World demand for flavors and fragrances -- including flavor and fragrance blends, as well as essential oils and other natural extracts, and aroma chemicals -- is projected to increase 4.3 percent per year to $23.5 billion in 2014. Overall advances will be stimulated by gains in food and beverage processing activity, which is the largest market segment. Growth in personal income levels and consumer spending will also stimulate demand for flavors and fragrances used in cosmetics and toiletries, a market segment historically concentrated in North America and Western Europe, but now seeing rapid advances in developing regions. The best opportunities for flavors and fragrances will be found in the Asia/Pacific region, which will account for one-third of total value gains between 2009 and 2014. These and other trends, including market share and product segmentation, are presented in World Flavors & Fragrances, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.
While the US is by far the world’s largest user of flavors and fragrances (accounting for one-quarter of world demand in 2009), the fastest growth will occur in developing regions. Advances in Asia, Central and South America, Eastern Europe and the Africa/Mideast region will all outpace the global average. Industrialization trends and increases in living standards will fuel demand for flavors and fragrances in these regions’ generally underdeveloped end-user manufacturing industries. Over the forecast period, the Asia/Pacific region will surpass Western Europe to become the second largest regional consumer of flavors and fragrances, behind North America. In particular, China and India will see some of the fastest growth in both demand and output, as multinational producers continue to establish subsidiaries in these countries in order to meet local demand.
Food and beverage processing, which accounted for 47 percent of aggregate demand in 2009, will remain the largest market segment for flavors and fragrances. The expansion of fortified foods -- as well as beverages -- will provide opportunities, since flavors are often used to cover up the off-tastes of vitamins, minerals, antioxidants and other added ingredients. Trends toward fast food and other convenience-oriented food options will further boost demand, as these highly processed items often require stronger flavor loadings. The toiletry and cleaner segment will also remain an important market. Faster growth is expected for applications in cosmetics and toiletries, while demand in the well-established detergent and cleaner industry will be limited by market maturity, even in developing regions such as Eastern Europe.
The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.