FLAVORS AND FRAGRANCES MARKET ANALYSIS

The global flavors and fragrances market size was valued at USD 30.8 Bn in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 6.27% from 2023 to 2030. The increasing preference of consumers toward ready to eat foods and a rise in demand for natural and organic ingredients are driving growth of the global flavors and fragrances market. The market for flavors and fragrances is also expected to grow as consumers are seeking new flavors and fragrances in different types of products. These products are designed to be suited for a range of applications and are likely to be popular in developing markets.

Global Flavors and Fragrances Market: Regional Insights

Regionally, Europe is the largest market in the global flavors and fragrances market. This is attributed to the significant demand from the food & beverages industry, uptake in fine fragrances & cosmetics, and consumption of bio-based products in liquor-based drinks.

North America is the second largest market in the global flavors and fragrances market. The region is expected to exhibit high growth rate due to the increasing demands for flavor & fragrance applications in local beverages. In addition, the region is also projected to witness strong growth in the fine fragrances & cosmetics application segment.

Asia Pacific is the third largest market in the global flavors and fragrances market. It is anticipated to grow at a rapid pace during the forecast period, due to the increasing demand from the food & beverage industry, uptake in fine fragrances / cosmetics, and consumption of bio-based ingredients in alcohol-based beverages.

Figure 1. Global Flavors and Fragrances Market Share (%), By Region

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Global Flavors and Fragrances Market Drivers:

Growing demand for flavor ingredients for dairy, fish and meat alternatives products to augment market growth

There is a high demand for flavor ingredients for dairy, fish and meat alternatives products due to growing vegan population. According to the recent report by Veganz study, a well-known manufacturer of vegan products as well as a supermarket chain in Europe, the number of vegans in Europe has doubled in four years, reaching 1.3 billion in 2016 to 2.6 billion in 2020, accounting for around 3.2% of the regional population. However, the strongest growth is witnessed among the flexitarians, accounting for approximately 22.9% of the European population.

Increasing demand for clean label flavors is propelling market growth

The demand for clean-label flavors is on rise due to growing environmental concerns and increasing adoption of healthy lifestyle. According to Tate & Lyle the demand for clean label claims is increasing by more than 13% in Latin America market and 8% in Middle East & Africa market with claims like ‘natural’, ‘better for you’ and ‘free from’ ascending.

Global Flavors and Fragrances Market Opportunities:

Growing application of flavors in alcoholic beverages is expected to provide significant growth opportunities. For instance, in August 2022, Monster Beverage Corporation has launched its first flavored alcoholic malt beverage product. The beverage will be called The Beast Unleashed (6% abv) and will initially be available in four flavors.

Increasing use of flavors in bakery is also expected to serve major growth opportunities. Vanilla extracts and flavors have gained high popularity in the bakery segment. For instance, Eurovanillin provides a vanillin flavor developed for use in sweet bakery products like biscuits, cakes, and wafers.

Global Flavors and Fragrances Market Trends:

Growing trend of complex heat flavors

Rising awareness regarding the complex heat flavors among consumers as they are probing for enticing flavors is expected to uplift the market growth. For instance, the ingredient company Sensient adds to the above trend by stating a change in consumer preferences in hot flavors over the years which has been from ghost pepper in 2017 to Trinidad Scorpion in 2018 to Carolina Reaper in 2019.

Energy drinks are a growing trend, expanding application of flavors

The use of food flavors in protein shakes are expanding due to growing number of gym freak and athletes worldwide. For this, manufacturers are introducing energy drinks with variety of flavors. For instance, in 2019, Organic Valley has reformulated its Fuel protein shakes, which consist of high-protein, low sugar options made without pesticides or artificial flavors. It is available in various flavors like vanilla, chocolate, and coffee flavors.

Global Flavors and Fragrances Market Restraints:

Manufacturing and supply chain complexities

Factors such as transportation, infrastructure for storage facilities for various food and beverage products, technological advancement especially to the local demand are restricting the market growth over the forecast period.

Negative impact of Covid-19 on the global economy           

The COVID-19 pandemic has affected the supply chain of the flavors and fragrances market. This has led to the disruption of trading activities, production facilities, hotels, and restaurants. Nevertheless, the introduction of innovative and creative fragrances in hygiene products is expected to drive the market growth.

Figure 2. Global Flavors and Fragrances Market Share (%), By Segment Type

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Global Flavors and Fragrances Market Segmentation:

The global flavors and fragrances market report is segmented into source, type, application, and geography

Based on source, the market is segmented into Natural and Synthetic. Out of which, Natural is expected to dominate the global market over the forecast period and this is attributed to the growing concerns among consumers regarding the side-effects of artificial flavors. The natural segment of the global flavor and fragrance market was valued at 30.8 Bn in 2022, and it is projected to reach 50.1 Bn by 2030, recording a CAGR of 6.27% during the forecast period (2023-2030).

Synthetic segment is also expected to witness significant growth in the near future owing to their benefits offered such as final product’s texture, consistency, maintaining flavor, color, and fragrance. The synthetic segment of the flavor and fragrances market was valued at USD 737.46 billion in 2022, and it is projected to reach USD 1153.404 billion by 2030, recording a CAGR of 5.75% during the forecast period (2023-2030).

Based on type, the market is segmented into Aroma Chemicals and Essential Oils. Out of which, Aroma Chemicals is expected to dominate the global market over the forecast period and this is attributed to the growing popularity of benzaldehyde in aroma chemical category. It is strong, intensely sweet, penetrant, and fruity, like a bitter almond. The benzaldehyde sub-segment of the market studied was valued at USD 163.24 billion in 2022, and it is projected to reach USD 248.06 billion by 2030, recording a CAGR of 5.37% during the forecast period (2023-2030).

Essential Oils segment is also expected to witness significant growth in the near future and this is owing to the increasing demand for citrus oil in essential oils category. Citrus oil is widely used in food and beverage preparations to improve the nutritional value of food products. The citrus oil sub-segment of the market studied was valued at USD 1466.28 billion in 2022, and it is projected to reach USD 2141.73 billion by 2030, recording a CAGR of 4.85% during the forecast period (2023-2030).

Based on application, the market is segmented into Bakery & Confectionery, Dairy Products, Savory Food, Beverages, and Other Applications. Out of which, Bakery & Confectionery is expected to dominate the global market over the forecast period and this is attributed to the growing demand for flavored bakery products. The bakery and confectionery segment of the market studied was valued at USD 802.39 billion in 2022, and it is projected to reach USD 1283.72 billion by 2030, recording a CAGR of 6.05% during the forecast period.

Dairy Products segment is also expected to witness significant growth in the near future and this is owing to the growing consumption of yogurt, ice cream, smoothies and shakes, and flavored milk. The dairy products segment of the market studied was valued at USD 536.27 billion in 2022, and it is projected to reach USD 839.37 billion by 2030, recording a CAGR of 5.76% during the forecast period.     

Global Flavors and Fragrances Market: Key Developments

In November 2019, Solvay announced its decision to build a new state-of-the-art facility to manufacture vanillin in Zhenjiang City, in China's Jiangsu Province, boosting its production capacities by 40% and enabling the Group to serve the fast-growing Asian market better.

In February 2019, Solvay started offering two new natural vanillin solutions, including e Rhovanil Natural CW and Rhovanil US NAT, which is globally recognized as a natural ingredient for the US food market, catering to this rising consumer demand for GMO-free, natural and true-to-nature products.

In March 2019, IFF collaborated with Aryballe, a digital olfaction technology based in Grenoble, France, to refine and further develop the flavor and fragrance capabilities. This partnership focused on developing odor sensing and quality control applications to create a platform for applications in the food, fragrance, cosmetics, and other industries.

In April 2019, IFF opened its new global service center in Budapest, Hungary, consolidating key finance processes for its worldwide operations. The center is part of a multi-year effort to optimize IFF’s finance operating model. It would be in Mill Park and would have more than 100 employees by the end of the year.

In July 2020, Takasago announced a pioneering agreement with the Cooperative Corporation of Perfume Plants of Provence (SCA3P) to purchase the Cooperative's production of Lavandin Grosso essential oil.

In December 2019, The Takasago Group opened its first flavors and fragrances factory in Indonesia, with an investment of USD 25 billion. The facility emerged as Takasago’s 12th plant for flavors and fragrances production worldwide.

Global Flavors and Fragrances Market: Key Companies Insights

The global flavors and fragrances market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global flavors and fragrances market are Merck KGaA, Solvay S.A., International Flavors and Fragrances Inc., Takasago International Corp., Kerry Group Plc, Firmenich SA, ROBERTET, TANOBIO, BASF SE, Jiaxing Zhonghua Chemical Industry Co. Ltd, and Sensient Technologies

*Definition: Flavors and fragrances are a key component of various food products and cosmetics. They are also used in personal care, cleaning products and home care products.