Global demand to increase 4.7% per year through 2008
Global demand for flavors and fragrances is forecast to increase 4.7 percent per year to $19 billion in 2008. Growth in the worlds most developed markets will continue to be moderate. However, good opportunities in food processing and consumer product manufacturing industries, expanding gross domestic product and disposable personal income levels, and ongoing international investment activity in developing regions will bolster global demand for flavors and fragrances.
Developing regions to present best growth prospects
Historically, flavor and fragrance supply and demand have been dominated by Western Europe, the US and Japan, and these regions continued to lead in 2003 with 65 percent of demand and over three-quarters of worldwide production. However, maturity in the large markets of the US, Germany, France and the United Kingdom is forcing flavor and fragrance firms based in these countries to expand their operations to remain competitive.
More rapid growth has been registered over the past decade in Asia/Pacific, Latin America and Eastern Europe, and these markets will continue to provide opportunities through 2008. China, for example, is a key area of interest due to its low per capita consumption of fragrances, cosmetics and processed foods; increasing industrialization, personal income and population; and the availability of raw materials at a relatively low cost. Latin America is increasingly targeted due to its production of valued source materials (e.g., orange and other essential oils) and potential as an emerging market. In addition, the Eastern European market represents growth potential, and many flavor and fragrance houses are positioning themselves to gain a foothold in this market.
Flavor blends to remain dominant product segment
Flavor blends will continue to be the largest product segment through 2008, aided by strong gains in developing countries which are increasing their consumption of products such as fast food, soft drinks, snacks and other convenience foods. These products generally require higher loadings of flavor chemicals compared to more basic foodstuffs. Demand for fragrance blends and essential oils will benefit from increased interest in natural and exotic aromas, which are more expensive than their synthetic counterparts.
Aroma chemicals are expected to see modest growth through 2008, as they continue to face pricing pressures and competition from blends.
Study coverage
These and other findings are examined in World Flavors & Fragrances, a new Freedonia study. It provides historical data through 2003 plus forecasts to 2008 and 2013 by product and market in current US dollars for 16 countries and 6 world regions. This study also details market share data and provides profiles for over 20 key producers and suppliers of flavor blends, fragrance blend, essential oils and aroma chemicals. | 
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