In a recent Technavio market research report, it was projected that the global aroma chemical market will grow at a rate of 5% CAGR for the next four years. Among the contributing factors to the growth are changing consumer trends, a rise in disposable income and an increased attention to naturals.
More Money, More Fragrances
As disposable income in emerging markets continues to grow, consumers are looking for cleaner healthier products to improve personal hygiene and grooming needs. Consumers are additionally looking for household products in order to keep their homes clean.
Emerging markets have also played a key role in global growth. Countries like Thailand, Indonesia, Taiwan, Malaysia and Australia have seen growth in the demand of personal care products.
Additionally, there is research being done to create specialized fragrances to address sanitation concerns in third world countries and areas with insufficient sewage systems.
Regulations & Cost Pose Barriers to Growth
Despite these positive indicators, the aroma chemical market isn’t without its challenges. The biggest challenge facing companies is the competetive barrier to enter the niche marketplace. Companies are working to establish market share through research and product development investments as well as strategic pricing to remain viable, resulting in little new competition.
Additionally, there have been issues concerning regulations and supply chains. REACH regulations have resulted in issues with lavender farmers in France. Earlier this year, the TSCA reform was signed was signed into law, changing regulations surrounding chemical safety.
It is yet to be seen if current regulation uncertainty will become a bigger obstacle in the years ahead.