the robust trend of green consumerism among the increasing popularity of natural inputs for sensory-related aspects and food preservation.
An Infographic Representation of Essential Oils Market
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COVID-19 Outbreak Surged the Demand for the Product Owing to its Health-benefitting Properties
The COVID-19 pandemic has positively impacted the market worldwide. There have been reports of the huge increase in demand for essential oils, as these oils claim to enhance health and immunity. According to industry experts, amid the chaotic pandemic situation, people should incorporate ethereal oil in daily life to improve their immune system and achieve a healthy and calm mind.
The pandemic has raised global awareness to improve the body's immune system. Apart from healthy eating and regular exercise, increased immunity can also be achieved from a healthy and calm mind, including aromatherapy. This is in line with growing awareness of holistic medicine and organic product utilization. The demand for products such as tea tree oil, peppermint oil, and eucalyptus oil, which have potential as aromatherapy and antibacterial and antiviral qualities is increased during this pandemic period.
Prominent companies such as doTERRA and Young Living Essential Oils are experiencing an increase in product sales. Therefore, market players operating in the industry are focused on improvising their production and supply strategies to address this enormously growing demand for the product and enhance its marketing strategy. They are even seeking the help of digitalization to fulfill consumer's demands amid the pandemic.
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Increasing Application of the Product Across Multiple Industry
Traditionally, this oil is widely utilized in food and beverages and aromatherapy, but, in recent years, the increasing application of the product in several industries such as pharmaceuticals, cosmetics, and personal care is anticipated to drive product sales. For instance, in August 2020, EO, an ethereal oil-infused hand sanitizer brand, announced its partnership agreement with Alaska Airlines to provide travelers ethereal oil-infused hand sanitizing wipes to help fliers feel more comfortable and relaxed.
Rising Inclination towards Aromatherapy to Drive Essential Oils Market Growth
Aromatherapy is also referred to as essential oil therapy. Since the last decade, customers have become more selective about their personal care product uses. Although many similar products are available, high-quality products and competitive prices will satisfy customer satisfaction and increase product loyalty. Therefore, rising expenditure on the research and development of more effective products, processes, services, and technologies are predicted to impact the market growth positively. The robust growth incentive to the hospitality and tourism sector has brought greater benefits of aromatherapy within reach of common consumers. This trend, coupled with increased utilization of natural active components in pharmaceutical and cosmetic formulations, has further boosted the ethereal oils market.
Increasing Demand for Natural Ingredients to Spur Market Growth
Essential oils have a vital role in the natural preservation of foods amidst the rising concern for synthetic food additives and their long-term harmful effects. Several clinical studies involving ethereal oils in the concentration range of 0.5–20 microliters per gram have shown antibacterial actions in the foods such as meat products, fish, fresh meat, milk, dairy products, and cooked rice. There has been an important synergy established utilizing preservation methods along with such oils. Thus, the greater push for research and development in ethereal oils incorporation as a food additive is anticipated to provide further impetus to the ethereal oils market.
The global food and beverages industry is undergoing a gradual yet substantial transition concerning ingredients formulations. The rising customer's inclination towards natural and organic products has made ethereal oils a crucial ingredient of choice for food processors. There has been a steady surge in the customer's understanding of the harmful health effects of synthetic chemicals added for flavor applications. Producers are thus encouraged to utilize natural inputs to increase the aesthetic appeal of food products alongside improving the nutritional and functional properties.
High Price of the Product May Hinder Product Growth in Developing Economies
These oils are a very concentrated product. Henceforth, one pound of lavender oil consumes around 250 pounds of lavender flowers. The declining supplies of aromatic plants possess a greater risk to the growth of the plant-based volatile oils market. The strong and ever-rising demands against constrained supply are bound to create high price scenarios discouraging its utilization across different application sectors in developing economies.
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Citrus to Hold the Major Share Backed by Increasing Popularity among Consumers
The market by product type is classified into citrus, eucalyptus, lavender, rosemary, tea tree, and others.
The citrus segment held a dominant share of the market in 2020. Citrus-based ethereal oils such as lemon oil and orange essential oil dominate the global marketplace due to their availability, superior functional and organoleptic characteristics, and strong demand dynamics.
Orange and lavender ethereal oils lead in the global market due to their active principles for oral and topical applications. The food and beverages sector is the leading application of plant-based volatile oils, which act as natural antimicrobials. These oils have exhibited effective inhibitory actions against spoilage-causing microbes. The processed foods having savory organoleptic profiles such as meat, fish, cheese-based foods, soups, and sauces can thus be suitable food matrices for incorporating citrus-based oils.
Food and Beverages Segment to Hold Major Share
Based on application, the market is categorized into food and beverages, personal care and cosmetics, pharmaceuticals and medical formulations, and others.
The food and beverage segment is expected to account for the largest essential oils market share during the forthcoming years. Food and beverages remain preferred matrices for incorporating plant-based volatile oils. The addition of aetheroleum oils to food products increases the shelf-life, storage stability, and sensory characteristics of various edibles.
The flavors and fragrances application segment utilizes significant quantities of plant-based volatile oils in the global marketplace. The application spectrum of aetheroleum oils is further expected to expand based on the reported antiparasitic, anti-toxigenic, and insecticidal traits.
Europe Essential Oils Market Size, 2020 (USD Billion)
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The market in Europe stood at 3.85 billion in 2020, and the region is predicted to continue dominating the global industry in the upcoming years. The developed market of the European Union has recognized some of the components of plant-based volatile oils such as carvacrol, carvone, cinnamaldehyde, and citral, p-cymene as a legally registered flavoring. The cosmetic producers in Europe are inclining heavily towards the inclusion of this type of oils in their formulations. The growing demand for aromatherapy in major markets of Germany, France, and the U.K. is expected to further contribute to the sales of plant-based volatile oils.
North America is predicted to be the second-most dominant region in terms of market share. The demand for the product in the region is expected to experience promising growth over the next few years in light of the increasing consumption of natural ingredients containing cosmetic products, new product launches, and rising disposable income.
Regions such as South America and Asia-Pacific are anticipated to witness significant growth of the market during the forecast period. Several factors, including rising concerns towards aging, UV effects, and hair fall, are likely to fuel growth in these regions. Moreover, the consumers in these regions are ready to spend a huge amount of money on personal care and cosmetics products, which is anticipated to support the market's steady growth.
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Emerging and urbanization economies of the Middle East and Africa are expected to become global hotspots in the plant-based volatile oils market during the upcoming years. Additionally, the players operating in the global market are expanding their distribution network to increase their prominence in the regional market, which is predicted to support the steady growth of the regional market. For instance, in November 2019, Young Living Essential Oils inaugurated its new office in the South Africa market. This new opening would help the company grow in the South African market.
Industry Consolidation a Priority for Prominent Companies in the Market
The global market remains largely fragmented owing to the prominence of local and private-label brands in different regions. Nevertheless, technological advancements resulting in superior product characteristics are key for the sustainable growth trajectory of plant-based volatile oils. Companies such as Givaudan International SA, International Flavours and Fragrances Inc., and Symrise AG embark on mergers and acquisitions activities to increase their prominence in the marketplace. For instance, in February 2021, Givaudan acquired Myrissi (France). The acquisition of Myrissi is aligned with the company’s long-term Fragrance & Beauty strategy.
The global market report includes qualitative and quantitative insights into the market. It also offers a detailed analysis of the market size and growth rate for all possible market segments. Various key insights presented in the report are an overview of related markets, competitive landscape, recent industry developments such as mergers & acquisitions, the regulatory scenario in critical countries, and key essential oil industry trends.
Value (USD Billion)
Fortune Business Insights says that the global market size was USD 8.74 billion in 2020 and is projected to reach USD 18.25 billion by 2028.
Growing at a CAGR of 9.57%, the market will exhibit steady growth during the forecast period (2021-2028).
The citrus segment is expected to be the leading segment during the forecast period.
The increasing demand for aromatherapy is the key factor driving the market growth.
Biolandes SAS, Givaudan International SAS, International Flavors and Fragrances Inc., and Symrise AG are a few of the leading players in the market.
Europe dominated the market in terms of revenue share in 2020.
The food and beverages segment holds the major share in the global market.
The increasing product application in several industries is the key market trend.
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