Essential Oil Market

Market Overview

The global essential oil market size was valued at USD 10.69 billion in 2022. It is projected to reach USD 21.54 billion by 2031, growing at a CAGR of 8.1% during the forecast period (2023-2031). The essential oil market is propelled by rising consumer preference for natural and organic products, increased interest in health and wellness trends, and the widespread application of essential oils across diverse industries.

Essential oils, also known as volatile oils, aetherolea, and ethereal oils, are extracted from a plant's leaves, stems, flowers, bark, roots, and other parts. Various herbs and plants, including orange, eucalyptus, cornmint, peppermint, citronella, lemon, lime, clove, and spearmint, are distilled using steam and water to produce essential oils. These oils contain volatile aroma compounds and genuine plant essence. Primarily, essential oils are utilized in cosmetics and toiletries, food, and beverages. Increased consumer preference for natural and organic products, whether in cosmetics, food or other product categories, is the primary factor driving market expansion. In response, manufacturers operating in these industries have developed products with natural additives. In addition to factors such as rapid industrialization, an increase in disposable income, and an improvement in the standard of living in emerging economies, the increase in the use of essential oils by a variety of end-user industries contributes to the expansion of the market.

Market Dynamics

What are the Primary Factors Driving the Essential Oil Market?

Rising Popularity of Aromatherapy

People seek stress-relieving and relaxing therapies as the prevalence of hectic lifestyles and schedules grows. Some essential oils, including lavender, mandarin, and rose, have a calming and energizing effect on the body and mind. In spa and aromatherapy sessions, oils with strong aromatic fragrances, such as lavender, are utilized. They are known to promote spiritual health, mental health, emotional health, and restful sleep. Before applying essential oils directly to the body, they must be diluted with a carrier oil due to their high concentration. As a result of the aforementioned factors, the use of essential oils in aromatherapy is increasing. Aromatherapy can also be called essential oil therapy. Customers have become more selective in their use of personal care products over the past decade. Although there are many similar products on the market, superior quality and competitive pricing will increase customer satisfaction and brand loyalty. Increasing expenditures on the research and development of more efficient products, processes, services, and technologies are anticipated to have a positive effect on market growth. The robust growth incentive to the hospitality and tourism sector has made aromatherapy more accessible to the general public. This trend, along with the increased use of natural active ingredients in pharmaceutical and cosmetic formulations, has further boosted the market for ethereal oils.

Rising Demand for Organic and Natural Ingredients in Various Industries

Essential oil market trends play a crucial role in the natural preservation of foods in the face of growing concern over synthetic food additives and their long-term toxicity. Multiple clinical studies involving ethereal oils at concentrations ranging from 0.5 to 20 microliters per gram have demonstrated antibacterial effects in foods such as meat products, fish, fresh meat, milk, dairy products, and cooked rice. Using preservation techniques in conjunction with such oils has resulted in a significant synergy. Consequently, the increased emphasis on research and development for ethereal oils incorporation as a food additive is anticipated to provide additional impetus to the ethereal oils market. Regarding ingredient formulations, the global food and beverage industry is undergoing a gradual but substantial transition. The growing customer preference for natural and organic products has made ethereal oils an indispensable ingredient for food manufacturers. Customers' awareness of the harmful health effects of synthetic chemicals added to flavor applications has steadily increased. Thus, producers are encouraged to use natural inputs to enhance the aesthetic appeal of food products while simultaneously enhancing their nutritional and functional qualities.

What are the Main Factors that will Slow Down the Essential Oil Market?

High Cost of Essential Oil Products

Products made with essential oils cost a lot because they are all-natural. Flowers, stems, leaves, roots, and other plant parts are needed for the extraction of these oils. The amount of raw materials needed to produce one gram of essential oil is enormous. The price of oil is a result of the long extraction process and the limited market availability of raw materials. Additionally, only a few extraction techniques, such as cold-pressed distillation, steam, and water, are commercially available. As a result, the cost of essential oils rises due to a lack of adequate extraction technologies.

What are the Future Opportunities for Essential Oil Market?

Growing Applications of Essential Oils in the Pharmaceutical Industry

Essential oils have been utilized to promote population health and personal hygiene. They are renowned for their anti-inflammatory and antibacterial healing properties and are gaining popularity among medical professionals and researchers. Essential oils aid in the treatment of cancer, digestive disorders, and other diseases by bolstering the immune system. Additionally, they are used to prevent acute respiratory diseases. Consequently, the emerging applications of essential oils in the pharmaceutical industry are anticipated to drive market growth over the forecast period. Essential oils are the primary constituents of medicinal herbs, their biological activities have been known since antiquity, and they are utilized extensively in numerous industries. Essential oils possess important biological properties like antibacterial, antioxidant, antiviral, insecticidal, etc. Due to these distinctive characteristics, they are more widely accepted and utilized in numerous fields across the globe. Interestingly, components of essential oils are utilized in several pharmaceutical applications, which will bring future growth opportunities to the global market.

Regional Analysis

The global market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.

North America Dominates the Global Market

North America region is the highest contributor to the market and is expected to grow at a CAGR of 8.23% during the forecast period. Governmental initiatives have assisted the region in increasing investment in natural rather than synthetic alternatives. The rise in popularity of "Green solutions," herbal essential oils like peppermint, orange, clove, and others, has aided market participants in maintaining their operations. Due to changes in lifestyle and an increase in disposable income, the pharmaceutical and aromatherapy industries in North America have seen an increase essential oil market demand, which supports the expansion of the market. People with hectic schedules seek out relaxation techniques like aromatherapy and spa treatments. Sectors like pharmaceuticals and food and beverages are anticipated to be major drivers of the essential oil market growth. The average cost of oils has decreased as a result of improvements made in the field of essential oil extraction and concentration levels. The market in this region is also anticipated to grow as a result of rising consumer demand for essential oils and the rising usage of cosmetics and body care products.

Europe is expected to witness dynamic growth with a CAGR of 8.7% in the essential oil market share during the forecast period. The prosperous economic climate in the European region has compelled nations to use essential oils in a variety of applications. The seven biggest essential oil processing companies in the world are based in Europe. Applications in spas and naturopathy are the main drivers of essential oil sales in Europe. Growing public awareness of health and hygiene is a driving force behind the market expansion in Europe. This rapid growth is attributed to the existence of end-use industries that have developed as well as consumers' growing awareness of the advantages of essential oils. The expansion of the industry in Europe has benefited from the existence of groups like the European Federation of Essential Oils (EFEO). EFEO was established to advance and defend the interests of all parties involved in the market value chain. The organization is also engaged in discussions to introduce or change essential oil legislation with the EU Commission and EU Parliament. Market expansion in the area has benefited from these trends.

Asia-Pacific is expected to witness a significant CAGR of 9.2% in the global market during the forecast period. This is attributed to favorable weather for farming, inexpensive labor, and a plentiful supply of raw materials. In addition, it is anticipated that a shift in consumer preferences toward wholesome food and drink, as well as other food products in China and India, will present profitable growth opportunities for international market players in the Asia Pacific market. In 2020, China will control the Asia Pacific market. The demand for essential oils in China is anticipated to increase due to the enormous demand for Chinese fragrances and the presence of a sizable consumer base in the skincare market.

The LAMEA region is expected to witness moderate growth with a CAGR of 8.4% in the global market during the forecast period. The majority of orange extracts and essential oil are exported from Brazil. Despite growth from a small base, the essential oil market in Africa and the Middle East will continue to be relatively small in terms of value when compared to developed nations like North America and Europe. When it comes to the use of essential oils and oil-based products, the region has seen overall growth. Due to the Middle East's significant market potential, major international companies are currently expanding there. In addition to the growing use of orange and peppermint oils in healthcare, the medical, and spa & relaxation sectors are what drive the market for essential oils. The growing demand for goods made with natural ingredients is what is driving the market in this area.

Segmental Analysis

The global market is segmented by product and application.

Based on the product, the global market is bifurcated into orange, eucalyptus, peppermint, citronella, cornmint, lemon, clove, lime, and spearmint.

The orange segment is the highest contributor to the market and is expected to grow at a CAGR of 9.1% during the forecast period. Orange essential oil is extracted by cold compression from orange peels. It has a light citrus scent and offers therapeutic and health benefits. It is the cheapest readily available oil on the market. It is abundant in the antioxidant d-limonene, which aids in the cleansing process. It easily combines with other citrus oils. Due to its eco-friendliness and lack of greasiness, the orange essential oil is suitable for use in household cleaners, pesticides, and therapeutic products. Due to its sweet and sour aroma, it is also utilized in perfumes.

The cornmint segment is expected to witness a higher CAGR of 9.05%. The leaves of the herb Mentha piperita, a member of the mint family, are used to make cornmint essential oil, also known by the scientific name Mentha arvensis. This is a medicinal plant that is frequently employed to treat digestive issues like indigestion, stomach infections, and acidity. Food products, toothpaste, and mouthwash all contain this oil as an ingredient for flavoring. Steam distillation of men the leaves, which contain up to 80% menthol, is used to extract this oil. Due to its potent scent, this oil is primarily used in aromatherapy. For calming and energizing the body, cornmint oil is a crucial ingredient in spa treatments and aromatherapy. Due to its powerful, menthol-infused fragrance, this oil is currently used extensively in relaxation therapies. These are used specifically for therapeutic and healing purposes. Due to its low cost and widespread use, cornmint oil has replaced peppermint oil in many different industries.

Based on the application, the global market is bifurcated into food and beverage, medical, cleaning and home, spa and relaxation, and others.

The food and beverages segment is the highest contributor to the market and is expected to grow at a CAGR of 8.24% during the forecast period. In the food and beverage industry, essential oils are frequently used as a flavoring component. Some of the flavors or essences used in food products include peppermint, menthol, lime, orange, spearmint, and others. Orange juice and other tangy foods are flavoring agents that use orange essential oil. Chewing gums and candy contain spearmint oil. In addition to these, flavoring agents for products like toothpaste, soft drinks, cookies, ice cream, and medicines are added using essential oils.

The medical segment is expected to grow at a significant CAGR of 9.07%. The most popular and effective ingredients in pharmaceutical and medical applications are tea tree oil, peppermint oil, lavender oil, and citronella oil. These oils aid in the treatment of various headaches, body aches, fevers, sinus infections, fungal infections, acne, sunburns, and other skin conditions. The body has no trouble breaking down natural molecules, like those in essential oils. Individual customers' adoption of essential oils has been positively impacted by the rise in consumer preference for natural goods. The use of essential oils for medical purposes has become extremely important as the practice of naturopathy spreads to new areas. Therefore, it is anticipated that this industry will offer manufacturers a wide range of opportunities soon.

Recent Developments

• May 2022, VedaOils launched a chemical-free range of soap-making supplies to assist the soap-making process in the Soap Industry.
• January 2022, Symrise acquires Schaffelaarbos to expand its global pet nutrition market in European Union.