ESSENTIAL OILS 127
Essential oils: the market and its issues analysed
Dean Lockton – ProTec Group, UK
It is important in the context of our business and in the personal care market as a whole to reconfirm that an essential oil is defined as a “natural volatile oil extracted from a specific botanical source and having the characteristic odour of the plant or other source from which it is extracted.” Essential oils have become an important part of everyday life and their use continues to grow. They are multifunctional, used in many applications across a number of industries; as fragrances in personal care, household and industrial; as flavourings in food, beverage and pharmaceutical; for their therapeutic properties in aromatherapy, wellness, veterinary and animal healthcare; even for their antibacterial and antimicrobial actions. With the ever-developing world and
increasing consumer-led demand, essential oil requirements across all markets but especially in the personal care market are calculated to grow with a compound annual growth rate (CAGR) of between 9% - 10% for the period 2014 to 2022. For essential oils, this will see the market value reach US$ 11.5 billion in 2022 from what was US$ 5.5 billion in 2014 when annual production was calculated at 160,000 metric tonnes. The rise in consumer-led demand for natural and organic ingredients in multi- functional personal care products that support a healthy life style is encouraging, for both the essential oil and personal care markets. New product development based on natural or organic themes are a core growth focus for both brand owners and manufacturers. However, in light of what may be seen as all-round positivity within the markets, the short-term scenario may be somewhat different and it is inevitable that essential oil production will fall significantly below that of demand. As a consequence, market drivers of volume and value will come into force as the supply / demand ratio becomes unbalanced. Limited availability with demand in excess of supply will force raw material prices in an upwards direction, the tendency also that while prices rise, they very rarely return to pre-rise levels. The tight supply and higher pricing will be a major concern for manufacturers as natural and
April 2019
organic raw material shortages can then bring unintended consequences with quality. With demand outstripping supply, there being seasonal harvests but year round demand, there is a risk that this situation will result in compromises in quality and continuity of supply. Nature is not consistent, natural variations from one harvest to another will produce variations in the essential oil and its composition. It may be climatic influences, changes in weather patterns, too much or too little rain, higher than average temperatures or frosts. It may be methods of cultivation, it may even be harvest timing or using a fresh or partially dried botanical starting material rather than it being fully dried. There may be natural disasters, earthquakes, floods, fires. In addition to natural influences, regulatory compliance is also having an impact. Implementation of new environmental protection regulations in major essential oil producing countries has forced producers to close their operations. The result of this being an immediate decrease in production. As a result of lower oil yields and limited
supply, a reputable producer / supplier relationship will increase raw material pricing on the market based on the true financial situation and in-line with their margin expectations and requirements. They will also bring their natural material to market, compositionally declared at the point of production. Conversely, those unscrupulous
producers / suppliers may well be tempted to manipulate and adjust the material composition to achieve what may be considered a ‘typical’ composition that they believe is more acceptable to the unknowing buyer. This raises a very important issue whereby a genuine essential oil with a naturally variable composition must be identified and in no way confused with one that has been ‘adulterated’. Consequently, the journey from grower to end user has never become more important.
Adulteration
What is adulteration? The Oxford Dictionary defines this as “The action of making something poorer in quality by the addition of another substance.” Count noun defines further “these adulterations may harm the therapeutic use of the oils.” So why adulterate and how, or is it not as simple or as clear as that? Could it be the result of an unintentional action rather than an intentional one?
Unintentional actions of adulteration There has to be some explanation in that there is a possibility that certain actions are accidental and adulteration is unintentional. That said, these are not to be excused and go some way to recognise the importance of a creditable supply chain. Poor agricultural practice where weeds are not removed from the crop before harvest; collecting material
PERSONAL CARE EUROPE
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