Essential Oil Market Overview, 2023-28

An essential oil is a liquid that is generally distilled from the stems, leaves, seeds, roots, or flowers of the plant. The commonly used essential oil used are lavender, tea tree, orange, lemon, peppermint, cornmint, and others. These oils are antibacterial, antiviral, antifungal, and antimicrobial. They by-pass the digestive system easily and thus are beneficial for people with poor digestion/assimilation. Moreover, essential oils are highly oxygenating and are suitable for infants since they cannot swallow tablets and capsules. The growth of the essential oils market can be attributed to usage of essential oils in various applications such as flavor & fragrance, aromatherapies, and others. Moreover, healing benefits of essential oil are expected to be instrumental in governing peak sales paving the way for essential oils market growth. Essential oil is a potent aromatic component isolated from an odoriferous plant of a single botanical species. It is highly concentrated and volatile and is made of various chemical constituents, which give it the characteristic fragrance that is inherent to its parent plant. Furthermore, the use of essential oils in the food industry, as antioxidants, flavorings, or colorants, has also increased, and they can also be used for food preservation. The use of essential oils to improve both food safety and shelf-life of meat products has been mostly used in food products. The use of essential oils can be traced back thousands of years to ancient civilizations such as the Egyptians, Greeks, and Chinese. These cultures recognized the healing power of aromatic plants and utilized them for medicinal and spiritual purposes. The term essential oil itself stems from the word essence, emphasizing the concentrated nature of these plant extracts. People's desire to purchase products derived from natural components has been stimulated by the continued implementation of rules encouraging the use of environmentally friendly ingredients in the food, beverage, and cosmetics industries. Manufacturers from several industries are creating creative ways to include healthy and natural ingredients in their formulas to deliver maximum consumer benefits.

According to the research report, “Global Essential Oil Market Overview, 2023-28” the market is anticipated to cross USD 34 Billion by 2028, increasing from USD 23.25 Billion in 2022. The market is expected to grow with 7.12% CAGR by 2023-28. The market growth is attributable to the increasing demand from major end-use industries such as food & beverage, personal care & cosmetics, and aromatherapy. Essential oils contain complex, volatile chemical compounds, which are known for their antifungal, antibacterial, anti-inflammatory, and antiviral properties. Unlike most conventional medicines and drugs, these oils have no significant side effects. Such factors are projected to be the major driving factor for market growth. Conventional medicines and drugs have pleasant-smelling aroma compounds to create appealing products, mainly for chemicals that emit odors. Essential oils are also steadily replacing most chemicals, drugs, and medicines owing to associated health benefits and decreased risk of side effects. The COVID-19 pandemic has impacted the market positively around the globe. Because oils claim to enhance health and immunity, it increases the demand for essential oils. As per the research and development report of the industries, people should include ethereal oil in daily life to improve their immune systems and achieve a calm mind and a healthy life. The pandemic has increased awareness toward improving the body’s immune system all over the globe and with growing awareness of holistic medicine and the use of organic products. The demand for other oils like tea tree oil, peppermint oil, and eucalyptus oil, which have the potential for aromatherapy and antibacterial and antiviral qualities, has also increased. Major companies such as doTERRA and Young Living Essential Oils are in high demand and increased their product sales. Moreover, many other market players in the industry are focused on improvising their production and supply strategies to increase their demand for the product and improve their marketing strategy. With the help of digitalization, consumers are fulfilling their demands during the pandemic.

Based on the region, Asia-Pacific region is projected to grow with over 8% CAGR by 2023-28 in global essential oil market.

The global essential oil market is segmented into five major regions including North America, Europe, Asia-Pacific, South America and Middle East & Africa. Asia Pacific countries such as India, China, and Indonesia are pioneers in the industry and have emerged as the largest exporters of some of the most precious oils and extracts in the world, such as champaca extract, jasmine extract, davana oil, frankincense oil, sandalwood oil, spice oils, etc. The suitable weather conditions for agriculture, low-cost labor, and ample availability of raw materials are some of the factors acting as the driving forces for the growth of production in this region. China and India are expected to be the largest consumers of essential oils in the region. China is expected to be one of the largest consumers of essential oils in the region, driven by the increasing demand for natural and organic products in the country. The Chinese market is characterized by a large number of small and medium-sized enterprises (SMEs) producing and selling essential oils. The demand for essential oils in the Asia Pacific region is expected to grow in the coming years, driven by the increasing popularity of natural and organic products and the growing awareness of the health benefits of essential oils. Furthermore, due to the rising popularity of traditional medical methods like Ayurveda and Chinese medicine, as well as the rising desire for natural and organic products, the essential oils market is predicted to develop significantly in the Asia Pacific area. Due to the rising demand for essential oils in the food and beverage, pharmaceutical, and cosmetics industries, nations like India, China, and Japan are predicted to lead market growth in the area. Also, the market is expanding in the area as people become more aware of the medicinal uses for essential oils.

Lavender Oil type is projected to witness prominent market growth by the end of the forecast period in global essential oil market.

Lavender Oil is an essential oil obtained from steam distillation from the spikes of certain species of lavender. Although lavender is native to France and the western Mediterranean regions, it is now cultivated worldwide. Lavender oil can benefit the skin in numerous ways. It could lessen acne, help even skin tone, and reduce wrinkles. It can even be used to treat other things, such as improving hair health and digestion. Moreover, lavender oil helps cure migraine problems, while rosemary oil helps increase concentration levels. Personal care emerged as an important segment within spa & relaxation in the global essential oil market as they are used in stress relieving therapies. They beautify hair and skin, makeup, and color cosmetics. Further, these oils are used for cleaning the teeth, gums, and mouth and in soaps, shampoos, and baby products. Rising awareness about using natural and organic products is boosting the natural ingredient segment among personal care products, positively impacting the essential oil industry. They are also widely used in perfumes, body sprays, and air fresheners.

Based on the application, the aromatherapy is projected to grow with a significant market growth during the forecast period in global essential oil market.

The rising popularity of aromatherapy and other alternative medicine is increasing in demand, as are the relaxing effects of essential oils when applied through a massage. The health industry has begun to incorporate essential oils in aromatherapy applications to treat Alzheimer’s, bronchitis, and various cardiovascular problems. Changing lifestyles and their consequences, such as high stress and depression, along with increasing disposable incomes, results in an increase in demand for aromatherapy. Ginger oil, pine oil, oregano oil, and wintergreen oil are some of the essential oils used on a large scale in alternative therapies. The National Association for Holistic Aromatherapy (NAHA), the Alliance of International Aroma Therapists, and The Canadian Federation of Aroma Therapists have established standards for aromatherapy certification in the US and Canada. This would allow the essential oil industry to use different oils for various aromatherapy products, globally. With emerging economies, growing industrialization, increasing demand for processed foods, and consumer preference for quality products, ingredient suppliers are becoming increasingly optimistic about the growth of the food & beverage industry. Essential oil is a liquid that is naturally filtered from the plant’s stems, leaves, flowers, seeds, or roots. The type of essential oils is lavender, tea tree, orange, lemon, peppermint, corn mint, and others. These are antibacterial, antiviral, antifungal, and antimicrobial oil. They bypass the digestive system quickly and thus are beneficial for people with poor digestion/assimilation. Moreover, it contains high oxygenation and is suitable for infants since they cannot swallow tablets and capsules.

The conventional segment is leading the global essential oil market in 2022. Based on the distribution channel, MLM distribution is projected to grow with significant CAGR by 2028.

Synthetic substitutes for essential oils market are easily available and are used in most synthetic cosmetics as cheaper substitutes. Several synthetic drugs are available in the market, including antibiotics and anti-inflammatory drugs. Hence, several synthetic and substandard products available in the market act as substitutes for natural plant extracts and pose a challenge for essential oil manufacturers. Moreover, in most cases, it is highly difficult to recognize the synthetic additives, thus implying the significance of proper labeling. FDA has established labeling requirements for fragrances in cosmetics and aromatherapy. FDA requires the list of ingredients under the Fair Packaging and Labeling Act (FPLA). This law is not allowed to be used to force a company to tell “trade secrets.” Fragrance and flavor formulas are complex mixtures of many different naturals and synthetic chemical ingredients. They are the kinds of cosmetic components that are most likely to be “trade secrets.” Information required for cosmetic essential oils or essential oil products includes the declaration of ingredients and caution statements. The FDA provides a Cosmetic Labeling Guide with full regulations for cosmetic labels and a very useful compliance guide for labeling over-the-counter (OTC) drugs. Such transparency is expected to mitigate the challenge of adulteration and promote the growth of the market.

Many key producers of essential oils have embraced multi-level marketing techniques in order to reach out to more customers and expand their business. Growing awareness of the health benefits of essential oils has resulted in an increase in retail sales, particularly through convenience stores. In addition to traditional over-the-counter sales, key market players are offering products directly to customers through online retail channels such as e-Commerce platforms. As a result, customers now have easier access to products. Manufacturers of essential oils have also allowed wholesalers to order products in bulk via their websites. Thus, adopting multi-level marketing strategies will help manufacturers allow their products to be available to customers in an efficient manner. For instance, DoTerra recently achieved the 5 Mn global customer mark, owing to widespread awareness and easy access to its products.

Carbon dioxide (CO2) extraction is becoming increasingly popular for extracting essential oils in global essential oil market.

CO2 extraction is a gentle and non-toxic method that preserves the integrity and aroma of the plant material. It can produce high-quality essential oils with a more authentic and natural scent compared to some other extraction methods. CO2 extraction allows for selective extraction of specific compounds. By adjusting the temperature and pressure, it's possible to target and extract specific compounds while leaving undesirable ones behind. This level of control is particularly valuable in producing oils with specific medicinal or aromatic properties. Unlike some other extraction methods that use potentially harmful solvents like hexane or ethanol, CO2 extraction is solvent-free. This makes it a safer and more environmentally friendly option. CO2 is a pure and natural substance, so it doesn't introduce impurities into the final extract. This purity is important for applications like aromatherapy, cosmetics, and pharmaceuticals. CO2 extraction is considered more environmentally friendly because it doesn't involve the use of hazardous solvents, and the CO2 used can often be recycled or reclaimed, reducing waste and emissions. CO2 extraction is versatile and can be used for a wide range of botanical materials, including herbs, spices, and flowers. It's used not only for essential oils but also for extracting other valuable compounds like cannabinoids from cannabis plants. Consumers are increasingly seeking natural and high-quality products, which has led to a growing demand for essential oils and other botanical extracts produced using CO2 extraction.

Market Drivers

• Growing Demand for Natural and Sustainable Products: There is a rising global awareness and preference for natural and sustainable products across multiple industries. Essential oils are considered natural alternatives to synthetic fragrances and additives, making them highly sought after. Consumers are increasingly seeking products that align with their values, such as eco-friendliness, cruelty-free sourcing, and organic production methods. This demand for natural and sustainable products is driving the essential oil industry's growth. Essential oil manufacturers are adapting by emphasizing sustainable farming practices, organic certifications, and transparent supply chains. Companies that can demonstrate environmentally responsible and ethical sourcing will have a competitive advantage. Additionally, this driver is encouraging research into new plant sources and extraction methods to meet the growing demand while preserving natural ecosystems.
• Health and Wellness Trends: The health and wellness industry is experiencing rapid growth, with consumers looking for holistic approaches to well-being. Essential oils are a key component of aromatherapy and alternative medicine, as they are believed to have various therapeutic benefits, including stress reduction, pain relief, and mood enhancement. The increasing interest in natural remedies and holistic health practices is propelling the demand for essential oils. Manufacturers are investing in research to better understand the medicinal properties of essential oils and their potential applications in mainstream healthcare. Collaboration with healthcare professionals and institutions is becoming more common. However, regulatory challenges and the need for scientific validation remain hurdles for the industry.

Market Challenges

• Quality Control and Authentication: Ensuring the purity and authenticity of essential oils is a significant challenge in the industry. Adulteration and mislabeling are common issues, as the high value of certain oils incentivizes fraudulent practices. Consumers and businesses alike need assurance that they are purchasing genuine and high-quality products. The industry is investing in advanced testing methods, including gas chromatography and mass spectrometry, to verify the chemical composition of essential oils. Certifications and standards are also being developed to help consumers make informed choices. Companies that can guarantee the quality and authenticity of their products will gain trust and a competitive edge.
• Environmental Concerns and Sustainability: Many essential oil crops are sensitive to climate change, and unsustainable farming practices can lead to deforestation and habitat destruction. Moreover, overharvesting can threaten the survival of certain plant species. As the demand for essential oils grows, the industry faces increasing scrutiny regarding its environmental impact. Sustainable and ethical sourcing practices are becoming a priority. Companies are working to establish partnerships with local communities and adopt regenerative agriculture methods to reduce their environmental footprint. Additionally, the industry is exploring the cultivation of alternative plant sources that are more resilient and environmentally friendly.

Market Trends

• Digital Transformation and E-commerce: The essential oil industry is experiencing a digital transformation, with businesses increasingly relying on e-commerce platforms to reach consumers directly. This trend has been accelerated by the COVID-19 pandemic, which prompted a shift towards online shopping. Essential oil companies are investing in online marketing, e-commerce platforms, and mobile apps to enhance customer engagement and sales. Digital tools also facilitate product education and customer support, helping consumers make informed choices.
• Diversification of Product Offerings: To cater to a broader consumer base and adapt to changing preferences, essential oil companies are diversifying their product offerings. This includes developing new blends, incorporating essential oils into various products (e.g., skincare, cleaning products), and creating personalized aroma profiles. Diversification allows companies to tap into different market segments and expand their customer base. It also encourages innovation and creativity in product development, contributing to the industry's overall growth.

Competitive Landscape

The global essential oil market is highly fragmented, with a large number of small and medium-sized players operating in the market. However, there are several key players that dominate the market. These companies have a strong presence in the market and are known for offering a wide range of high-quality essential oils. In addition, they invest heavily in R&D and product development to stay ahead of the competition. Overall, the market is highly competitive, with new players entering the market regularly. As the market continues to grow, companies will need to differentiate themselves through product innovation, quality, and branding to maintain their competitive edge. Manufacturers are working to improve the functionality of essential oils in various applications such as food, cosmetics, pharmaceuticals, and animal nutritional products. Many companies are focusing on introducing new essential oil blends in order to keep up with rising consumer preferences. This factor is driving the sales of essential oils as a result of the various benefits provided, which has created long-term opportunities for global manufacturers. Major companies profiled in the report include Symrise AG, International Flavors & Fragrances, Royal DSM N.V., Givaudan SA, Cargill, Incorporated, Sensient Technologies Corporation, Robertet Group, Mane SA, Young Living, Phoenix Aromas & Essential Oils.

Key Developments

• In July 2022, doTERRA is growing rapidly with Expansion into India. doTERRA's essential oils are sourced from India, Asia, the Pacific, the Middle East, and Africa, so an operating presence in India makes strategic sense for doTERRA’s global growth.
• In September 2022, MANE KANCOR’s innovation Center was opened at Angamaly, focusing on innovations in natural shelf-life solutions, natural color solutions, culinary taste solutions, personal care ingredients, and nutraceutical products.
• In April 2022, Phoenix Flavors and Fragrances, a leading developer and compounder of high-performance flavors and fragrances, announced the acquisition of Innovative Fragrances Inc., an Atlanta-based developer and compounder of fragrance compounds serving a diverse set of end markets including home fragrance, personal care, candles, and other air fresheners. The acquisition of IFI aligns with the Company’s vision of creating a market-leading developer of high-performance flavors and fragrances, supported by a strong team of perfumers and regulatory experts to meet customer-specific requirements and needs.
• In July 2022, the acquisition of Flavor Solutions, Inc. (US) grew Sensient’s flavor portfolio through the expansion of its traditional flavor offering as well as the addition of savory reaction flavors, natural shelf-life extender technologies, and additional sweetness enhancing and salt reduction taste-modulation technology platforms.
• December 2022 - Dabur India, India’s one of the leading consumer products manufacturers, expanded its air freshener products by launching the “Odonil Gel Pack”. This product is infused with essential oils..

Considered in this report:

• Geography: Global
• Historic year: 2017
• Base year: 2022
• Estimated year: 2023
• Forecast year: 2028

Aspects covered in this report:

• Global Essential Oil with its value and forecast along with its segments
• Regional wise Essential Oil market analysis
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

Regions covered in the report

• North America
• Europe
• Asia-Pacific
• South America
• Middle-East & Africa

By Type

• Citrus (Oranges, Tangerines/ Mandarins, Lemons and Limes, Grapefruit)
• Rosemary Oil
• Geranium Oil
• Lavender Oil
• Rose Oil
• Peppermint Oil
• Clove leaf Oil
• Eucalyptus Oil
• Citronella Oil
• Clove Bud Oil
• Jasmine Oil
• Tea Tree Oil
• Others (Dill Seed, Saffron, Grapeseed Oil, Cumin Seed, Nutmeg, Cedarwood, Frankincense, Sandalwood, Sage, Clove bud, Myrrh Oil, Juniper Berry, Cardamom, Black pepper, Ginger, Cinnamon, Basil, Spearmint oil, Jasmine oil, Turmeric, Vetiver, Acorus Calamus, Ajowan, Carrot Seed, Cassia, Celery, Curry Leaf, Cypriol, Davana, Fennel, Garlic, Ylang ylang)

By Application

• Food & beverages
• Cosmetics
• Aromatherapy
• Healthcare
• Home care
• Other applications (feed, insecticides, and paints)

By Nature

• Conventional
• Organic

By Method of Extraction

• Distillation
• Cold press extraction
• Carbon dioxide extraction
• Solvent extraction
• Other extraction methods (resin tapping and maceration)

By Distribution Channel

• Direct Distribution
• Retail Distribution
• Mlm Distribution
• Online
• Others (Craft Fairs and Trade Shows, Home Parties and Workshops, Beauty Salons, Alternative Medicine Practitioners, etc.)

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience:

This report can be useful to industry consultants, manufacturers, suppliers, associations and organizations related to the Essential Oil industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.