Aroma Chemical Market

Global Aroma Chemical Market Forecast

• The approximately US$5.5 Bn market for aroma chemicals (2023) eyes revenue worth US$7.5 Bn by 2030
• Global aroma chemicals market size to witness 4.5% CAGR between 2023 and 2030

Quick Report Digest

1. The key trend anticipated to fuel the aroma chemical market growth is the increasing use of aroma chemicals and the rising demand for natural aroma chemicals in various applications.
2. Another major market trend expected to fuel the aroma chemical market growth is the increasing consumption of these products in the cosmetics, toiletries, soaps, food, and beverages industries.
3. The development of new fragrance formulations has been facilitated by the incorporation of sulfur-containing compounds in perfumes. With a diverse range of variant options accessible to perfumers utilising sulfur-based compounds, aroma chemical manufacturers are expected to innovate and create novel flavours and scents worldwide
4. In 2022, the synthetic category dominated the industry. This trend is driven by the increasing usage of synthetic ingredients in cosmetics, personal care items, and the food and beverage industry. Synthetic fragrances play a crucial role as key components in crafting customised and premium scents.
5. In terms of market share for aroma chemical globally, the Terpenes & Terpenoids segment is anticipated to dominate. The significant market share can be attributed to the natural availability of the product, along with its increasing usage in various applications such as paints, printing inks, rubber adhesives, pressure-sensitive tapes, and chewing gums, among others.
6. In 2023, the fine fragrances category controlled the market. The high share of the segment's market share can be attributed to the increasing demand for beverages and processed foods, driven by growing disposable income levels.
7. The Asia Pacific region is anticipated to account for the largest share of the global aroma chemical market, owing to the increase in the food & beverages sector where aroma chemicals are used predominantly.
8. The market for aroma chemicals is expanding in North America due to the increasing population has led to heightened demand for bath soaps, dishwashing detergents, and laundry detergents across residential and commercial sectors.

A Look Back and a Look Forward - Comparative Analysis

The market for aroma chemical has grown in popularity as a result of factors such as increased consumption across various sectors including cosmetics and toiletries, soaps and detergents, and food and beverages industries.

Aroma chemicals are experiencing rising demand due to their widening application in pivotal end-use sectors such as dairy, cosmetics, and toiletries, soaps and detergents, fine fragrances, convenience foods, bakery foods, and confectionery. Furthermore, the surge in demand for low-calorie beverages and the overall growth in the beverages market are significant contributors to the industry's growth trajectory.

The market witnessed staggered growth during the historical period 2018 – 2022. This is due to the substantial growth of the major end-use application sectors such as cosmetics and toiletries, soaps, and detergents. However, in some applications, the demand for aroma chemicals has increased, including food and beverages and fine fragrances.

The rapid development within the chemical industry, alongside the accessibility of raw materials, is driving a surge in demand for technological innovations across sectors like food and beverage, cosmetics, and personal care. Consequently, the advancements in technologies employed within the chemicals industry are amplifying the manufacturing capacities of aroma chemicals. This technological progression presents an opportunity for the expansion of the global aroma chemicals market.

Key Growth Determinants

• Expansion of Cosmetics Industry

There is a growing trend among both men and women towards skincare and beauty products such as creams, face masks, and peels, leading to an expansion in the cosmetics market. This trend is driven by a preference for natural and organic products, as consumers become increasingly conscious of their lifestyles and have greater disposable income.

The rapid growth of urban centres, and the surge in online shopping are fuelling curiosity and demand for innovative and upscale cosmetics. According to Helplama, US consumers collectively spend a significant US$89.7 billion annually on beauty products. Among the top players in the beauty industry, L’Oreal led with revenue reaching US$40.31 billion in 2022, followed by Unilever with US$25.11 billion, and The Estee Lauder with $16.4 billion.

On average, American women allocate more than US$3,756 per year towards beauty products and services, with monthly spending ranging from US$244 to US$313 on cosmetics. Aroma chemicals play a vital role in enhancing the scent of various products such as gels, lipsticks, shampoos, and other toiletries, without compromising their quality. Given the significance of cosmetics to consumers, major companies are increasingly incorporating natural ingredients into their products, resulting in heightened sales and driving market growth globally.

• Increasing Consumption of Confectionery Products

The aroma chemicals market is anticipated to experience significant growth due to the rising consumption of confectionery products. Confectionery refers to the creation of sweet treats rich in sugar and carbohydrates, including candies, pastries, and other sweet foods. Aroma chemicals play a crucial role in enhancing the taste and fragrance of confectionery items such as chocolates, candies, and bakery products.

These products are essential for achieving the desired flavours and aromas that attract consumers. For instance, in March 2023, the National Confectioners Association reported a substantial increase in total confectionery sales, reaching US$42.6 billion in 2022 compared to $36.9 billion in 2021, representing a growth rate of 15%.

Notably, chocolate sales experienced a notable increase of 9.1% in dollar sales growth in 2022. Consequently, the growing consumption of confectionery products is a key driver fuelling the expansion of the aroma chemicals market.

• Growing Demand from F&B

The increasing demand for beverages is driven by their effectiveness in maintaining hydration and energy levels, particularly in dry and humid climates. Additionally, there is a growing preference for protein-based drinks due to heightened self-care awareness and evolving lifestyles.

According to Food Navigator, sales of natural and organic food and beverages in the US market are projected to exceed US$300 billion by 2024 and US$400 billion by 2030. In 2021, sales of clean-label ingredients, including natural colours and flavours, fruits and vegetables, starch, and sweeteners, reached US$38.8 billion.

Moreover, a study reveals that 73% of consumers are typically willing to pay a premium for clean-label products as of 2019. According to Forbes' 2022 report, Nestle leads the food and beverage industry with sales surpassing US$93 billion, followed by Pepsico in the second position.

Major Growth Barriers

• Synthetic Chemicals in Perfumes, and their Potential Health Effects

Approximately 95% of the synthetic chemicals found in fragrances are sourced from petroleum-based chemicals, such as benzene derivatives, phthalates, and aldehydes, among others. These substances are widely regarded as harmful and pose risks to human health, including the potential to cause birth defects, cancer, allergies, asthma, and disorders of the nervous system in both adults and children.

Moreover, some of these synthetic chemicals are classified as hazardous by the Environmental Protection Agency (EPA). According to researchers from the Environmental Working Group (EWG), approximately 75% of fragrance products contain phthalates, which have been linked to breast cancer, diabetes, reduced sperm count, reproductive malformations, and disruptive hormonal activity. These factors have the potential to impede the overall growth of the fragrance market.

• High Costs of Natural Chemicals

One challenge facing the global aroma chemicals market is the elevated production costs associated with natural aroma chemicals. The intricate and lengthy extraction process required to obtain natural aroma chemicals results in higher expenses compared to synthetic alternatives.

Furthermore, stringent regulations governing the use of certain aroma chemicals across industries could impede market expansion. The growing emphasis on sustainability and environmental considerations is also fuelling demand for natural and eco-friendly aroma chemicals, posing a potential hurdle for manufacturers heavily reliant on synthetic options.

Key Trends and Opportunities to Look at

• Increasing Demand for Natural Products, Especially within Cosmetics and Personal Care

Increased consumer awareness regarding the adverse impacts of chemicals on human health has led to a surge in demand for natural fragrance chemicals sourced from organic origins such as plants and animals. Consumer preferences are shifting towards natural and organic options across industries including food and beverage, personal care, and pharmaceuticals.

This growing preference for herbal and natural products across various sectors is anticipated to drive the demand for natural fragrance chemicals on a global scale. The value of European imports of natural ingredients for cosmetics has witnessed a notable increase over the past five years, primarily driven by the demand for vegetable oils.

Between 2018 and 2022, the value of European imports of vegetable oils demonstrated an average annual growth rate of 12%, reaching €1,271 million from €818 million. Conversely, the value of essential oils imports remained steady at approximately €900 million per year during the same period. In 2020, the European market for natural and organic cosmetics was valued at €3.89 billion, marking an increase from €3.64 billion in 2018.

The escalating trend towards natural products in the food and cosmetic sectors is projected to bolster the demand for natural products throughout the forecast period, driven by heightened consumer concerns regarding health, wellness, and evolving lifestyles. Moreover, manufacturers are actively engaged in the development and introduction of eco-friendly products while reducing chemical usage, thereby propelling the growth of the natural aroma chemicals market.

• Technology Advancements in Manufacturing Process

The rapid progress within the chemical industry, coupled with the accessibility of raw materials, is driving the demand for technological advancements across sectors like food and beverage, cosmetics, and personal care. This surge in technological innovation within the chemical sector is enhancing the manufacturing capabilities of aroma chemicals.

Moreover, businesses are increasingly adopting environmentally friendly and cleaner extraction technologies. For instance, Privi Speciality Chemicals Limited integrates waste recycling and emission reduction into its production processes.

By leveraging high-value chemicals of fragrance from Crude Sulphate Turpentine (CST) and deriving agrochemicals from by-products, the company aims to minimise waste and optimise profitability. Consequently, technological advancements present significant opportunities for the growth of the global aroma chemicals market.

• Utilisation of Essential Oils in Aromatherapy

The utilisation of essential oils and aromatherapy, which has a history spanning over a millennium, is experiencing a notable resurgence in contemporary usage and application. This resurgence is anticipated to drive significant growth in the market in the coming years. A substantial portion, approximately 32%, of the American population acknowledges the therapeutic benefits of aromatherapy.

Aromatherapy, a traditional holistic healing approach, primarily relies on natural aromatic ingredients to promote relaxation and alleviate insomnia, headaches, and other mental health issues. This ancient practice of harnessing aromatic compounds has consistently contributed to the expansion of the aroma ingredients market, further propelled by advancements in biotechnology facilitating the growth of synthetic aroma ingredients.

How Does the Regulatory Scenario Shape this Industry?

Before entering the US market, fragrance ingredients must meet the regulatory requirements set forth by the US FDA for cosmetic ingredients. While fragrances and fragrance ingredients are not subject to pre-market approval by the US FDA, they must comply with labeling regulations and ensure consumer safety during usage.

Cosmetic or personal care products containing fragrances intended for sale in the USA must include a list of ingredients, typically listed individually. Manufacturers are legally prohibited from selling cosmetics containing any ingredients that may pose a risk when used as directed on the label and under normal conditions. Health Canada is empowered to take enforcement action if a product poses a health or safety hazard to Canadians.

Health Canada monitors scientific research on cosmetic ingredients and draws on information from various sources, including the Chemicals Management Plan, the European Union, and the US Food and Drug Administration (FDA). If any ingredients are found to pose a risk to consumers, Health Canada takes swift action to prohibit or restrict their use and may add them to the Cosmetic Ingredient Hotlist. The stringent regulatory framework established by these authorities influences the manufacturing, labeling, and marketing practices of aroma chemical manufacturers and cosmetic companies.

Fairfield’s Ranking Board

Top Segments

1. Synthetic Category Continues to Dominate the Type-wise Segment

The synthetic segment dominated the market in 2023. Synthetically produced aroma chemicals find applications in the food and beverage, cosmetics, and personal care industries, all of which exhibit significant demand for these compounds. Utilising the latest technologies, synthetic aroma chemicals are derived as the primary source of these products. Their utilisation aids in replicating the natural essence of various flavours utilised across these industries.

Furthermore, the natural category is projected to experience the fastest market growth. Natural-identical aromas are chemically defined substances with aromatic properties. These compounds are obtained through isolation or chemical synthesis, employing various chemical reactions like acetylation, and esterification. The raw materials needed for producing natural-identical aromas are chemically indistinguishable from those derived from animal or plant sources.

2. Terpenes & Terpenoids Continue to Surge Ahead

In 2023, the Terpenes & Terpenoids category dominated the industry. These products, naturally sourced, find extensive application in pressure-sensitive tapes, paints, printing inks, chewing gums, and rubber adhesives. Additionally, they play a crucial role as flavouring agents and fragrances across various industries. Terpenes, primarily utilised in the food and beverage and rubber industries, witness significant consumption.

However, the limited availability of terpenes can result in higher extraction costs, posing a challenge to market growth. Nonetheless, given the rising commercial significance of their benefits, this chemical segment is anticipated to expand. With applications extending to cosmetics, personal care products, soaps, detergents, household items, and the food and beverage sector, the utility of this business segment is poised for growth during the forecast period.

The musk chemicals category is anticipated to grow substantially throughout the projected period. Musk chemicals are sourced both synthetically and naturally. Natural musk is derived from plant roots and seeds, as well as from the rump gland of musk deer, muskrats, and civet cats. These chemicals have diverse applications, including in soaps and detergents, cosmetics and personal care products, food items, and household products, among others.

3. Fine Fragrances Remain the Market Leader

The fine fragrances segment dominated the market in 2023. The significant market share of this segment can be attributed to several factors, including the increasing demand for beverages and processed foods, the rise in disposable income, growing consumer interest in exotic flavours, and the escalating demand for various food applications such as convenience foods, confectionery, dairy, and bakery products.

Aroma chemicals are skillfully blended by perfumers to craft fine fragrances that can range from subtle to intense aromas. For instance, cinnamaldehyde serves as a foundational ingredient for creating fine fragrances such as cinnamyl alcohol (with notes of lilac), and dihydro cinnamyl alcohol (with hints of hyacinth).

Similarly, allyl hexanoate finds application in fine fragrances to impart delightful scents reminiscent of wisteria, peach blossom, and apple blossom, among others. With an array of unique ingredients available for formulating fine fragrances, aroma chemicals are poised to experience significant demand in the foreseeable future.

The food and beverages category is expected to experience the fastest growth within the forecast time frame. The burgeoning food and beverage industry, coupled with the extensive utilisation of fragrance chemicals across a wide array of food items including packaged goods and supplements, presents numerous opportunities for the aroma chemicals market. Flavours and aromas play a crucial role in stimulating appetite, enhancing taste perception, and aiding in product recognition.

Advancements in manufacturing technology, alongside the expansion of the food processing sector driven by the escalating demand for ready-to-eat food products, are anticipated to bolster product growth. Moreover, the increasing consumer preference for exotic flavours and aromas in food products such as pastries and cookies, along with the growing adoption of natural and fresh flavours, and fragrances in the food industry, is poised to elevate the market share of aroma chemicals.

Regional Frontrunners

Asia Pacific Remains the Largest Revenue Contributing Region in the Global Aroma Chemical Market

The expansion of the fragrance industry is primarily propelled by the growing demand for natural fragrances in emerging economies and significant technological advancements aimed at meeting evolving consumer preferences. International Flavours & Fragrances (IFF) stands as a frontrunner in the fields of food, beverages, and biosciences. In 2022, IFF reported global net sales exceeding US$12.44 billion, up from US$11.65 billion in 2021.

Furthermore, IFF allocated over US$603 million towards global research and development endeavors in 2022. Furthermore, the increasing desire for customisable and niche fragrances is spurring the consumption of aroma chemicals, driven by consumers' quest for personalised fragrance experiences and unique scents.

North America Likely to Witness the Significant Growth in Sales During Forecast Period

The United States holds a significant portion of the North American aroma chemicals market, poised for growth in the forecast period due to increasing demand from the cosmetics and personal care sector. A blog by ESW in July 2022 highlighted that within this demographic, 43% of consumers express a preference for natural skincare, surpassing 31% of the overall consumer population in the US.

Moreover, the demand for additional flavours to enhance the taste of low-fat food and beverage products is on the rise. With the high prevalence of obesity in the US and a growing interest in low-calorie food options, there is anticipated growth in demand for various flavours, thereby driving the need for aroma chemicals. According to the CDC, from 1999–2000 through March 2020, obesity prevalence in the US increased from 30.5% to 41.9%, with severe obesity increasing from 4.7% to 9.2% during the same period.

Fairfield’s Competitive Landscape Analysis

The global aroma chemical market is a consolidated market with fewer major players present across the globe. Key players in the market compete for market dominance through initiatives such as new product launches, sustainability initiatives, and strategic partnerships.

Advancements in the market, particularly in research and development endeavors, play a pivotal role in achieving a competitive advantage, with a focus on innovating new aroma compounds to align with shifting consumer tastes and preferences. Moreover, Fairfield Market Research is expecting the market to witness more consolidation over the coming years.

Who are the Leaders in the Global Aroma Chemical Space?

• BASF SE
• Givaudan
• Firmenich SA
• Symrise AG
• International Flavours & Fragrances Inc. (IFF)
• Takasago International Corporation
• Solvay SA
• Robertet Group
• Sensient Technologies Corporation
• Kao Corporation

Significant Industry Developments

New Product Launch

• November 2021: In November 2021, Flavourchem, a global supplier of flavours and ingredients, introduced Taste Mod for Protein, a clean-label solution designed to mask off-notes in plant-based protein. This innovation represents the first of a series of high-performance taste modulators aimed at enhancing the sensory experience of functional foods and beverages.
• July 2021: In July 2021, P2 Science, Inc., a company specialising in green chemistry, unveiled a new herbal aroma chemical named Herbenone. This product offers fresh basil, slight jasmine, herbal, and anise notes, enhancing various personal care and cosmetics products.

Distribution Agreement

• May 2021: In May 2021, Azelis completed the acquisition of Vigon International, Inc., a specialty manufacturer and distributor based in the United States, specialising in ingredients for the flavours, fragrances, and cosmetics sectors. This acquisition positions Azelis strongly in the flavours and fragrances market in the Americas.
• March 2020: In March 2020, Harima Chemicals Group entered into a partnership with Takasago International Corporation, a key player in the flavours and fragrances industry. The agreement involves Takasago acquiring all shares held by Mitsubishi Corporation in Harima's subsidiary, LAWTER B.V. As a result, Takasago and Harima will become the sole stakeholders. Through this collaboration, LAWTER will ensure a consistent supply of turpentine derivatives for Takasago's flavours, aroma, fine chemicals, and fragrances businesses.
• January 2022: In January 2022, Firmenich announced a strategic partnership with HARMAY, a prominent new retail brand in China. The partnership aims to advance the Fine Fragrance category in China by leveraging the strengths of both companies to support the development of new fragrance brands, concepts, experiences, and models.

An Expert’s Eye

Demand and Future Growth

Aroma chemicals, derived from natural sources and characterised by their non-toxic nature and pleasant scent, find wide-ranging applications in industries such as cosmetics, beauty care, detergents and soaps, consumer products, and others. Moreover, the increasing demand for both natural and synthetic fragrances in the cosmetics and beauty care sector is expected to drive the market for aroma chemicals in the coming years.

Additionally, their use in the fabric care industry, where their non-toxic properties contribute to enhancing the aesthetic appeal of fabrics, further boosts their demand. However, the aroma chemical market is expected to face considerable challenges because of high research & development costs.

Supply Side of the Market

According to our analysis, chemical companies partner with other companies to establish distribution networks across diverse regions, ensuring comprehensive coverage. An example of such collaboration is Azelis’ subsidiary SammChem's partnership with BASF SE in 2019, specialising in distributing specialty chemicals and food additives.

Manufacturers are increasingly diversifying their product portfolios and introducing natural products to address future sustainability requirements. Key players in the aroma chemicals market are concentrating on developing advanced chemicals using state-of-the-art fermentation technologies to gain a competitive advantage.

Cutting-edge fermentation technology employs microbial fermentation to produce complex organic chemicals, including aroma chemicals, with precision. For instance, in October 2023, Isobionics BV, a Netherlands-based biotech firm specialising in aroma ingredients, introduced Isobionics Natural alpha-bisabolene 98 and Isobionics Natural (-)-alpha-bisabolol 99, leveraging its advanced fermentation technology. Through this innovative approach, the company consistently expands its range of natural flavours beyond citrus offerings to meet growing consumer and market demands.

Global Aroma Chemical Market is Segmented as Below:

By Type:

• Natural
• Synthetic

By Chemicals:

• Benzenoids
• Musk Chemicals
• Terpenes & Terpenoids
• Misc (Ketones, Esters, Aldehydes)

By Application:

• Food and Beverages
• Fine Fragrances
• Cosmetics and Toiletries
• Soaps and Detergents
• Misc

By Geographic Coverage:

• North America 
  • U.S.
  • Canada 
• Europe 
  • Germany
  • U.K.
  • France
  • Italy
  • Turkey
  • Russia
  • Rest of Europe 
• Asia Pacific 
  • China
  • Japan
  • South Korea
  • India
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America 
  • Brazil 
  • Mexico 
  • Argentina
  • Rest of Latin America 
• Middle East & Africa  
  • GCC 
  • South Africa
  • Egypt
  • Nigeria
  • Rest of the Middle East & Africa