Paper presented at the IFEAT Int. Conference in Cape Town, South Africa, 27 Nov.- 1 Dec. 2006: ‘The Industryin Sub-Saharan Africa and the Indian Ocean Islands’. Pages 238-242 in the printed Conference Proceedings._________________________________________________________________________________THE INTERNATIONAL MARKET FOR ORGANIC OILSKaren ManheimerMastertaste Inc.,100 Hollister Road, Teterboro, NJ 07608, USA[ ]A market for organically grown essential oils and extracts has developed over the past decade, notablyin North America and Western Europe. This presentation provides an overview of the market fororganic products and discusses the opportunities and challenges for producers of organic essential oils.Market Trends for Organic ProductsThe organic market is here to stay and not a passing fad. It is a part of an overall long-term andinternational trend towards health and wellness in food and consumer products.In the past, the organic market was limited to fresh produce, meat and dairy products. Today, themarket has evolved further into highly processed foods and beverages as well as personal careproducts, such as shampoo and toothpaste. In Western countries, it is possible to buy almost anyprocessed food product as organic, including breakfast cereal, macaroni and cheese mix, and instantjuice powders.Organics are also migrating from a luxury / premium status to the mass market. An example of this isthe recent announcement of Walmart’s intention to be the world’s largest organic retailer, offeringorganic products at just a 10% premium over conventional.The organic consumer in the USA and the European UnionConsumers of organic products in the USA and the EU are growing at a rate of 14.1% per year and thecombined total is expected to reach 172.8 million in 2009.The US and European consumers oforganic products are similar in theirmotivations and, in particular, areconcerned with the connection betweendiet and disease. They seek to avoidharmful agricultural chemicals and oftenstart buying organics for their babies andchildren. Their concerns over food safetyinclude genetically modified ingredientsand overuse of antibiotics.Reasons given for buying organicsIn the USA• Health & nutrition• Taste• Food safety• EnvironmentalprotectionIn the EU• Food safety & health• Environmental protection• Taste• Nature conservation• Animal welfareDrivers for the organics marketSome of the forces driving the growth of organic products are:• Greater availability, particularly since the larger US and European retailers (e.g. Whole Foods,Walmart, Tesco, and Carrefour) are now emphasizing organic products.238

• The products themselves are getting better as more and more high quality ingredients (flavoursand fragrances) become available.• Prices are coming down.• National organic standards clear the way for large consumer package goods companies toenter the market.• Global food and beverage processors are investing in organics both by acquisition ofindependent organic companies and by developing organic line extensions of traditionalbrands.Examples of Some Multinational Companieswith Organic BrandsThe US marketIn October 2002, the US Department of Agriculture adopted the National Organic Program whichdefined an organic standard in the US. This prompted a market growth rate of around 20% per yearand it is forecast to grow at 10-16% per year over the next 4 years.In 2005:• Americans spent $51 billion on natural and organic products.• Organic food and beverage sales reached $13.8 billion and grew at a rate of 16.2%.• Other organic products in the non-foods category (nutritional supplements, personal care,fibre, household cleaners, flowers and pet food) had a growth rate of 32.5% and sales totalled$744 million.The EU marketThe European market is more mature than the USA, having enjoyed high growth during the 1990s.Current growth rates are in the 7-8% range per year with individual countries enjoying different ratesof growth.The European organic market was estimated to have grown by 26% since 2001 was valued at Euro20.7 billion in 2004.239

In 2005:• European consumers of organic foods spend up to Euro 15 billion annually and demand isgrowing at a rate of 10% per year.• Germany is the biggest organic market, worth Euro 3.9 billion (+ 11% on 2004) and 2.4% ofthe total food market is organic.• Italy is the second biggest organic market, worth Euro 2.4 billion (Euro 1.7 billion ondomestic sales and Euro 700 million as exports).• The UK market is performing well and is worth Euro 2.3 billion (+ 30% sales on 2004).Status of the organic market for individual EU countriesMatured market Growing market Emergent marketDenmarkAustriaSwitzerlandGermanyUKItalyHungarySpainCzech Republic• Growth 5% or lower• Partly decreasing salesdevelopment• Growth of 5-15%• Steady growth• Rapid market growth,starting from a lowlevelUsage of Organic Essential Oils and ExtractsThe main applications for organic essential oils and extracts are:• flavouring of foods and beverages,• aromatherapy,• cosmetics, and• perfumes.In foods and beveragesExamples of Marketed ProductsNorth America – Sol Mate organic energybeverage featuring organic flavouringssuch as lemon and limeEurope – Plamil organic ginger chocolatebar featuring organic ginger flavourNorth America –Dove organic chocolatebars featuring organic flavourings suchas citrus and spiceEurope – Rocks fruit drinks featuringorganic flavourings such as orange oilNorth America – Comanzo & Co. organickids' cup cookies – oatmeal, carrot andraisin, featuring organic flavourings suchas vanillaEurope – Belvoir organic cordial,featuring organic flavourings such asgingerNorth America – Elite Naturel Bionix 100%Organic Health & Energy Source,featuring organic flavourings such asginseng, banana, coconutEurope – Snapdragon organic fruit juiceand still spring water drink, featuringorganic flavorings such as ginseng andguaranaThe extent of usage of organic oils and extracts as flavours currently is limited by:• the available supply,• high prices, and• loopholes in organic legislation that allow conventional natural flavours in organic products.240

In personal care productsExamples of Marketed ProductsEurope - Boots Botanical Line, featuringorganic botanicals such as chamomile,honey, bergamot, basil and peppermintNorth America - Purity Cosmetics Bathand Body Line, featuring organicbotanicals such as rose, lavender, pear,and honeyEurope - Avalon Organics Baby Line,featuring organic botanicals such as aloe,almond, calendula, chamomile, sunflowerNorth America – Innersense hair care line,featuring organic botanicals such asapricot, Rooibos, lotus flower and orangeflowerEurope – Juice Beauty Skin Care Line,featuring organic botanicals such ashoney, aloe, lemon, grape and sageNorth America - Alba Shave Care Line,featuring organic botanicals such asaloe, calendula, and green teaEurope – Pangea Organics Health &Beauty Aids, featuring organic botanicalssuch as blood orange, lavender, calendula,chamomile, and roseNorth America – Nourish Muscle WarmingBalm, featuring organic botanicals suchas vanilla, almond, peppermint, cinnamonand nutmegThe US natural and organic personal care market is projected to grow from $5 billion in 2004 to $7.9billion in 2009 - a growth of 58%. Skin care has the largest share of the US market while hair care hasthe highest rate of growth.The European market is in the vicinity of Euro 1 billion. Italy and Germany are the largest marketsand France and Germany have the fastest growth. The Weleda and Dr. Hauschka companies are themarket leaders in this segment.Challenges for Producers of Organic OilsIn light of these promising statistics about the organic markets in Europe and the United States, thereare a number of challenges for producers of organic essential oils:• Which products to produce? The market needs new organic products not necessarily more of the same products. We do not need yet another organic geranium oil.• How much to produce? Do you take a chance and produce organics before the demand is apparent or do youproduce a small amount that cannot support a global launch?• Which certifications do you choose - NOP, IFOAM, EU, JAS?• Who are your intended customers? If you want to sell in the US and Europe, you have to get NOP and EU certified. If you want to sell in Japan, you need to be JAS certified.Concluding RemarksIn summary, there is a growing international market for organic consumer products in which organicessential oils and extracts are important ingredients for organic processed food, beverage and personalcare.My wish list for new organic flavour and fragrance ingredients includes:• More organic lemon and orange oils241

• More organic fruity and floral notes• Organic aroma chemicals• Organic paprika extract and other organic coloursKaren Manheimer grew up in the family essential oil business, J. ManheimerInc. She has been active in its operations for 13 years and was instrumental inestablishing the organic business for the company in 2001. After graduatingfrom the University of Pennsylvania with degrees in French and Anthropology,Karen went to work for a French steel company and two years later returned toschool and received her Masters in Business Administration from the Universityof Michigan. J. Manheimer Inc. was acquired in 2004 by Mastertaste Inc., a partof Kerry Group Plc. Karen is currently the Vice President of the NaturalProducts Division of Mastertaste Inc. and manages the oleoresins, botanicalextracts and organic essential oils business.Data Sources•• Datamonitor• Euromonitor• FIBL• International Trade Centre (ITC) Marketing Manual and Web Directory for Organic Spices,Herbs and Essential Oils• Management Ventures Inc• OTA 2006 Manufacturer Survey• US Market for Natural & Organic Personal Products242

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