Essential Oils Market: Current Analysis and Forecast (2021-2027)

Essential oils are liquid extracts of various potentially beneficial plants. They're made from parts of certain plants like leaves, seeds, roots, and rinds. Essential oils usually have a stronger smell than the plants they are extracted from and contain higher levels of active ingredients. Moreover, essential oils hold a prominent place in traditional and folk medicine around the world because they can benefit the human body in several ways. They are used in aromatherapy to manage stress and anxiety and they help in curing fungal infections. Furthermore, essential oils extracted from different plants have different characteristics. For instance, Lavender oil's relaxing fragrance helps in improving sleep quality, tea tree oil has antimicrobial qualities. Further on, many essential oils have antioxidant properties, antioxidants help in preventing damage to cells caused by free radicals. The essential oils market is likely to grow at a CAGR of ~9% during the forecast period (2021-2027).

Based on the type, the market is classified into orange, eucalyptus, lavender, peppermint, citronella, lemon, tea tree, clove, spearmint, and others. In 2020, orange oil accounted for a significant share of the global essential oils market. The growth of this segment can be attributed to the availability of orange essential oil, antimicrobial activity, pain relief, and anti-cancer properties. According to the National Center for Biotechnology Information of India, d-Limonene, the most abundant constituent of navel orange essential oil, has been shown to have anti-proliferative and apoptosis-inducing effects, thus it has been used as a chemopreventive and chemotherapeutic agent against multiple types of tumors.

On the basis of application, the market is categorized into food and beverages, pharmaceuticals, cosmetics & personal care, home care, and others. The food and beverages segment held the prominent revenue share in 2020 and is expected to grow at a robust CAGR during the forecast period, which can be accredited to strict government regulations regarding the safety of food and limit on the usage of synthetic flavors and essence foodstuff. Essential oils are known for their health benefits, as they are natural ingredients that give the essence of the source they have been extracted from. They are used in food & beverages for adding flavor to the final products, and as substitutes for synthetic ingredients. As consumers are becoming aware of the health benefits of essential oils, the preferences for food & beverage products with these oils as additives has increased.

Based on the method of extraction, the essential oils market has been divided into distillation, carbon dioxide extraction, cold press extraction, solvent extraction, and others. Among these, the distillation segment held a prominent share in 2020 and will continue to grow at a steady rate during the forecast period. The efficiency of the distillation method is expected to drive the growth of this segment. Distillation, or classical distillation, is the process of separating the components or substances from a liquid mixture by using selective boiling and condensation. To separate a mixture of liquids, the mixture can be heated to force components, which have different boiling points, into the gas phase. The gas is then condensed back into liquid form and collected.

For a better understanding of the market adoption of the essential oils industry, the market is analyzed based on its worldwide presence in the countries such as North America (United States, Canada, and the Rest of North America), Europe (Germany, France, Italy, Spain, United Kingdom and Rest of Europe), Asia-Pacific (China, Japan, India, South Korea, and Rest of APAC), and Rest of World. In 2020, Europe accounted for the majority of the shares in the global essential oils market and it is expected to grow at a substantial growth rate. This is attributed to the presence of developed end-use industries and rising awareness about the benefits of essential oils amongst consumers. The presence of organizations such as the European Federation of Essential Oils (EFEO) has benefitted the industry growth in Europe. According to EFEO, its aim is to represent producers and traders of essential oils and related products within Europe. It protects and promotes their interest and acts in defense of these products at relevant national, European, and international levels.

Some of the major players operating in the market include Cargill Inc., Firmenich SA, Rocky Mountain Oils LLC, Young Living Essential Oils LC., Sydney Essential Oil Company, Essential Oils Of New Zealand Ltd., Robertet SA, The Lebermuth Company Inc., Givaudan SA, West India Spices Inc.