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Aroma chemicals are used to compound both flavor compositions (for imparting attractive taste and aroma to processed foods and beverages) and fragrance formulations (which impart a pleasing scent to consumer goods such as perfumes, toiletries, cosmetics, detergents and household cleaners). Compounded flavors and fragrances are complex blends that include in their formulations not only aroma chemicals but also essential oils and natural extracts, solvents, diluents and carriers.
In 2000, the worldwide flavor and fragrance business, including sales of compounded flavor and fragrance compositions and essential oils, was valued at almost $14 billion, representing a 4.0% compounded yearly growth rate since 1997. Production of aroma chemicals, calculated from estimates of supply/demand by major geographic region, accounted for $1.8 billion of the total value.
Since 1996, demand for aroma chemicals has grown almost 2.7% per year (in constant dollars), with consumption valued at an estimated $1.7 billion in 2000.
Although overcapacity is known to exist for some products, the estimated production of aroma chemicals appears to be only in slight excess of consumption. Current demand for aroma chemicals is estimated to be approximately in balance with the supply.
While production of aroma chemicals is virtually impossible to assess precisely because of the large number of chemicals involved in a highly complex web of international trading, consumption is estimated to vary significantly worldwide, by geographic area as well as by product category. In 2000, the United States and Western Europe together accounted for over 70% of the value of all aroma chemicals and over 90% of the value of musk chemicals consumed in flavor and fragrance compositions. These high ratios also characterize the estimated consumption of aroma chemicals for 2000.
In 1996-2000, consumption of aroma chemicals in Europe increased at an annual rate of about 6.8% in value. This impressive growth may be contributed to the opening of Eastern European markets, which presented good opportunities for European suppliers. In Japan, consumption of synthetic aroma chemicals has declined because regulations favor products from natural sources. Synthetic aroma chemicals are used in less than 25% of compounded products. Other Far Eastern markets, especially China, have experienced above-average demand growth since 1996, albeit from a much smaller base than either the United States or Western Europe. Export values increased in China because of the large expansion of production facilities by global producers of aroma chemicals.
In the United States, growth of 5-6% per year is expected through 2005. In Western Europe and Japan, consumption is expected to remain at the same level. Markets in Southeast Asia are likely to grow at a high rate of 7-8% per year during the same period.
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