Essential Oils Market Outlook by Type (Citrus, Tea Tree, Eucalyptus, Citronella, Clove, Lavender, and Others), Application (Food & Beverages, Fragrances, Cosmetics, & Aromatherapy, Household, and Pharmaceuticals), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021–2028

Global Essential Oils Market Share Analysis

The global essential oils market forecast is predicted to garner $20,497.61 million in the 2021–2028 timeframe, growing from $10,349.81 million in 2020, at a healthy CAGR of 9.20%.

Market Synopsis

Strategic alliances among market players, along with trends of aromatherapy, is expected to accelerate the growth of the essential oils market.

However, high cost of essential oils along with concerns related to depletion of natural resources might be some of the growth-restricting factors for the market.

According to the regional analysis, the Asia-Pacific essential oils market forecast is anticipated to grow during the review period and generate a revenue of $6,005.80 million in 2028, with CAGR of 10.30%, due to increasing consciousness of consumers about the benefits of essential oil.

Essential Oils Overview

Essential oils are compounds that are extracted from plants (any part) and capture plant’s essence, flavor, or scent. Therefore, every essential oil has its own characteristic essence or aroma such as clove, peppermint oil, and others. Moreover, essential oils can be obtained with the help of distillation, cold pressing, and mechanical methods. Some of the examples of essential oils are tea tree oil, lavender oil, rosemary oil, clove oil, and other essential oils.

Covid-19 Impact on Essential Oils Market

Though the novel coronavirus pandemic had a devastating effect on several industries, the essential oils market experienced a positive growth during this period. Essential oils have anti-infective, antioxidant, and antimicrobial properties; therefore, they are used in treating different health conditions including stress conditions, immunity disorders, depression, and sleep disorders. For example, doterra oils are considered to be the best essential oils across the globe. Therefore, the importance of essential oils market share has skyrocketed, thus driving the growth of the market.

In addition to this, according to the news published by Times of India, in July 2021, aromatherapy with the help of sandalwood and jasmine essential oils is the best way to overcome depression, sadness, and stress. The above-stated factors show that the pandemic may generate substantial investment opportunities for the market in the coming years and Covid-19 impact on essential oils market has been positive.

Increasing Prevalence of Essential Oils in Food Industry to Surge the Market Growth

The global essential oils market outlook is witnessing a massive growth mainly due to increasing usage of essential oils in food and beverage industries. Essential oils are used instead of several herbs and juices; few drops of essential oils enhance the flavor of food. Such factors will increase the adoption of essential oils as a replacement of herbs and drive the market growth globally. Furthermore, demand for conscious food choices, healthy lifestyles along with preventive health measures in the food sector are leading to the overall growth of essential oil.

Equivalently, according to an article by Science Direct, world's leading source for scientific, technical, and medical research journals, in June 2019, synthetic preservatives that are used in food industries are very harmful and can cause degenerative diseases, cancer, intoxication, and other allergies. Therefore, essential oils such as lavender oil, peppermint oil, clove oil, tea tree oil, lemon oil, cinnamon oil, mustard oil, thyme oil, oregano oil, and eucalyptus oil are the best essential oils that are acting as food preservatives and prevent microbial growth in food, thereby driving the adoption of personalized nutrition. These types of initiatives from market leaders are also predicted to drive the growth of the market.

To know more about global essential oils market insights, drivers, get in touch with our analysts here.

High Cost of Essential Oils to Restrain the Market Growth

Essential oils are very costly as compared to other oils; therefore, they might be unaffordable by many people. This factor is expected to restrain the growth of the global market during the forecast period. Moreover, manufacturing of essential oils can divest the plants as essential oils are mostly extracted from seeds, wood, flowers, roots, and barks of plants. These are some of the factors anticipated to hinder the market value of the essential oils in the next few years.

Growing Trends of Aromatherapy in the Essential Oils to Create Massive Investment Opportunities

The global essential oils market is growing at a very fast pace due to increasing hectic and busy lifestyles of the people, resulting in significant demand for stress-relieving therapies, driving the demand for aromatherapy. Moreover, aromatherapy with essential oils is the mild sedative that relaxes the brain waves which can decrease the level of stress hormone. All these properties of essential oils make them ideal to use in insomnia, a sleep aid, thereby positively affecting the market growth.

Furthermore, essential oils industry already has leading market players innovating strategies to attract customers. For example, dôTERRA, a multinational company based in Utah that sells essential oils and other related products, announced in October 2020, that they are going to launch different essential oils products and diffusers that include three new wellness programs that is completely designed to help customers focus on their specific health goals. All such aspects may further lead to lucrative market opportunities for key players in the upcoming years.

To know more about global essential oils market opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The citrus type sub-segment is predicted to have a dominating as well as fastest growing market share in the global market. The sub-segment is expected to register a revenue of $4,907.12 million during the forecast period. Citrus essential oils are mostly used in home care products as they can dissolve easily in other substances; some of the common citrus essential oils are sweet orange, bitter orange, neroli orange petitgrain, mandarin, lemon, lime, and others. Moreover, according to an article by Healthline Media, media company based in San Francisco, in October 2019, orange essential oils offer various benefits such as they are antimicrobial, reduce symptoms of anxiety and depression, act as pain reliefs, anticancer, antioxidant, and promote weight loss. These factors and key benefits may bolster the growth of the sub-segment during the forecast period. 

Source: Research Dive Analysis

The food & beverages sub-segment of the global essential oils market is projected to have the dominant share. It is also projected to surpass $7,460.75 million by 2028, with an increase from $3,745.10 million in 2020. This growth in the market can be attributed to rising number of diseases across the globe. Essential oils are very useful in food and beverage industry to prevent viral infections caused by synthetic preservatives. Moreover, growing trends of natural and healthy ingredients in the food are some the factors that will ultimately increase the demand for essential oils in sub-segment and further surge the market growth.

The fragrances, cosmetics, & aromatherapy sub-segment of the global essential oils market is projected to have the fastest growth. It is also projected to surpass $6,762.47 million by 2028, with an increase from $3,216.58 million in 2020. This growth in the market can be attributed to increasing number of organic cosmetics and fragrances that use natural essence of plants, for example, rose essential oils are mostly used in cosmetic products such as body lotion, cream, and soaps. All such elements may increase the demand for essential oils in fragrances, cosmetics, and aromatherapy, thereby upsurging the market growth.

Source: Research Dive Analysis

The Market for Essential Oils in Europe to be the Most Dominant

The Europe essential oils market accounted $4,419.37 million in 2020 and is projected to register a revenue of $8,854.97 million by 2028. The extensive growth of the Europe essential oils market is mainly driven by the presence of organizations such as The European Federation of Essential Oils (EFEO) in Europe that promotes the production and trades of essential oils and its related products across Europe. Moreover, the strong presence of leading essential oils providers and manufacturers is fueling the market growth across the globe. These factors will ultimately drive the demand in the essential oils market across the region.

The Market for Essential Oils in Asia-Pacific to be the Fastest Growing

The share of Asia-Pacific essential oils market is expected to rise at a CAGR of 10.30%, by registering a revenue of $6,005.80 million by 2028. The growth shall be a result of increasing focus towards high quality of foods and snacks, encouraging manufacturers to opt for essential oils as per their preferences. In addition to this, growing trends of natural cosmetics and fragrances are some of the aspects that may bolster the demand for essential oils market, in the upcoming years.

Competitive Scenario in the Global Essential Oils Market

Product launches and mergers & acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading essential oils market players are Cargill, Inc., DuPont, Koninklijke DSM N.V., dôTERRA International LLC, Givaudan SA, Young Living Essential Oils, The Lebermuth Company, Inc., Symrise, Sensient Technologies Corporation, and Essential oils of New Zealand.

Porter’s Five Forces Analysis for the Global Essential Oils Market:

• Bargaining Power of Suppliers: The suppliers of essential oils market are high in number and are larger and more globalized. So, there will be less threat from the suppliers.
  Thus, the bargaining power of suppliers is low. 
• Bargaining Power of Buyers: Buyers demand cost effective essential oils. This has increased the pressure on the essential oils providers to offer the best essential oils in a cost-effective way. Thus, many suppliers are offering best yet cost – effective essential oil. This gives the buyers the option to freely choose essential oils that best fits their preference.
  Thus, the bargaining power of the buyers is high. 
• Threat of New Entrants: Companies entering the essential oils market are adopting various innovations such as developing essential oils that are helpful in overcoming stress and depression.
  Thus, the threat of the new entrants is moderate.
• Threat of Substitutes: There are different types of essential oils available. Different essential oils have different uses; thus, no substitutes are required.
  Therefore, threat of substitutes is low.
• Competitive Rivalry in the Market: The competitive rivalry among industry leaders is rather intense, especially between the global players including dôTERRA International LLC and Young Living Essential Oils. These companies are launching their value-added services in the international market and strengthening the footprint worldwide.
  Therefore, competitive rivalry in the market is high.