Essential Oil Market - Forecast(2023 - 2028)

Essential Oil Market Overview

The Essential Oil Market size is estimated to reach $15.4 billion by 2027, growing at a CAGR of 9.7% during the forecast period 2022-2027. Essential oils are hydrophobic, highly concentrated oils that are extracted for their flavor and aroma. They are fragrant substances derived from the leaves, stems, blossoms, bark, roots and other sections of a plant. They have antioxidant, antibacterial and anti-infective qualities that are beneficial to the health of an individual. Essential oils such as orange oil, lime oil, lemon oil, lavender oil, rosemary oil, geranium oil, citronella oil, peppermint oil, cornmint oil, tea tree oil and other oils play an important role in various industries such as food and beverages, cosmetics and toiletries, home care, aromatherapy, health care, feed and other industries. The high-quality essential oils help in treating several conditions such as sleep disorders, stress colic and other conditions. The growing consumer awareness about natural and organic personal care products and food and beverages is pushing the focus of manufacturers toward natural products. This is set to propel the growth of the Essential Oil Market during the forecast period 2022-2027. This represents the Essential Oil Industry Outlook.

Essential Oil Market Report Coverage

The report: “Essential Oil Market Forecast (2022-2027)" by IndustryARC, covers an in-depth analysis of the following segments in the Essential Oil Market.

by Type: Orange Oil, Lemon Oil, Lime Oil, Peppermint Oil, Citronella Oil, Lavender Oil and Others.
by Application: Food and Beverages, Cosmetics and Toiletries, Aromatherapy, Home Care, Health Care and Others.
by Distribution Channel: Supermarkets, Hypermarkets, E-commerce Websites and Others.
by Geography: North America (the US, Canada and Mexico), Europe (Germany, France, the UK, Italy, Spain, Russia and the Rest of Europe), Asia-Pacific (China, Japan, South Korea, India, Australia & New Zealand and the Rest of Asia-Pacific), South America (Brazil, Argentina, Chile, Colombia and the Rest of South America) and Rest of the World (the Middle East and Africa).

Key Takeaways

• Geographically, the Europe Essential Oil Market accounted for the highest revenue share in 2021 and it is poised to dominate the market over the period 2022-2027 due to the rising demand for essential oil in food and beverages, cosmetics and toiletries, home care, aromatherapy, health care, feed and other industries in the European region.
• The growth of the Essential Oil Market is being driven by the surging advantages connected with the application of essential oil like enhancement of mood and setting a positive atmosphere, benefits of essential oil regarding relaxation and sleep, inflammation alleviation, pain alleviation and averting some ailments by boosting the immune system. 
• Essential Oil Market Detailed Analysis of the Strengths, Weaknesses and Opportunities of the prominent players operating in the market would be provided in the Essential Oil Market report. 

Essential Oil Market Segment Analysis - by Type:

The Essential Oil Market based on type can be further segmented into Orange Oil, Lemon Oil, Lime Oil, Peppermint Oil, Citronella Oil, Lavender Oil and Others. The Orange Oil Segment held the largest market share in 2021. This growth is driven by the surging application of essential oil for enhancing low libido, lowering premenstrual syndrome (PMS)-related health problems and fighting hypertension. High vitamin C content along with the antioxidant property of orange oil helps in reducing dark spots and wrinkles, which is the major driving factor for its demand in the personal care industry. Furthermore, the Lemon Oil segment is estimated to grow at the fastest CAGR of 10.2% during the forecast period 2022-2027. It is because of the ability of lemon oil to be combined in household cleaners attributed to its use in detergents, fragrances and soaps and the typical application of lemon oil to treat sore throats and the flu as a detoxifying and disinfectant.

Essential Oil Market Segment Analysis - by Application:

The Essential Oil Market based on the application can be further segmented into Food And Beverages, Cosmetics and Toiletries, Aromatherapy, Home Care, Health Care and Others. The Aromatherapy Segment held the largest market share in 2021. This growth is driven by the surging recognition of aromatherapy attributed to changing lifestyles and their effects, like increased stress and depression. Natural plant sources such as flowers, herbs and trees are used to extract the oils. Tea tree oil, jasmine oil, rosemary oil and lavender oil are some of the essential oils used in aromatherapy. Massage therapy, acupuncture and topical care all employ these oils. As per the study, diffusing lavender essential oil helps reduce cortisol levels, which are linked to stress. Diffusing rosemary oil helps increase memory retention by 5-7%. 

Furthermore, the Food and Beverage segment is estimated to grow at the fastest CAGR of 10.5% during the forecast period 2022-2027, owing to the increasing focus of food and beverage industries on extending product shelf life without sacrificing quality.

Essential Oil Market Segment Analysis - by Geography:

The Essential Oil Market based on geography can be further segmented into North America, Europe, Asia-Pacific, South America and the Rest of the World. Europe (Essential Oil Market) dominated the market with a 35% share of the overall market in 2021. The growth of this region is owing to the presence of developed end-use businesses as well as increased consumer awareness of the benefits of essential oils. The presence of organizations like the European Federation of Essential Oils (EFEO) has backed the growth of the essential oil sector in Europe. The European Federation of Economic Organization (EFEO) was established to promote and protect the interests of all stakeholders involved in the market value chain. The group is also in talks with the European Commission and the European Parliament about introducing or amending essential oil laws. Market expansion in the region has benefited from such tendencies. According to Euromonitor, fragrance sales data for 2019 shows that there were $18.2 billion in sales of fragrances from essential oil in 2019. Furthermore, the Asia-Pacific region is estimated to be the region with the fastest CAGR over the forecast period 2022-2027. This growth is fueled by the factors like favorable climatic conditions for agriculture, low-cost labor and the availability of raw materials.

Essential Oil Market Drivers

Increasing Demand for Lavender Essential Oil:

The demand for lavender essential oil has seen a significant increase due to the benefits it provides, such as eliminating harmful bacteria, relieving muscle spasms, relieving flatulence, disinfecting and soothing inflamed skin (especially when caused by venomous, itchy bug bites), promoting speedy healing of irritated and scarred skin and relieving muscle tension when used during a massage. This mild sedative is supposed to alleviate stress by relaxing brain waves, which is said to lower cortisol levels and contribute to the stress hormone when used in aromatherapy. It is also utilized as sleep assistance for people suffering from insomnia because of its calming and relaxing effects. As per world export-import data, the total import of lavender oil in 2019 was 10,900 units. The increasing demand for lavender essential oil is therefore driving the Essential Oil Industry during the forecast period 2022-2027.

Growing Trend of Clean Labeling:

The growing trend of clean labeling is a vital contributor to the overall industry expansion due to a growth in customer concern for simple and fewer synthetic chemicals on product labels. Unhealthy ingredients, such as chemical formulae of synthetic chemicals, are not listed on clean labels. Manufacturers would be encouraged to employ essential oils instead of synthetic additives as a result of this trend. As per food and beverages insight, 73% of consumers were happy to pay extra for clean-label products in 2019. Euromonitor International report states that clean-label food product sales hit $180 billion in 2020. The growing trend of clean label products is therefore driving the growth of the Essential Oil Market during the forecast period 2022-2027.

Essential Oil Market Challenges

Environmental Impact of Essential Oils:

For the majority of the body care formulations, it is recommended that essential oils make up no more than 2% of the total end product volume. Most essential oils are extremely flammable; specifically tea tree, clove, frankincense, eucalyptus, lavender, lemon and peppermint. One needs extra precautions when disposing of them or cleaning up a spill. Flammable oils are thought to be hazardous household waste in tiny amounts. Also, the containers carrying those items cannot be recycled unless the oil is washed from the container. Numerous oils including the ones listed above as flammable are toxic to aquatic life and can have long-lasting effects on marine ecosystems as per their MSDS sheets. These issues are thus restraining the growth of the Essential Oil Market.

Essential Oil Industry Outlook:

Product launches, mergers and acquisitions, joint ventures and geographical expansions are key strategies players adopt in the Essential Oil Market. The top 10 companies in the Essential Oil Market are:

1. Cargill, Inc
2. DuPont
3. Koninklijke DSM N.V.
4. dôTERRA International LLC
5. Givaudan SA
6. Young Living Essential Oils
7. The Lebermuth Company, Inc.
8. Symrise
9. Sensient Technologies Corporation
10. Essential oils of New Zealand

Recent Developments:

• In October 2021, Cargill declared the launch of poultry feed with essential oils for healthy flocks and maximized egg production. The firm’s Nutrena and Naturewise poultry feeds contain essential oils in order to help increase egg weight and egg size, improve digestion and enhance immunity. 
• In October 2020, doTERRA declared numerous novel essential oil products and diffusers along with three novel wellness programs planned to assist people in focusing on their particular health goals.
• In August 2020, Young Living, the world's leading provider of essential oils, declared a series of novel products and product lines during its virtual International Grand Convention.

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