Flavor and Fragrance Market - Growth, Trends, and Forecasts (2023-2028)

The flavor and fragrance market is projected to register a CAGR of 4.6% during the forecast period.

The increasing consumer interest in nutritionally enriched products and all-natural foods is promoting the demand for high-value premium and natural additives, expanding the demand for natural food flavors in the market studied. The trend also justifies the emerging trend of botanical flavors, which are primarily perceived as healthy among the region's consumers. For instance, citrus essential oils have also seen a noticeable increase in use in beverages due to their immunity-boosting and antioxidant characteristics. Furthermore, the increasing demand for foods with exotic or ethnic flavors drives the demand for variant flavor blends. The food and beverage industry provides great opportunities for flavor manufacturers. It is an indispensable ingredient for foods and drinks, which helps deliver palatability, position a product, or target a specific group of consumers.

The overall flavor industry exceeds consumer demand for the most nuanced and subtle flavor in food, with taste being the most specific factor influencing a consumer's purchase decision.The importance of taste has been increasing as more consumers choose taste over other food attributes prior to their purchase.

In the fragrance industry, consumer goods are projected to be the largest segment. The rise in disposable income and changing lifestyle of consumers are fueling demand for high-end cosmetics, detergents, soaps, perfumes, and other household and personal care products. This, in turn, is contributing to the overall growth of the flavor and fragrance market.

Flavor & Fragrance Market Trends

Growing Demand for Flavor Ingredients for Meat Alternatives Products

Globally, the demand for products beyond traditional meat, fish, and dairy products has increased in the past few years, which is attributed to the surging vegan population and the rising demand for meat alternatives among flexitarians. These consumers are increasingly shifting their habits to plant-based foods, predominantly faux meat. According to a recent report by Veganz Study, a well-known manufacturer of vegan products and a supermarket chain in Europe, the number of vegans in Europe has doubled in four years, from 1.3 million in 2017 to 2.6 million in 2020, accounting for approximately 3.2% of the regional population. These foods are immensely popular in European and American countries, resulting in extensive usage of vegan ingredients as flavoring agents. In addition, with increasing concerns and awareness toward animal cruelty involved in food production and processing, consumers prefer vegan and plant-based foods over conventional products on the market. Hence, in an attempt to manufacture cleanly labeled and free-from-labeled food products, manufacturers are adopting natural and vegan options for flavors.

North America Leads the Global Market

The North American market for flavor and fragrance is mature and quite stable. As a result, as the market recovers from the economic downturn, there is a high potential for transformed growth. The United States is the largest market in the region, followed by Canada, owing to the high consumption of convenience and processed food. Owing to the United States' fast-paced food and beverage industries, foreign players are expanding their footprints in the country to deliver the most innovative nutritional flavors to cater to the increasing demand of consumers. In November 2021, FONA International, a McCormick's-owned brand, will have finished a multi-million dollar manufacturing expansion. There has been an expansion of 15,600 square feet of manufacturing and storage space as a result of the expansion. This is expected to provide further growth in manufacturing and storage over time. With the expansion, McCormick and FONA are demonstrating their commitment to high-tech manufacturing technology. The region's extensive consumption of processed foods is clearly a positive indicator for the flavor and fragrance market.

Flavor & Fragrance Market Competitor Analysis

The flavor and fragrance market is highly competitive, with key players competing for major market share and small regional players catering to smaller regions to acquire nearly half of the market share. Key players are based primarily in the North American and European regions. Some major players in the market studied include International Flavours & Fragrances, Solvay SA, Kerry Group PLC, Firmenich SA, and BASF SE. The players operating in this market are focusing on adopting various key strategies, like rapid market expansions, new product launches, and mergers and acquisitions, in order to gain a better market share, a stronger consumer base, and a competitive edge over other competitors. As a part of the strategic expansion, companies are targeting regional markets and strengthening their global footprint through new product developments.

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