Essential Oils

Market and Legislation

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 1 Introduction

Of the estimated 3,000 essential oils known,

approximately 150 are of commercial importance
currently and traded on the world market.

2 Production of essential oils

Worldwide essential oils production was estimated in 2017 as

more than 150,000 tonnes valued at about $6B USD, which
represents a tripling in volume since 1990 (45,000 tonnes),
50% of which has occurred since 2007. According to several
economic analyses, growth will continue and by the 2020s is
expected to reach 370,000 tonnes annually and be valued at
more than $10B USD (current dollars).

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The major producers of essential oils across the world are
China and India, followed by Indonesia, Sri Lanka, and
Vietnam. Major essential oil producing countries in Africa
include Morocco, Tunisia, Egypt, and Algeria; the Ivory Coast,
South Africa, Ghana, Kenya, Tanzania, Uganda, and Ethiopia
play minor roles.

The North American continent is also a major essential oil

producer. The United States (US), Canada, and Mexico all
possess major natural aromatic plant materials, while
Argentina, Paraguay, Uruguay, Guatemala, and the island of
Haiti also make sizeable contributions to sector productions.

Apart from the above mentioned major oil-producing

countries, there are many others of less importance, such as
France, Germany, Taiwan, Japan, Jamaica, and the
Philippines.

Many producers also come from developing country low-cost

peasant-type operations and economies (65% of world
production).

The examples are numerous: orange derivatives produced in

Brazil and China, corn mint in India and China, lemon in
Argentina and Spain, Eucalyptus in China and India,
peppermint in the US and India, citronella in China and
Indonesia, sassafras in China, lime in Mexico, lavandin in
France and Spain, and Patchouli in Indonesia and China.

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Data from the European Federation of Essential Oils (E.F.E.O.)
indicates that world essential oils production covers about
600,000 ha of the 1.6 billion ha in agricultural production.
Approximately 1 million farms are producers in the sector,
which represents 0.06% of total farms in the world (1,600
million). The top three essential oil crops (orange, mint, and
lemon), about 100,000 tonnes, represent more than two-
thirds of the total essential oil crop production. A number of
essential oils are produced on small farms or collected from
forests: Patchouli, Litsea, Citronella, Eucalyptus globulus, Clove
leaf (production range: 1,000–10,000 tonnes), as well as
Vetiver, Geranium, Ylang Ylang, Nutmeg, Lavender (production
range: 50–400 tonnes). Small farmers continue to dominate
essential oils production and therefore make an important
contribution to the local incomes of relatively poor rural
populations in developing countries. Aside from the socio-
economic importance to the producing communities, these
crops play important environmental roles. Many are short- or
long-term perennial crops that provide stable environments;
cultivation of many relies on long-established and traditional
varieties that act to balance the surrounding flora. In addition,
wild crafted crops support the maintenance of natural
vegetation and its flora and fauna complexes.

The European market for essential oils continues to grow at a

healthy rate, as demonstrated by the development of leading
flavouring manufacturers. Most are based in Europe, where
they produce flavourings for food and beverage
manufacturers, both inside and outside Europe. According to
Eurostat data, over the last decade, the EU has increased
production of essential oils by 41% and more than doubled its
value. As for the value trend, it is always rising, except for a

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2009 drop. On the other hand, production volume has
decreased since 2011, although as of 2016, a counter-trend
has emerged and shown a slight rise. In fact, during 2006–
2016, Germany increased its production more than 50%;
similar trends occurred in Spain, Greece, and the UK. In 2016,
total EU essential oils production was valued at €902 M and
yielded about 41 million kg.

Among EU member states overall, Germany consistently

ranks as the top volume producer and in 2016 represented
46% of the essential oils produced (about 19 million kg) and
23% of their value. During this same decade, France made the
largest gains in value by growing its sales by 90%. Over the
same decade, Germany, Spain, and the US recorded even
larger increases. In 2016, France was the top value producer
and accounted for 34% of total EU-28 value; the country
ranked second in quantity at 7 million kg. Other important
European producers include Spain, the UK, and Italy. For
France, Spain and the UK, resinoides (€ 72M) deliver sizeable
portions of both value and quantity production of these states,

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and concentrates do the same for France, Bulgaria, the UK,
and Portugal. 2.2. World trade of essential oils In 2016, the
world exported $4.38B USD in essential oils and import is
$4.54B USD.

In rank order, these were the

 top exporters:
the US ($47B USD), Germany ($28B USD), the UK ($26B USD),
and France ($22B USD,

 the top importers were France ($65B USD), the US ($47B

USD), Germany ($41B USD), and Ireland ($35B USD).

As a group, the EU is the world’s biggest importer of essential

oils, with France, Germany, and the UK being the major
countries. Based on geography, Europe dominates the
essential oils market, accounting for about 40% of world
exports in 2016. The region is expected to maintain its pre-
eminence throughout the analysis period due to growing
demand for natural cosmetics, rising awareness, and
increasing adoption of innovative essential oils in various
sectors.
European imports Over the five-year period from 2012–2016,
the EU essential oils import values grew considerably to a
peak, while import volumes remained relatively constant,
which reflects a rise in unit price. Imports reached nearly
60,000 tonnes in 2016 to a value of €1.2B.

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3 Demand for essential oils

Demand comes principally from the following markets: food

and beverage (35%), fragrances, cosmetics and aromatherapy
(29%), household (16%), and pharmaceutical (15%).

4 Consumption of essential oils

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The majority of consumers by country, according to the data
provided by Directorate Marketing of the USDA, are in the US
(40%), Western Europe (30%), and Japan (7%).

What trends offer opportunities on the European market for aromatherapy?

Several trends on the European market aid the interest in aromatherapy oils:
 Consumers see natural health products, such as aromatherapy, as milder and thus safer
options as compared to conventional medicine. Consumer awareness of side effects from
conventional medicine is increasing, especially for strong medicines taken over long periods of
time.
 According to industry experts, there is growing trust in the effectiveness of essential oils for
various health indications. For example, there are more accounts of resistant bacteria, which
antibiotics cannot defeat. Some researchers are looking into the use of essential oils, which may
be effective on these resistant bacteria.
 To both consumers and companies, massive, and growing, amounts of information are
available on aromatherapy and essential oils used for specific effects. Some essential oils do not
even need product claims and information on applications because consumers already know or
can easily find information on how and for what effect to use them.

 Be aware that you are not allowed to make medicinal claims in your product documentation
or marketing materials when marketing your product to cosmetics manufacturers. You can
make such claims if you target the herbal medicinal products market, but then you also need to
comply with relevant legislation.

Tips:

 Be careful with the claims you make on your essential oil. Consider not making claims at all
and sell essential oils as natural ingredients based on proven product identity. If you want to
make claims for your essential oils, ensure you can back up these claims to any potential buyer.
 You need to guarantee safety and efficacy according to the mode of use and the respective
legislation as an ingredient/chemical or as a final consumer product. For more information on
claims, refer to the Buyer Requirements section of this factsheet.

Traceability of oils used in aromatherapy is key. Since aromatherapy relies on the chemical
composition of essential oils, product identity and origin is vital.

Sustainable and ethical production of essential oils is of particular importance when consumers
use them as aromatherapy. Organically produced oils are seen as having a higher quality than

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conventionally produced oils. Moreover, many consumers of essential oils for health purposes
are also interested in ethically produced oils.

Essential oils used for holistic aromatherapy require a good marketing campaign to show how
and for which indications they can be used.

You can use several elements to build such marketing stories:

 Along with traceability, traditional usage is important, since aromatherapy oils often lack
scientific proof of their effectiveness. Together with the oil’s image, traditional use forms the
basis for their use in aromatherapy. Although you cannot make claims which are not backed up
by monographs, you can refer to publications on aromatherapeutical use of your product. At the
retail level, essential oils used in aromatherapy are often marketed without claims, but in
conjunction with literature, even in the same display.

 An oil’s origin can be used, especially when this “fits” with the indication area it is
traditionally used for. For example, an exotic origin can be marketed as a place where you can
reduce stress, which would fit with oils targeting stress & anxiety issues (e.g. rose geranium oil
from Réunion).

 Organic or fair trade certification may add value to your oil, but this depends on your
(prospective) buyer.

What requirements do I need to comply with to enter the EU market for aromatherapy oils
marketed as herbal medicinal products?

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