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The European market potential for essential oils

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Essential oils have a wide range of applications. In cosmetics, they are used as fragrances and for their active properties. There is an increasing demand for niche essential oils used in the cosmetics and fragrance industry. This report focuses on frankincense and patchouli essential oils on the European cosmetics market.

1. Product description

Essential oils are a complex mixture comprising over 1,000 compounds. They are typically a colourless substance, but they can also be pale, yellow or brown. As they are oil-based, they are insoluble in water. Essential oils have applications in traditional medicine, cosmetics and aromatherapy.

Essential oils can be produced from various plant sources such as resins, leaves, flowers, fruits, bark and wood. They are usually extracted by steam distillation; they can also be extracted by water distillation, solvent extraction and floral extraction. The extraction method largely depends on the raw materials being extracted.

In cosmetic products, essential oils are normally used as fragrances. They are becoming popular as natural alternatives to synthetic fragrances in product formulations. They have medicinal properties and can have a positive effect on the body. Essential oils are also used in air fresheners, as they provide benefits such as refreshing, soothing or cleansing the air.

Some examples of essentials oils used as fragrances:

-           Shooting citrus
-           Spring floral
-           Warm vanilla
-           Holiday blend
-           Autumn spice

The following HSC numbers of essentials oils for fragrances are used:

-           3301.12 – Sweet and bitter orange
-           3301.13 – Lemon
-           3301.19 – Citrus fruit oils not elsewhere specified
-           3301.24 – Peppermint
-           3301.25 – Other mint oils
-           3301.29 – Other essential oils
-           3301.30 – Resinoids
-           3301.90 – Oleoresins

The most common essential oils are citrus and peppermint oils. The majority are used in food production. There has been a growing demand for niche essential oils in the cosmetics sector. The reason is that cosmetics brands look for unique ingredients which are natural and cater to consumers who are looking for high-quality products. Examples include frankincense and patchouli essential oils.

There is a lot of competition in the essential oil market, particularly for orange, lemon, and peppermint. European buyers are willing to source from small suppliers when it comes to niche essential oils; their minimum volume requirements are also low. The most prospective essential oils include patchouli, ylang-ylang, neroli, and frankincense.

Frankincense essential oil

Frankincense essential oil is sourced from the boswellia carterii tree, which is typically found in Somalia and Pakistan. The oil is extracted by steam distillation from the oleo gum resin. It is used in cosmetics and aromatherapy, as it has active and functional properties. Frankincense oil has anti-ageing properties; it is also used to reduce acne and blemish, while it is a remedy for scars, wounds, eczema and stretch marks as well.

In aromatherapy, frankincense oil is used to relieve stress and anxiety, reduce pain and inflammation, boost the immune system and help fight cancer. Frankincense oil can be absorbed through the skin or used as a bath soak.

While frankincense essential oil is traded under HS code 33012941, there are no trade data recorded under this HS code. Trade data of frankincense essential oil are clubbed together under HS code 330129. In the COSING database, frankincense oil is labelled 89957-98-2 / 8050-07-5. COSING is the official cosmetic ingredient database of the European Union (EU). It lists more than 15,000 ingredients used in the manufacturing of cosmetics and gives information on permitted as well as banned substances.

Table 1: Frankincense essential oil record on COSING

INCI Name

BOSWELLIA CARTERII OIL

Description

Boswellia Carterii Oil is the volatile oil obtained from the Boswellia carterii, Burseraceae 

INN Name

 

Ph. Eur. Name

 

CAS #

89957-98-2 / 8050-07-5 

EC #

289-620-2 / 232-474-1 

Chemical/IUPAC Name

 

Cosmetic Restriction

 

Other Restriction(s)

 

Functions

MASKING

 

TONIC

SCCS opinions

 

Identified INGREDIENTS or substances e.g.

 

Source: COSING

Table 1 provides the INCI name as well as the CAS number. The database also lists the properties and applications of natural essential oils. This information is used by suppliers preparing a technical dossier for their ingredients.

Patchouli essential oil

Patchouli comes from a plant species in the same family as mint and lavender. There are 3 species of patchouli, which are called Pogostemon Cablin, Pogostemon Heyneanus and Pogostemon Hortensis. Pogostemon Cablin is the one cultivated for its essential oil, because of its superior properties.

Patchouli is a brushy herb grown in the tropical regions of Asia. It has a heavy and strong scent. It is usually extracted by steam distillation of the dried leaves. Initially, patchouli was used in the perfume industry, but it is also used now in incense and alternative medicine. Patchouli oil is made using sesquiterpene alcohol, which helps its use in fragrances.

In cosmetics, patchouli can be used in haircare products, skincare products and deodorants. It is mainly used for its conditioning properties. Patchouli essential oil is traded under HS code 3301295129. Trade data of patchouli essential oil are clubbed together under HS code 330129.

Table 2: Patchouli essential oil record on COSING

INCI Name

POGOSTEMON CABLIN LEAF OIL

Description

Pogostemon Cablin Leaf Oil is the volatile oil obtained from the leaves of the Patchouli, Pogostemon cablin, Labiatae 

INN Name

 

Ph. Eur. Name

 

CAS #

8014-09-3 / 84238-39-1 

EC #

- / 282-493-4 

Chemical/IUPAC Name

 

Cosmetic Restriction

 

Other Restriction(s)

 

Functions

MASKING

SCCS opinions

 

Identified INGREDIENTS or substances e.g.

 

Table 2 provides the INCI name as well as the CAS number. The database also lists the properties and applications of natural essential oils. This information is used by suppliers preparing a technical dossier for their ingredients.

This study focuses on essential oils with HS code 3301 and HS code 330129, because essential oils such as frankincense and patchouli are traded under HS code 330129.

Figure 1: Examples of cosmetic products containing essential oils in Europe

Examples of cosmetic products containing essential oils

Source: Various 

Tips:

  • Familiarise yourself with the beneficial properties your essential oil offers to the cosmetics industry. For example, frankincense oil’s anti-ageing properties and patchouli oil’s hair conditioning properties.
  • Inform European buyers about your essential oil’s beneficial properties when approaching them along with displaying this information on your company website and marketing materials. This is likely to increase your chances of entering the European market.
  • Focus on niche essential oils that cannot be sourced from Europe. European buyers prefer to source raw materials locally and will only consider imported essential oils if there is limited supply. Examples include frankincense, patchouli, neroli, sandalwood and ylang-ylang.

2. What makes Europe an interesting market for essential oils?

The European cosmetics market presents an opportunity for suppliers of essential oils from developing countries. There is a growing demand for niche essential oils in the fragrance and personal care industries. Consumers are demanding high-quality natural products on the European market. The import of essential oils and other essential oils to Europe is increasing, which trend is likely to continue in the coming years.

According to Cosmetics Europe, the European cosmetics and personal care market is the largest in the world with a value of €79.8 billion in 2019. Euromonitor fragrance sales data for 2019 show that European fragrance sales were US$18.2 billion.

The global luxury perfume market was valued at US$11.7 billion in 2018, with it expected to grow by a compound annual growth rate of 5.3% to reach US$16.8 billion in 2026. Increasing consumer preference for glamour, style, fashion and fragrance are key drivers for growth. Other drivers include the high purchasing power of target consumers and the high presence of luxury brands across the market.

Artisanal and niche fragrances are also on the rise. They are perceived to be of higher quality, as they use a higher concentration of extracts. Growth is driven by the consumer demand for natural high-quality products in Europe. According to Market Data Forecast, the global natural fragrances market is expected to grow at a compound annual growth rate of around 5% to reach US$39 billion in 2025.

Essential oils are mostly used in cosmetic products as fragrances, usually in skincare products, haircare products and toiletries. Some essential oils, such as frankincense, are used for their active properties. According to Cosmetics Europe, the categories of skincare products, haircare products and toiletries comprise about 70% of the total European cosmetics market. The large market provides a good opportunity for essential oils exporters in developing countries. For more information on opportunities for European natural ingredients in the cosmetics sector, see CBI study what is the demand for natural ingredients for cosmetics in the European market.  There is a growing market for natural and organic cosmetics in Europe; the market was valued at EUR 3.64 billion in 2018. Ecovia Intelligence projects the market to grow at a healthy rate in the coming years. The consumer demand for cosmetics and toiletries which avoid contentious chemicals is expected to fuel market growth. This healthy growth rate corresponds to a robust demand for natural ingredients, providing opportunities for potential suppliers in developing countries.

Figure 2: Imports of essential oils (HS code 3301) to the EU, 2015–2019

Imports of essential oils

Source: Eurostat

Imports of essential oils and oleoresin have decreased slightly between 2015 and 2019. However, the import value has increased. The majority of essential oils are used by the food industry. Higher priced essential oils are usually used in the perfumer and personal care industries. Fragrances, cosmetics and aromatherapy generate about one-third of the demand of essential oils according to the European Federation of Essential Oils (E.F.E.O).

The European essential oils market is expected to grow in the coming years. Increasing consumer demand for products made from natural ingredients is a major driver. Another factor is that natural ingredients are gaining popularity in the cosmetics industry. Germany, Netherlands, France and UK are leading importers in Europe.

Figure 3: Imports of other essential oils (HS code 330129) to the EU, 2015–2019

Imports of other essential oils

Source: Eurostat

Figure 3 shows the imports of other essential oils (HS code 330129) to the EU from 2015 to 2019. This category includes essential oils other than citrus, excluding peppermint and other mint essential oils. Frankincense (HS code 33012941) and patchouli (HS code 3301295129) are two examples of oils included in this category. Generally, these are high-value oils used in products such as cosmetics and perfumes. 

Figure 3 shows the volume of imports to Europe decreased by 7.7% from 2015 to 2019. However, over the same period, the value of imports to Europe increased by 21.6% because of growing demand for high-value essential oils, although volumes are declining.  In 2019, more than 42% of imported essential oils came from intra-EU trade, a slight increase from 2015.

Tips:

  • Focus on buyers that offer a wide range of essential oils. These buyers tend to source niche essential oils and supply artisanal producers of fragrances. By supplying niche essential oils, you can justify the price premium that artisanal manufacturers of cosmetics and perfumes are willing to pay.
  • Make sure that you keep the quality of your essential oils consistent. European buyers pay a lot of attention to quality. Avoid adulteration of your essential oils and be transparent when buyers request information as well as documentation about the production process.
  • Visit trade fairs when looking for buyers. Examples include InCosmetics and Vivaness.
  • See the CBI study on tips for finding buyers in the European cosmetics market for useful information and guidance on finding buyers in channels you can use to enter the European market.

3. Which European countries offer the most opportunities for essential oils?

The countries that offer the most opportunities for suppliers of essential oils, especially patchouli and frankincense, are France, Germany, Netherlands, Spain, UK and Italy. These countries are the largest importers of other essential oils. France, Germany, and the UK have the largest consumer markets for cosmetics as well as fragrances.

Figure 4 shows that Germany is the leading European importer of essential oils (HS code 3301), followed by the Netherlands and France. In the case of other essential oils (HS code 330129), France and Germany are the leading importers.

France

Table 3: French imports of essential oils (HS code 3301 and 330129), 2015–2019

2019

Volume in  1,000 tonnes

Volume change (2015–2019)

€ million

Value Change (2015–2019)

Main exporters’ market shares

Important market players

HS code 3301

11.1

23.2%

391.7

14.1%

Brazil (10.2%), China (9.4%), India (9.3%)

Elixens

HS code 330129

4.6

17.7%

273.7

12.7%

China (19.3%), Belgium (16.2%), Indonesia (11.2%)

SNPM Huiles Essentielles

Source: Eurostat

Table 3 shows France is a leading European importer of essential oils in terms of volume and value. Suppliers of essential oils from developing countries should target French buyers, as there is a growing demand for natural fragrances in the French cosmetics market. French consumers are seeking high-quality products containing natural ingredients. Market growth is also driven by growing demand for natural and organic cosmetics.

France saw a healthy rise in the imports of essential oils from 2015 to 2019. In 2019, 36% percent of essential oils imported to France came from other European countries, an increase of 9.1% from 2015. Essential oils with HS code 330129 account for 41.1% of France’s total essential oils imports. In terms of value, this share is nearly 70%. Increasing French imports of essential oils in volume and value means France offers good opportunities to exporters of essential oils from developing countries.

France has a significant fragrance industry which achieved revenues of US$2.3 billion in 2020, and is expected to grow by a compound annual growth rate of 1.1% until 2025. France is a leading exporter of fragrances to other European countries and the rest of the world. French perfume exports are performing well, reaching more than €4.8 billion in 2020, an increase of 23% in the past five years.

Some of the major cosmetics companies in France are L’Oréal, Groupe Rocher, Laboratoire Nuxe, Bioderma Laboratories and Pierre Fabre. France has an important market for natural and organic cosmetics. Leading natural and organic cosmetics companies include Caudalie, Léa Nature Group, and Nature et Stratégie.

Leading fragrance houses in France include Caron, Chanel, Coty, and LVMH. Fragrance and flavour companies such as Mane and Robertet Group are based in France. The large fragrance suppliers have essential oils in their portfolio, since there is a growing demand for natural fragrances.

Germany

Table 4: German imports of essential oils (HS code 3301 and 330129), 2015–2019

2019

Volume 1,000 Tonnes

Volume change (2015–2019)

Value

€ million

Value change (2015–2019)

Main exporters' market shares

Important market players

HS code 3301

20.7

-1.3%

340.0

18.2%

Netherlands (44.4%), Brazil (11.3%)

SanaBio GmbH

HS code 330129

3.2

-1.9%

139.3

26.6%

China (37.4%), France (19.9%)

Atriplex GmbH

Source: Eurostat

Germany is a leading European importer of essential oils. Between 2015 and 2019 the volume of German imports declined 1.3%. However, the value of essential oil imports increased by 26.2% during this period. In 2019, Germany’s imports of essential oils from outside of the European Union reached 34.1%, an increase of 1.5% from 2015.  Essential oils with HS code 330129 accounted for 15.5% of the total volume imported to Germany in 2019.  In Germany, the value of high-quality essential oils has increased, thus making it an attractive market for exporters of essential oils in developing countries.  

Germany has the largest consumer market in Europe. The leading cosmetics manufacturer in Germany is Beiersdorf, which also owns the perfume brand Gammon. Other perfume brands in Germany include Urban Scents, Mäurer & Wertz and Biehl Parfumkunstwerke. There is a growing demand for premium perfumes that use high-quality ingredients, such as Atelier PMP.

Germany has the largest natural and organic cosmetics market in Europe, valued at €1.3 billion in 2018. Growth is expected to continue at a steady pace in the coming years. Leading natural and organic cosmetics companies include Wala Heilmittel, Börlind group, Laverana, Logocos (L’Oréal), Primavera Life, and Santaverde. Leading importers of essential oils in Germany include SanaBio and Atriplex. SanaBio specialises in organic essential oils.

Germany has a significant cosmetics and perfume industry, with fragrance sales reaching €2.6 billion in 2019. Germany was the third-largest global exporter of perfumes in 2019, with exports valued at US$2.2 billion. Exporters of essential oils should target German buyers, as there is a growing demand for natural fragrances in the cosmetics sector.

Netherlands

Table 5: Dutch imports of essential oils (HS code 3301 and 330129) 2015–2019

2019

Volume 1,000 Tonnes

Volume change (2015–2019)

Value € million

Value change (2015–2019)

Main exporters' market shares

Important market players

HS code 3301

13.3

-0.5%

253.9

57.3%

Brazil (39.8%), United States (12.8%), Mexico (10.1%)

IMCD N.V.

HS code 330129

1.6

106.4%

94.3

148.6%

United States (35.9%), China (19.1%), France (12%)

De Lange BV

Source: Eurostat

The Netherlands is a significant European importer of essential oils. Between 2015 and 2019 the volume and value of Dutch imports of essential oils increased. Volume increased by nearly 106% while value increased by almost 206%. These figures suggest a substantial increase in prices caused possibly by poor harvests and unfavourable weather conditions. In 2019, essential oils imported from outside of the European Union had a share of nearly 84%, a drop of more than 4% percent from 2015.

Essential oils with HS code 330129 account for more than 12% of the share. This share has increased in the last few years and is expected to continue in the coming years. The increasing volume and value of essential oil imported mainly from outside of the European Union makes the Netherlands an attractive market for exporters in developing countries.

The Netherlands also has a growing market for natural and organic cosmetics, valued at €66 million in 2018 and growing every year. Leading Dutch brands include De Traay and Chi International.

The Netherlands is an important re-exporter of raw materials, such as essential oils, to other European countries thanks to its strategic position as an entry point for raw materials. The Netherlands is expected to remain an important importer of essential oils from developing countries. Important traders of essential oils include IMCD and De Lange.

Spain

Table 6: Spanish imports of essential oils (HS code 3301 & 330129), 2015–2019

2019

Volume 1,000 Tonnes

Volume change (2015–2019)

Value € million

Value change (2015–2019)

Main exporters' market shares

Important market players

HS code 3301

5.5

-37.3%

121.2

-1.9%

China (20.5%), Brazil (17.6%), France (10.5%)

CHEMIR S.A. 

HS code 330129

2.4

-35.1%

78.8

-7%

China (24.7%), Indonesia (17.4%), France (15.0%)

Grupo Pilmon, S.L.

Source: Eurostat

The volume and value of Spanish imports declined between 2015 and 2019. Essential oils imported from outside of the EU accounted for a 66.4% share of Spanish imports in 2019, a 13.2% decrease from 2015. Essential oils with HS code 330129 account for nearly 44% of the total volume and more than 65% of the total value of essential oils imported to Spain.

There is growing demand for natural and organic cosmetics in Spain; the Spanish natural and organic cosmetics market was valued at €69 million in 2018. Leading domestic operators include Disna and Alqvimia. Important perfumery companies in Spain are Carner Barcelona and Campos de Ibiza.

Spain’s fragrance industry achieved revenues of more than US$1.3 billion in 2020, and is expected to grow by a compound annual growth rate of 3.5% to 2025. Spain is positioned as a leading country in the global fragrance market, being ranked as second-largest global exporter.

Demand for natural and organic cosmetics is expected to continue to grow in Spain. Suppliers of essential oils should target Spanish buyers because of the growing demand for essential oils and the expanding perfumery industry.

UK

Table 7: British imports of essential oils (HS code 3301 and 330129), 2015­–2019

2019

Volume 1,000 Tonnes

Volume change (2015–2019)

Value € million

Value change (2015–2019)

Main exporters' market shares

Important market players

HS code 3301

10.8

-24.8%

228.4

-12.7%

United States (18.4%), China (12.8%), Brazil (12.0%), India (10.0%)

Cornelius

HS code 330129

2.6

-5.8%

110.3

-2.6%

China (34%), France (11.3%), United States (10.7%)

A&E Connock

Source: Eurostat

UK imports of essential oils declined in terms of volume and value between 2015 and 2019. The volume of imported essential oils shrank by 24.8% while value decreased by 12.7% over this period. The share of essential oils imported from outside the EU was 67.2% in 2019, an increase of 3.2% from 2015. Essential oils with HS code 330129 make up 24% of the total volume.

The UK has the third-largest cosmetics market in Europe. The total sales value of fragrances in the UK was estimated at £1.74 billion. Essential oils imported to the UK are usually re-exported to other European countries.

Some of the leading cosmetics companies are Unilever and Elemis. The UK natural and organic cosmetics market was valued at €360 million in 2018, with demand for natural and organic cosmetics growing every year. Important UK companies include Neal’s Yard Remedies, Tisserand (First Natural) and Absolute Aromas.

Although the volume and value of UK imports of essential oils dropped from 2015 to 2019, the demand for essential oils for personal care products is expected to grow further in the next few years. Growing consumer awareness and a rising demand for high-quality natural products, such as perfumes and personal care products are the main drivers behind this. However, Brexit (Britain’s exit from the European Union) is likely to disrupt the supply chains for raw materials.

Italy

Table 8: Italian imports of essential oils (HS code 3301 and 330129), 2015–2019

2019

Volume 1,000 Tonnes

Volume change (2015–2019)

Value € million

Value change (2015–2019)

Main exporters' market shares

Important market players

HS code 3301

3.8

29.5%

69

22.9%

France (31.4%), United Kingdom (14.2%), Germany (13.9%), Spain (13.5%)

LR Flavors & Fragrances Industries SpA

HS code 330129

1.2

24.2%

31.1

34.7%

France (47.2%), Germany (14.6%)

LR Flavors & Fragrances Industries SpA

Source: Eurostat

Italian imports of essential oils increased in volume and value between 2019 and 2015. The volume of imports grew by 29.5% while value increased by 22.9% over this period. In 2019, 13.4% of Italian imports of essential oils came from outside the EU, a 3.6% drop from 2015. Essential oils under HS code 330129 account for nearly 32% of the total volume imported. Most essential oils imported to Italy come from within the EU.

Italy has the fourth-largest cosmetics market in Europe, valued at €10.1 billion in 2019. The Italian fragrance industry achieved revenues of almost US$1.2 billion in 2020, and is expected to grow by a compound annual growth rate of 2.2% to 2025.

Italy has the third-largest natural and organic cosmetics market in Europe, valued at €425 million in 2018. There is a growing market for natural and organic cosmetics in Italy. Italian consumers are becoming more aware of the environmental impact of cosmetic ingredients. Leading natural and organic companies include L’Erbolario and Helan.

Tips:

  • Be prepared to provide documents and marketing materials concerning the sustainability and traceability of your essential oil when approaching European buyers.
  • Be transparent when working with European buyers. Quality is one of the main requirements European buyers look for when sourcing essential oils, so ensure quality consistency in batches.

There is a growing demand for niche essential oils in the cosmetics sector. European consumers are looking for high-quality products that are safe and natural. This trend is driving the demand for personalised fragrances made of high-quality essential oils. Consumers are also seeking sustainable products that have a relatively low environmental impact. However, growing demand for allergy-free cosmetics in Europe and the coronavirus pandemic pose threats and challenges to exporters of essential oils from developing countries.

Growing importance of sustainable production

There is a growing need for transparency and traceability of supply chains in the cosmetics industry. The sustainable production of frankincense and patchouli essential oils is becoming more important. This trend is driven by increasing consumer awareness and a demand for environmentally friendly products. Thus, large cosmetics such as L’Oréal through its ‘L’Oréal for the future’ and Unilever through its Sustainable Living Plan have implemented sustainability programmes in recent years.

Boswellia carterii trees are dying because of over-harvesting. Since frankincense production is the main source of income for some disadvantaged communities in mountainous regions of Somalia, the famers are under economic pressure. As a result, multiple cuts are made to trees and they are not given the usual 1-year resting period. Moreover, the increasing demand for frankincense essential oil pushes up the prices, putting pressure on farmers to produce more.

This situation leaves Boswellia trees vulnerable to insect attacks and decreases their germination rate. Such unsustainable practices could have severe consequences for frankincense oil production. A recent study published by Nature Sustainability concludes that frankincense production will decrease by half in the next twenty years and Boswellia woodlands around the world will shrink by 90% in 2070.

Cosmetic companies want to develop products made according to environmentally sustainable and responsible practices, as well as providing social benefits. For example, working with collectors and the local community Neal Yard’s Remedies’ Frankincense Project is a conservation programme to propagate, cultivate and care for the sustainable production of frankincense in Oman. There are good opportunities for suppliers when they can demonstrate their essential oils comply with buyer requirements in these areas.

Producers of patchouli essential oil also face sustainability challenges, which include climate change, soil nutrient depletion and vulnerability of farmers. There are various sourcing partnerships in place that enable sustainable sourcing of patchouli. These partnerships have been introduced by Givaudan and Firmenich. Firmenich sources its patchouli from the Indonesian essential oil supplier Indesso.

Sustainability practices in the essential oil industry will become more important in the coming years. Exporters of frankincense oil and patchouli oil from developing countries should consider adopting sustainability schemes, such as FairWild and EU Organic certification to capitalise on this opportunity. Having such certification can help make frankincense oil and patchouli oil more competitive and attractive to prospective European buyers.

To further capitalise on this opportunity, exporters should promote on their company website and marketing materials all the certifications and labelling obtained for their essential oils. Arbor Oils of Africa is an example of a company in a developing country that has capitalised on this trend, exporting EU Organic certified frankincense oil and promoting the EU Organic certification on its website.

Tips:

  • Invest in sustainability practices when supplying frankincense and patchouli essential oils. European buyers look for suppliers that adhere to sustainability standards and practices. Buyers like to use this information in marketing, especially when approaching customers.
  • Consider adopting sustainability standards such as FairWild and/or Organic. Having your essential oils certified adds credibility to your products, allowing you to charge a premium.
  • Inform prospective buyers about the certification your essential oil holds along with promoting all your certifications on your company website and marketing materials to make it more appealing.

Increasing demand for personalised and niche fragrances

In recent years, there has been a trend towards the personalisation of fragrances, which is expected to continue in the coming years. This trend is gaining popularity because it allows consumers to connect a scent with their personality at an emotional level. It also gives them a greater sense of choice and control. The personalisation trend is popular especially with millennials. For instance, research shows that 70% of young UK consumers want to wear a ‘different fragrance from everyone else’.

Niche fragrance products and lines are seeing the most interest as consumers move away from the more widely available fragrance lines. As the fragrance market becomes more saturated, the niche fragrance market offers fragrance personalisation. Discerning consumers are more willing to pay higher prices for a scent that is customised to their needs.

Scents are being created from alternative ingredients. The goal is to create unique olfactive sensations for customers. A new trend is associating a scent to a place or a memory. This trend is becoming popular in the retail sector, with the growth in stand-alone perfumeries. For example, the British personal care company Lush created a range of personal care products containing patchouli oil. The line is associated with the hippie movement, because of its patchouli scent.

Personalisation is also a great way to develop trust and create relationships with consumers. This trend is likely to gain momentum within the fragrance industry in future. With the rising disposable incomes of millennials and the growing demand for high-quality cosmetic products among European consumers, the demand for niche essential oils is expected to increase in future.

There is a lot of competition in the essential oil market, particularly for orange, lemon, and peppermint. European buyers are willing to source from small suppliers when it comes to niche essential oils; their minimum volume requirements are also low. The most prospective essential oils include patchouli, ylang-ylang, neroli, and frankincense.

To capitalise on this trend, exporters of essential oils from developing countries should export niche essential oils to Europe. Exporters should familiarise themselves with and learn about the weaknesses of essential oils competing with frankincense oil and patchouli oil. In particular, what makes their essential oil a niche and unique compared to competing essential oils on the European market. Following this, exporters should use this information to persuade prospective European buyers, as well as display this information on their company website and marketing materials.

Tips:

  • Familiarise yourself with trends in the fragrance industry. For example, websites such as Cosmetics Business, blog posts and articles are a good source of information on upcoming trends.
  • Look into partnering with companies developing personalised and niche fragrances along with those targeting millennials, as there is increasing demand for these products from this demographic group.
  • See the CBI trends study on the European natural ingredients for cosmetics market, which gives insights into trends and opportunities for exporters from developing countries.

Growing demand for allergy-free cosmetics in Europe poses threats to essential oils

EU Cosmetics Regulation 1223/2009 lists the 26 most-known allergenic substances that must appear on the labelling of cosmetic products when present in finished formulas at certain levels. This is to protect consumers who are sensitive to these allergens. Although Europe has some of the strictest regulations for cosmetics in the world, some market actors have expressed concern about the possibility of new, stricter restrictions on fragrance allergens.

There is also growing demand for allergy-free and fragrance-free cosmetics from consumers in Europe. Allergy-free certification as well as AllergyCertified cosmetic products are becoming popular in the European market. This poses a threat to exporters of essential oils to the European market as 26 of the most-known allergenic substances can be found in essential oils used in cosmetics.

One way exporters of essentials oils from developing countries can prepare for this threat is to ensure their essential oils do not exceed the maximum levels prescribed for the 26 most-known allergenic substances that can be found in essential oils. Another way to prepare for this threat is to stay up to date with the latest EU regulations and ensuring compliance with it.

Tips:

COVID-19 creates challenges for exporters of essential oils

The coronavirus pandemic has created a number of challenges for exporters from developing countries. Challenges exporters face are expected to remain for the foreseeable future, particularly in light of further waves, as governments try to tackle the pandemic.

Lockdown, quarantine measures, import and export restrictions imposed by governments are key challenges disrupting global supply chains. In particular, some of these challenges include delays in receiving orders along with increasing costs of delivery. Indeed, one European buyer of essential oils interviewed for this report said  ‘transportation costs have increased’ and ‘lots of delays (have happened)’.

You can prepare for challenges posed by the COVID-19 crisis as well as reducing associated risks in a number of ways. One way is to regularly check websites, contacting government and trade ministries to find out the latest emergency measures in place, as well as getting guidance on exporting. Checking government websites of export countries for the latest guidance and rules on imports is a second way exporters in developing countries can prepare.

Contacting freight and logistic companies to find out information about the latest transportation and freight procedures due to COVID-19 restrictions and preparing for them is another way exporters can prepare. Finally, informing existing customers about their order and informing them of any possible delay is also a way to prepare for challenges posed by COVID-19 restrictions, as buyer’s value being kept up to date about the status of their orders.

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This study has been carried out on behalf of CBI by Ecovia Intelligence.

Please review our market information disclaimer.

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