According to BCC Research's new technical market report, Global Markets For Flavors And Fragrances, fragrances will account for nearly $11.9 billion in 2012 and by 2017, they are expected to reach $15.7 billion, a CAGR of 5.8 percent.
The global combined market of flavor and fragrance was worth an estimated $21.8 billion in 2011; although BCC says that this figure is projected to exceed $23 billion in 2012 and reach $30.2 billion in 2017, a CAGR of 5.6 percent between 2012 and 2017.
Natural driving demand
The expected growth is being driven by a number of factors with demand for ‘natural’ increasing in the ingredient markets.
According to the report, the demand for ingredients used in fragrances overall will continue to be driven by ongoing consumer preferences for natural ingredients and rising consumer interest in more complex and authentic fragrances.
Demand for high-end perfumes also continues to drive the markets for fragrance ingredients, says BCC.
The fragrances market is among the largest within cosmetics and toiletries globally; but historically, it has been one of the least dynamic markets, dragged down by declining unit prices, over-saturation of new products and low brand loyalty in key value countries including the US.
On the up
However the market is now growing and BCC’s report follows up on Global Industry Analysts (GIA) Global Perfume and Fragrance Market report released earlier this year.
GIA predicts that global perfume and fragrance sales will climb to $36 billion by 2017, with Asia-Pacific, Eastern Europe and Latin America demonstrating steady growth.
“Demographic sectors to keep an eye on are teenagers, currently the most lucrative market; boomers; and European males, 75 percent of whom use some sort of fragrance,” says the report.
In terms of trends, GIA also recommends an eye be kept on customized and natural, eco-friendly scents as well as celebrity fragrances.