Essential Oil Market Outlook, 2028

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. Essential oils can be defined as either products or mixtures of fragrant substances or as mixtures of fragrant and odorless substances. These fragrant substances are chemically pure compounds that are which providing the respective distinguishability. They are extracted through various methods such as distillation, cold press extraction, solvent extraction, enzymatic extraction, and many others. The use of essential oils is rising due to the demand from the food & beverage industry for the preparation of various products such as soft drinks, bakery products, sports drinks, and many others. Furthermore, essential oils have gained demand due to the spa & relaxation centers across the nation. However, certain essential oils can cause allergenic effects, especially in people prone to skin rashes, and those who have pollen allergies may hamper the market growth. Essential oils of herbs and spices origin are rising in demand. Essential oils such as peppermint, spearmint, and orange are in high demand in Canada. This demand is raising because of globalization as consumers demand new, innovative, and international flavors. Moreover, a busy lifestyle and less time for cooking have increased the demand for processed foods as they are convenient, which further opens new possibilities for essential oil use. The increasing awareness about health & hygiene drives the demand for convenience food and consumer products manufactured using natural ingredients across the globe. Similarly, the demand for premium consumer products among the high-income population is expected to drive the essential oils market. The rising demand for convenience and ready-to-eat meals, health and wellness foods, and technological advancements are expected to boost food flavors market growth. Rapid industrialization and increasing consumer disposable incomes in emerging economies such as China and India are also projected to foster the global food flavors market over the forecast period.

According to the research report, “Global Essential Oil Market Outlook, 2028” 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 origins of essential oils date back at least a thousand years, and have been used for medicinal purposes for at least as long. Essential oils are concentrated oils derived from plants that are described as containing “the essence” of the plant. Essential oil can be derived from nearly any plant matter imaginable, from flowers to tree bark. Today, essential oils are used less for medical purposes and more for aromatherapy, skincare, and alternative healing practices. A few of the most commonly used essential oils are tea tree oil, rosemary oil, and lavender oil. There is a strong upward trend in the essential oil market, as it is now being used in almost every industry due to the many health benefits, it offers, from the food and beverage industry to medicines and animal feeds, along with their presence in personal care products and other areas. Furthermore, the increasing R&D activities and innovation in extraction techniques are expected to bolster the market's growth in emerging economies. The prominence of Internet-based online sales is poised to increase over the coming years, as most importers and wholesalers launch websites for online sales in addition to the existing over-the-counter sales. The market is majorly driven by the health benefits offered by essential oils. The global essential oils market is supported by various organizations to promote the use of organic and natural ingredients or products in a majority of day-to-day applications. These organic essential oils are certified with various standards to promote their trade globally. High-quality standards are marked by specific guidelines and regulations for the production, harvesting, and processing of herbs and aromatic crops by international organizations, including the European Union and the United Nations. Post-harvesting processing operations for herbs, spices, and essential oils are monitored by entities such as the Food and Agriculture Organization of the United Nations and The United Nations Industrial Development Organization.

Based on the region, Europe region is anticipated to lead the market during the forecast period with value addition of over USD 3 Billion from 2023 to 2028.

The global essential oil market is segmented into five major regions including North America, Europe, Asia-Pacific, South America and Middle East & Africa. The higher market growth in European market is attributed to the vast population along with various untapped markets, which are likely to attract key players’ attention to expand and establish their operation and distribution facility in this region. In Europe, the presence of organizations such as the European Federation of Essential Oils (EFEO) has benefitted the industry growth. EFEO was formed to promote and safeguard stakeholders' interests across the market value chain. The organization is in discussions with the European Commission and the EU Parliament to amend or introduce legislation concerning essential oils. Such trends have benefitted the market growth in the region. Easy feedstock availability and the presence of various industry players are the major factors behind the dominating market share of Europe in this market. The early developed economy, along with the higher standard of living, are several factors contributing to the development of key end-user industries. 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 legally registered flavoring. Cosmetic producers in Europe are inclining heavily toward including ethereal oils in their formulations. France is the largest producer and exporter of essential oils in Europe, with a long history of producing high-quality oils. The country is known for its lavender, rosemary, and peppermint oils, among others. The French essential oils market is driven by the high demand for natural and organic products, particularly in the cosmetics and personal care industries. Other countries in Europe, such as Italy, Spain, and Switzerland, are also significant markets for essential oils, driven by the increasing popularity of natural and organic products.

The global essential oil market is dominated by citrus (oranges, tangerines/ mandarins, lemons and limes, grapefruit) oil type in 2022 with over 45% revenue share.

The global essential oil market is segmented into citrus oil, rosemary oil, geranium oil, lavender oil, clove leaf oil, rose oil, peppermint oil, clove bud oil, eucalyptus oil, citronella oil, jasmine oil, tea tree oil and others (dill seed, saffron, grape seed oil, cumin seed, nutmeg, cedar wood, 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, cornmint). Citrus-based ethereal oils such as orange and lemon oil dominate the global marketplace due to their availability, superior functional and organoleptic characteristics, and strong demand dynamics. Orange and lavender ethereal oils lead 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 practical 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. The growth can be attributed due to, it has sweet, citrusy fragrance, which is widely used in the food and beverage industry as a flavoring agent. Orange oil is also used in the cosmetic industry for its fragrance and in the cleaning industry for its degreasing properties. The food and beverage industry is the largest consumer of orange oil, accounting for a significant share of the market demand. Also, mandarin oil is a type of essential oil that’s derived from the peels of mandarins, which are citrus fruits. Mandarin oils have different concentrations and scents depending on the variety of mandarin they came from. For instance, grapefruit-mandarin would be bitterer in taste with a strong fragrance while tangerine-mandarin has a sweet smell but less intense flavors. The use for this product varies as well - some people drink or cook with them whereas others put it under their nose to relieve congestion and cold symptoms. It also serves as an ingredient for food such as orange chicken dishes among other recipes where its flavor can enhance the dish without being too overpowering.

According to the report, food & beverages application is anticipated to witness prominent market growth by the end of the forecast period.

The global market is categorized into various applications inducing food & beverages, cosmetics, aromatherapy, healthcare, home care and other applications (feed, insecticides, and paints) etc. Food and beverages remain preferred matrices for incorporating plant-based volatile oils. The addition of ethereal 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 anti-parasitic, anti-toxigenic, and insecticidal traits. In the food and beverage sector, essential oils are widely employed as flavoring and fragrance additives. Due to the expanding popularity of natural and clean label products, the usage of essential oils as natural flavorings has significantly increased. As essential oils are made from natural sources and don't include any toxic chemicals, they are seen as a safer option to synthetic flavorings. Moreover, essential oils are believed to aid with digestion, boost metabolism, and reduce inflammation, among other health advantages. These elements are anticipated to fuel the market for essential oils' food and beverage segment's expansion. Plant-based oils comprise compounds called phenols, terpenes, and terpenoids that are utilized for medical standards and health assistance. These compounds are used as essential ingredients in pharmaceutical agents and therapeutic drugs. The biological activities of these compounds are used for the treatment of various diseases. Carvacrol compounds present in essential oils can be used to lower cholesterol levels, improve gut symptoms, and lose weight. These are also popular as pain-reducing agents and cancer-fighting properties. Essential oils are widely used in capsules and tablets that can be availed from health food stores. The functional properties of ethereal oils make them vital ingredients in the pharma industry for the production of capsules and tablets. For instance, Zane Hellas offers essential oils in the form of capsules for oils to subside to the exact area of the body before dissolving, so as to allow better absorption.

The global essential oil market is further segmented into conventional and organic nature. Among them, organic segment is anticipated to grow with progressive CAGR by 2023-28.

The essential oil products 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 global Essential Oils Market growth. The global food and beverages industry is undergoing a gradual yet substantial transition concerning ingredient formulations. The rising customer's inclination toward 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 their nutritional and functional properties.

Based on the extraction methods, Distillation is the most widely used process across the globe in essential oil market.

The global essential oil market is segmented into distillation, cold press extraction, carbon dioxide extraction, solvent extraction and other extraction methods (resin tapping and maceration). Distillation is used for aromatic compounds. Distillation is the most economical method in essential oils market, and the process can be carried out with simple equipment close to the plant production location. It could be attributed to its property of retaining the oil's benefits and its cost-effectiveness. Steam distillation is popular due to its simplicity and low investment requirements. Steam distillation is the most common method for extracting and isolating oleoresins and essential oils from plants for use in natural products. The amount of steam can be controlled because there is no thermal decomposition of the oil constituents. Indian Aroma Exports, an Indian essential oil manufacturer, provides a diverse range of steam-distilled essential oils. Steam distillation primarily extracts essential oils for perfumery, food, and pharmaceutical applications. Herbs, spices, and flowers can also be distilled. In the process of steam distillation, vegetable material is mixed with water, and the system is brought to a boil, a process known as hydro-distillation. To separate the water from the oil fraction, the vapor is collected and condensed.

The direct distribution sales channel is projected to register highest revenue by the end of the forecast period in global essential oil market.

The distribution channel for global essential oil market is categorized into direct distribution, retail distribution, MLM distribution, online and others (craft fairs and trade shows, home parties and workshops, beauty salons, alternative medicine practitioners, etc.) The direct distribution segment holds the largest share of the global market. Consumers want to experience the product and feel the oil’s fragrance. Furthermore, the companies established a strong network through direct distribution channels. Therefore, the segment is anticipated to hold the dominating share of the market. With increasing product knowledge among individuals, they have started purchasing through different retail channels, including supermarkets, specialty stores, and online stores. However, other sales channels, on account of increasing awareness of essential oil among people, have given rise to more retail sales, primarily through convenience stores. Key players have adopted multi-level marketing strategies to expand their business and increase sales. Most importers and wholesalers have launched websites for online sales and existing over-the-counter sales. The distribution channels for selling the products will likely become complex as some sellers focus purely on online sales to improve their geographic presence worldwide. Companies offer compensation plans and attractive discounts to their distributors to improve their sales. For instance, doTerra has achieved 5 million global customers, of which 70% are wholesale customers. These platforms help increase the reach of their products, spread awareness, and eventually boost sales.

Market Drivers

• The aromatherapy industry has overall displayed an upward trend: Aromatherapy is gaining traction globally, and its rising demand is attributed to the rising hospitality sector and consumer preference for natural aromatherapy products and premium fragrances. The sedentary lifestyle has resulted in increased stress and anxiety levels globally. There is an increased demand for aromatherapy as it is clinically proven to cater to such conditions as it elevates cognitive performance, mood, and performance ability. The stakeholders are harnessing the functional benefits of essential oils and aromatherapy within the supply side. At the same time, the fragrance industry has transited from the classic perfume to the wellness and self-care industry. Besides, beauty and skin care products are integrating within the wellness industry, and aromatherapy is becoming an essential component of fragrance, beauty, and wellness.
• The health benefits of essential oils are a major factor driving the market: Essential oils such as lavender, basil, tea tree, and lemongrass have several health benefits that fuel their adoption among consumers. Basil essential oil is natural relaxant oil that helps relieve stress. The oil, whether applied topically or inhaled, provides relief from migraines, nervous tension, anxiety, depression, fatigue, and mental strain. It is commonly used to soothe stings from honey bees, insects, and snakes. Lavender essential oil works as a toner for the skin. It helps boost blood circulation, thus stimulating the skin cells with an adequate supply of oxygen and nutrition. Moreover, tea tree essential oil helps to stimulate the immune system. It also has antiseptic properties that help cleanse and tone the scalp and skin when applied topically. Therefore, increasing consumer awareness regarding the health benefits of various essential oils will drive the sales of essential oils during the forecast period.

Market Restraints

• Limited Availability of Raw Materials: The lack of availability of raw materials can be caused due to climatic conditions. In unfavorable climatic conditions, it is difficult for farmers to cultivate and grow plants such as herbs, spices, mint, citrus fruits, and others, thus less available raw materials is expected to restraint the market growth. The fluctuating production of these plants has resulted in the volatile supply of these plants in the form of seeds, roots, leaves, and others. The volatile supply of raw materials also drives the prices of the end product, these essential oils. The limited raw material availability is expected to hamper the market's overall value chain, a key restraining factor of the market. Thus, the lack of raw material availability may cause the switching of consumers to other products and can also affect the supply chain.
• High Production Cost for Essential Oils: The entire production process of essential oil includes the procurement of raw materials from farmers, then processing with one of the extraction processes out of cold-pressed, enzymatic extraction, and others, followed by the packaging and supplying of essential oils. Production cost depends on the availability of materials such as seeds, fertilizer, water, production equipment, and the weather. Thus, the lack of any of them interrupts production and increases the production cost. The other factors are price rise, place and right of exchange, presence of cheap low-quality faucets in the market and specified storage and transportation conditions leading to procurement issues and additional cost. In the whole process of production, the cost factor is considered to be the most important, which not only includes the price of raw materials but is also determined by costs of labor, capital, technology, and others. The particular inputs and how these factors are combined to generate production are expressed in the production cost.

Market Trends

• The increase in new product launches: Successful new product launches help increase the revenue and market share of players besides retaining the interest of consumers, which, in turn, supports the growth of the market. For instance, in January 2019, Natural Riches launched its new organic tea tree essential oil. The company claims that the new product is certified as organic pure, unadulterated, therapeutic grade, and quality tested. It can be used with carrier oil for massages. Similarly, in August 2018, Youngevity International introduced three new essential oil products. The three essential oil blends, Copaiba Plus, Big Smile, and Bounce Back, deliver exclusive aromatherapy support to specific areas of wellness. In June 2018, Garden of Life launched a new line of essential oils. The new line contains about ten essential oils such as lavender, peppermint, lemon, tea tree, eucalyptus, sweet orange, geranium, lemongrass, rosemary, and frankincense. Due to such variety of product offerings, the market will continue to grow during the forecast period.
• Increasing Application of the Product across Multiple Industries: Traditionally, aetheroleum oil is widely utilized in food and beverages and aromatherapy. However, 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 September 2022, INEOS Hygienics, a U.K.-based healthcare products manufacturer, launched a range of high-performance handwashes. These products are formulated using ‘INEOS DNA’ fragrance technology, containing purifying ethereal oils and phytoncides.

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, LLC, BASF SE, Takasago International Corporation, Mangalam Organics Limited, doTerra, NOW Foods, Biolandes SAS, The Lebermuth Company Inc., KAO Corporation, Edens Garden and Ultra International B.V.

Key Developments

• In 2023, Young Living, an industry giant renowned for its premium essential oils, stunned pet owners and devotees around the globe by unveiling its innovative new line of essential oils designed specifically for pets.
• In 2022, DoTerra, another prominent player in the essential oils market, caused a stir when it announced the construction of an essential oils facility in the United States. This investment demonstrates DoTerra's commitment to expanding its production capabilities closer to home, assuring its devoted customers of the highest quality and freshest oils.
• In February 2022, Givaudan purchased Myrissi (France). Givaudan's long-term Fragrance & Beauty strategy would be enabled by the acquisition of Myrissi; their expertise in AI would assist Givaudan in proposing new organoleptic approaches to consumers.
• In September 2022, doTERRA has introduced new natural and sustainably sourced essential oils. Eucalyptus essential oil and guaiac wood essential oil are among the new essential oils.
• In September 2022, Robertette has launched a brand-new essential oil online sales platform. The platform offers a wide range of essential oils, vegetal oils, and floral waters, with absolute CO2 extracts and other products on the way in the near future..

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 and Country-wise Essential Oil market analysis
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

Regions & Countries covered in the report

• North America (United States, Canada, Mexico)
• Europe (Germany, United Kingdom, France, Spain, Italy, Russia)
• Asia-Pacific (China, Japan, India, Australia, South Korea)
• South America (Brazil, Argentina, Colombia)
• Middle-East & Africa (UAE, Saudi Arabia, South 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.