An IAL Consultants' report on global flavors and fragrances found that the total global market jumped 4.6% last year to $28.2 billion. It is projected to grow at an average annual rate of 4.9% per year to hit $36 billion by 2022, according to Food Ingredients First.
The combined flavors and fragrances market is the most significant in Asia-Pacific — where the fastest medium-term growth rate is expected — and then North America and Western Europe. Flavors make up about 56% of the total world market for the segment, while fragrances account for the remaining 44%, the report said.
The report noted that the growth potential for flavors and fragrances is especially high in parts of Africa and Asia since access to processed foods and consumer goods in those areas continues to expand. Beverages dominated the end-use market for flavors last year with a 33% share, while the dairy industry had 13%.
The market for flavors and fragrances is increasing, and the U.S. is the No. 2 global market. A more diverse consumer base is favoring bolder ethnic flavors, meals inspired by street food and the revival of culinary classics. Chili, herb and floral flavors dominated food and beverage launches from 2013 to 2017 featuring global flavors, the report said, citing Innova Market Insights.
The bolder flavors are showing up in increased spiciness levels. And it's more sophisticated than just adding spice. Of food and beverage launches between 2013 and 2017 featuring chili flavors, about 59% were sriracha, 19% included habanero and 15% were chipotle.
Major global players in the flavors and fragrances space are undergoing a time of consolidation, IAL Consultants pointed out, with Switzerland-based Givaudan, New York-based International Flavors & Fragrances and the Swiss company Firmenich shifting to focus on taste and clean label trends. Those three companies, plus Germany's Symrise, are the four top players in the global flavors and fragrances market today, according to the report.
Now that IFF is buying Israeli company Frutarom, the speculation is that IFF will give market leader Givaudan some stiff competition for the No. 1 position. The $7.1 billion deal doesn't close until the fourth quarter, so it remains to be seen how much it might change market offerings, but there could be more products showing up with an increased focus on natural ingredients and health and wellness. As Andreas Fibig, IFF chairman and CEO, said this past May in a statement, "By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy."
Meanwhile, clean label, natural ingredients and bolder flavors appear to be where trends in the sector will continue to head. The market looks like a healthy one, given the statistics, so it may be a matter of how much consumers are willing to experiment with interesting new flavors and fragrances — and how much they're wedded to expectations about how foods and beverages are supposed to taste and smell.