A complete solution to the flavor and fragrance industry

Flavors and fragrances and industrial chain situation

Perfume is an organic compound that can feel fragrance by smell or taste. It is also called fragrance raw material. It is mainly used to formulate flavors for flavoring products, or directly used as food additives. Flavor is a mixture with a specific aroma or fragrance composed of spices and corresponding auxiliary materials, and is generally used for flavoring products before being consumed. Flavors and fragrances are not direct consumer goods in people’s lives, but are added as supporting raw materials to other products. They are widely used in food, tobacco, daily chemicals, medicine, feed, cosmetics, textiles and leather and other industries. Although small, it is essential to product quality. The upstream of the flavor and fragrance industry includes the planting of spices, animal breeding, petrochemical coal chemical industry and oil processing industries, and the downstream are mainly food and beverage, daily chemical, tobacco, feed and other industries.


Classification of spices, types of spices and demand situation

1. Spice classification

According to the different sources of raw materials and manufacturing processes, spices are divided into natural spices and synthetic spices. The advantage of natural flavors is that the main ingredients are derived from natural sources, which are relatively in line with the concept of health. The product has a rich taste, but due to natural conditions, the quantity is limited and the price is relatively high; synthetic flavors are usually synthesized from chemical raw materials through chemical means The advantage of synthetic fragrance is that the source of raw materials is wide, and the product category is richer than natural fragrance. The disadvantage is that the taste level is single and needs to be combined and used.

2. The types and demand of spices

At present, there are about 7000 kinds of spices in the world, with a large number, including about 6000 kinds of synthetic spices and about 500 kinds of natural spices (listed in the international market). Depending on the downstream consumption and use, the market demand for different spices ranges from tens of kilograms to tens of thousands of tons, with large differences. The basic situation is as follows:


Flavor categories and applications

Flavors are aromatic mixtures prepared from a variety of spices, solvents or carriers and other auxiliary materials, and are usually directly used to increase the aroma and odor of various end products. With the global economic growth and consumption upgrades, consumers are increasingly demanding consumer products such as food. Flavors are widely used in many industries such as food, beverages, daily chemicals, and tobacco.

4. Development status and trend of flavor and fragrance industry

The flavor and fragrance industry is a weak cycle industry, and the market size is steadily increasing with the development of the global economy and the improvement of human living standards.

People have higher and higher requirements for the quality of food and daily necessities, and the flavor and fragrance industry is growing rapidly. In the past 20 years, the sales of international flavors and fragrances have continued to grow, and sales rank second only to the pharmaceutical industry in the world's fine chemical industry. According to data from Leffingwell&Associates, the global flavor and fragrance industry sales reached US$26.3 billion in 2017, with a compound growth rate of 2.63% in the past 10 years. At present, Western Europe and North America have developed very mature markets, while the consumption of flavors and fragrances in developing countries, especially in parts of Africa and Asia, continues to grow.

It is predicted that the future will grow at a compound growth rate of 4.9% per year, and the market size will reach 28.9 billion US dollars by 2020.

Global flavor and fragrance consumption market distribution

From a global perspective, Asia is the largest consumer market in the flavors and fragrances market, accounting for about 41.28% of the global market, followed by North America and Western Europe. Although the Western European and North American markets are very mature, with the constant changes in consumer tastes and preferences, the demand for flavors and fragrances still has a certain growth potential. However, due to the growing demand for food and consumer products in developing countries, the consumption of flavors and fragrances will continue to grow.

Global fragrance market size calculation

In the global fragrances and flavors market, fragrances account for about 1/3, and fragrances account for about 2/3. Therefore, the global fragrance industry market size in 2017 is about 8.77 billion U.S. dollars, and the scale is expected to be about 9.6 billion U.S. dollars in 2020.

In the global flavors and fragrances market, food flavors and fragrances account for 56%, and daily flavors and fragrances account for about 44%. Food flavors can be divided into multiple categories. Among them, beverages account for the largest proportion, accounting for about 33% of the scale of food flavors, while tobacco flavors actually account for less than 4%.

The competitive landscape of the global flavor and fragrance market

The global flavor and fragrance industry presents a highly monopolistic pattern. The top ten international flavor and fragrance companies are mostly concentrated in developed countries. Representative companies include Givaudan and Firmenich in Switzerland, International Fragrance and Fragrance and Senxin from the United States, Dezhixin from Germany, and French Man and Robert, as well as Takasago and Hasegawa in Japan. In the 1980s, the fragrance and flavor enterprises in developed countries were still in a highly dispersed state. Since the 1990s, the concentration of the industry has accelerated significantly, and the market position of core manufacturers has become increasingly stable. The market share of the top ten manufacturers in 2017 reached 78.73%. The head company Givaudan's global market share is as high as 20%. With the completion of the acquisition of Huachen by International Fragrance and Fragrances in 2018, the industry market concentration has become more obvious.

In addition, in recent years, the top ten international fragrance and flavor production companies have all entered the Chinese market, and have increased investment in China, building R&D centers and production bases in order to gain a share of the vast Chinese market.

The competitive landscape of the domestic flavor and fragrance industry

At present, the concentration of my country's fragrance and fragrance industry is low. There are more than 1,000 fragrance and fragrance companies in China, and there are only more than 30 companies with annual sales of more than 100 million yuan. The company is at a disadvantage in competition, which is not conducive to the healthy development of the industry. After years of rapid development, a number of specialized fragrance and fragrance manufacturers have emerged in my country's fragrance and fragrance industry. Some key companies have developed rapidly and actively participate in global market competition. In the future, the concentration of the industry will gradually form, small companies will be eliminated due to weakened competitiveness, and companies with a certain degree of influence in the industry will grow rapidly through joint ventures, mergers and acquisitions, reorganizations, or through the assistance of the capital market.

Flavor and fragrance industry trends

1. The market scale continues to grow

The application of flavors and flavors is closely related to people's lives. In the future, with the development of the world economy, the improvement of people's living standards, and the continuous growth of downstream industries, the market size of the flavors and flavors industry will continue to grow. According to Freedonia's forecast, it is estimated that by 2025, the global demand for flavors and fragrances will reach 31.5 billion US dollars. According to Freedonia's forecast, it is estimated that by 2025, the global output of food and beverage products will reach US$3.17 trillion; the global output of daily chemical products will reach US$435 billion. According to the forecast of the Chinese Fragrance Association, during the "13th Five-Year Plan" period, the average annual growth rate of my country's fragrance and flavor industry will not be less than 7%, which is higher than the national economic (GDP) development expectations. By 2020, the total production and sales are expected to reach 51 billion yuan. about.

2. Industry concentration will gradually increase

Restricted by capital, technology, and talents, the concentration of my country's fragrance and flavor industry is relatively low. After years of rapid development, a number of specialized fragrance and fragrance manufacturers have emerged in my country's fragrance and fragrance industry. Some key companies have developed rapidly and actively participate in global market competition. In addition, due to environmental issues, small factories that currently have "scattered pollution" problems are constantly shutting down, resulting in the current sub-category orders and production capacity gradually being concentrated in large enterprises with standardized management in the industry and low safety and environmental risks. In the future, companies with a certain degree of influence in the industry will grow rapidly through joint ventures, mergers and acquisitions, reorganizations, or through the assistance of the capital market. The increase in industry concentration will become the future development trend of the domestic market.

3. Market competition is becoming increasingly fierce

The fragrance and fragrance industry is a highly open international market. On the one hand, domestic companies take advantage of the advantages of cost advantages, sufficient professional and technical personnel, rich production experience, and huge market potential to undertake the transnational transfer of the global fragrance and fragrance industry and actively participate in the international market. Competition, brand awareness in the international market has gradually formed, the international market position has become increasingly important, and the international market competition is fierce. On the other hand, with the gradual increase in the degree of opening up of the domestic market, internationally renowned fragrance and flavor manufacturers have established factories in China, relying on their brand advantages, strong technical force, modern production equipment, good product quality and standardized management. Concept, the speed of development is very rapid, the domestic market competition is intensified.


Industry Fortress

1. R&D and production fortress

The key indicator of fragrance products is the aroma of the product. Product formulations, processes, processing methods and even product batches will lead to differences in product aromas, which will affect the quality of downstream products. Therefore, the extraction and synthesis technology of spices, and the blending technology of flavors are very important to control the quality and stability of product aroma.

2. Environmental protection fortress

A certain amount of "three wastes" will be generated in the production process of perfume companies. In recent years, with the tightening of domestic environmental protection supervision, relevant laws and regulations promulgated by the state have made strict regulations and specific requirements for the approval and management of relevant environmental protection and safety qualifications for enterprises engaged in chemical production and operation, and the above laws are not met. Companies required by regulations are unable to carry out the production and operation of spice products.

3. Customer authentication bastion

Spices are mainly used for blending into flavors, used for flavoring products or directly used as food additives. In order to meet the various needs of consumers, downstream food and beverage, daily chemical and other production companies usually cooperate with flavor companies to customize flavor formulas that suit their needs. In order to maintain the unique aroma and taste of products, downstream flavor companies, downstream food and beverage, and daily chemical companies of flavors have stricter certification systems for flavor manufacturers, which require a longer inspection and certification process. It will remain stable for a long time.

4. Capital fortress

There are many kinds of raw materials needed for spices, especially the perfume companies need to continue to invest funds for raw material reserves. In addition, as society pays more and more attention to environmental protection, the government continues to introduce stricter environmental protection standards and higher environmental protection requirements. Spice manufacturers need to establish a complete set of environmental protection and governance systems, and invest a lot of money to ensure the normal operation of environmental protection facilities , To ensure that the "three wastes" meet the emission standards.

5. Product variety and quality fortress

Non-bulk spices usually have a small market capacity. Due to the small variety of some single products, increasing product categories is an important way for industry enterprises to expand their scale and enhance their core competitiveness. At the same time, in order to meet the diversified and one-stop procurement needs of the international flavor and fragrance giants, industry leaders generally increase the categories and varieties of production. At the same time, international flavor and fragrance giants and well-known fast-moving consumer goods companies have higher product quality requirements, and the different quality standards and requirements resulting from diversified products put forward higher requirements on the quality management system and quality of companies in the fragrance industry.


Summary of the flavor and fragrance industry

At present, there are a large number of domestic flavor and fragrance companies, totaling more than 1,000, and only more than 30 companies with annual sales of more than 100 million yuan. Under the background of increasingly severe environmental protection, irregular and smaller factories will be forced to close, and customer orders And production capacity will be transferred to large-scale enterprises.

In recent years, due to the development of China's economy and the improvement of national living standards, as well as the regional transfer of the global fragrance and fragrance industry, my country's fragrance and fragrance industry has developed rapidly and the market scale has continued to expand. In the future, under the environment of China's sustained economic growth and expanding internal demand, the domestic fragrance and flavor industry will continue to maintain rapid growth. In recent years, with the development of downstream industries such as food and beverage, daily chemicals, tobacco, and feed, the demand for fragrances and fragrances has been increasing, and at the same time, higher requirements for fragrance and fragrance products have been put forward.