The market for essential oils - Spain

1.2 The global market

Robust global growth

According to Transparency Market Research, between **** and ****, the global essential oils market is expected to grow at a CAGR of *.**%. It was valued in **** at $**.** billion and is expected to reach $**.** billion by the end of ****.

According to Grand View Research, global essential oil production was ***,*** tonnes in **** and is expected to reach ***,*** tonnes in ****, growing at an average annual rate of +*% per year over the period. In ****, global demand for essential oils was around ***,*** tonnes and is expected to reach around ***,*** tonnes in ****. There is therefore a real challenge to grow production in order to keep up with expanding demand. In addition, the growing demand for flavoured food and beverages is driving the market significantly.

Global demand for essential oils World, ****-****, in thousands of tonnes Source: ****

The growing European market

According to Transparency Market Research, the European market for essential oils, the world's largest, is expected to grow by +*.**% between **** and ****. The US market is expected to maintain its second position during this period.

The graph below shows the distribution of essential oil import volumes into Europe in ****, by exporting country. Of the essential oils imported into Europe in ****, **% came from Brazil and **% from the Netherlands. ...

1.3 A growing Spanish market

National production of essential oils in Spain has been growing in recent years. With just over * million tonnes of essential oils produced in ****, production grew by **% compared to the previous year, following a slight decrease between **** and **** [***].

Essential oil production Spain, ****-****, in millions of tonnes Source: ****

In terms of value of production, we can take the trade values provided by the UN Comtrade, which claimed Spanish imports in **** to be just under $*** million and exports to be $*** million (***).

Naturally, trade values do not represent the whole market, given how they do not consider distribution in wholesalers and retailers of essential oils. Therefore, it can be estimated the the Spanish market is worth more than its trade value.

1.4 Imports and exports

For this section we use UN Comtrade to obtain the trade balances for Spain with the world for the category **** - "Essential oils (***), including concretes".

With nearly $*** million worth of imports and $*** million worth of exports, Spain ranked *th and *th in the world for these * trade flows in **** [***].

As it can be seen from the graph below, both the imports and exports grew from **** to ****, however, these are values that are lower than the peak in ****. It seems, however, that there is a stabilising trend happening right now. It is also important to note the growth of the coverage ratio (***), showing the growing importance of the exports of essential oils for Spain.

Trade balance for essential oils Spain, ****-****, in millions of US dollars and % Source: ****

In terms of imports, Spain is not really dependent on any country in particular, with its main importing partner being China, representing less than **% of Spain's total essential oil imports. The top * importers of essential oils into Spain (***) account for just over **% of the country's total imports.

Origin of essential oil imports Spain, ****, in % of total imports Source: ****

The exports follow a similar pattern as the imports. Spain's top * export partners, France (***) account for ...

2.1 The growing popularity of beauty products

As part of the greater cosmetic market, essential oils are very much influenced by this sector. The cosmetic industry in Spain was worth *.* billion euros in ****, up *.*% from **** [***]. 

Size of cosmetic market Spain, ****-****, in billions of euros Source: ****

In this sector, it is the skin-care products that are most popular, representing **% of the whole market. Personal care products come second with **% of the market, followed by perfumes with **% [***]. 

Breakdown of cosmetic industry by sector Spain, ****, in % Source: ****

Moreover, it was estimated that the average Spanish uses *-* different cosmetic products daily and ** different products in a year. Finally, the average spending on these products per capita was of €*** in ****, higher than the EU average of €*** [***].

2.2 The strong growth of bio and natural cosmetics

Given the 'natural' nature of essential oils, this market is very much affected by consumer behaviour towards natural and bio cosmetic products.

Within the cosmetics sector, there is a sub-segment for bio/natural cosmetics. In ****, the Spanish market was estimated at *** million euros, or just over **% of the whole cosmetics sector [***].

The main reasons for consumers to buy these products are as follows (***) [***]:

Good for environment Simplicity (***) Transparency

However, awareness of the characteristics of natural cosmetic products is still quite low among Spanish consumers, with **% of them thinking that natural products are not necessarily better than the rest of the products and **% thinking that they are not necessarily more ethical than the other products [***].

In fact, only **% of consumers are able to differentiate between natural products and non-natural ones.

3.1 Breaking down Spanish production

The production of essential oils in Spain can be broken down into different aspects of its production. Considering the Spanish imports and exports of essential oils in **** (***), we use the figures provided by the UN Comtrade to breakdown these values. For this, we will use the following codes:

****** - Essential oils of orange ****** - Essential oils of lemon ****** - Essential oils of citrus fruit, other than of bergamot/orange/lemon/lime ****** - Essential oils of peppermint (***) ****** - Essential oils of mints other than peppermint ****** - Essential oils other than those of citrus fruit ****** - Resinoids ****** - Extracted oleoresins; concs. of essential oils in fats/fixed oils/waxes/the like, obt. by enfleurage/maceration

From all of these essential oils mentioned above, it is the oils other than those of citrus fruit (***) that represent most of Spanish production. In fact, of the nearly $*** million Spanish exports of essential oils, those other than citrus fruit represented **% of it [***]. 

Breakdown of essential oil exports, by type Spain, ****, in % of total exports Source: ****

As it can be seen from the graph below, for most of the items listed, the exports are higher than the imports (***).

Trade of essential oils, by type Spain, ****, in millions ...

3.2 A fairly concentrated market

Using the CNAE code **** (***), we can get an image of how the production of essential oils is organised in Spain.

With a combined turnover of over €*** million in ****, there were ** companies operating in this sector, giving an average revenue of around €** million per company. However, it is important to note that the top * companies in this sector generate approximately **% of the market's total revenue, making this market quite concentrated [***]. 

Market share by manufacturer of essential oils Spain, ****, in % Source: ****

3.3 The wider cosmetic industry

Given how the essential oil market is part of the greater cosmetic industry, we can expect similar trends between both of these.

In regards to distribution channels, cosmetic products tend to be mostly distributed in supermarkets and hypermarkets, which accounted for **% of the sector's sales in ****. Pharmacies and selective channels are the next most popular channels, with each contributing for **% of the total value of the market [***].

Distribution channels of cosmetic products Spain, ****, in % Source: ****

Following the Covid-** pandemic, sales in the main distribution channels (***) were not impacted very significantly, given how they remained open during the lockdown periods. However, distribution channels such as hairdressers and professional aestheticians saw their sales decline by **% and **.*% respectively [***].

On the other hand, the main 'winner' surging from the pandemic is the online channel, a channel that has been growing strongly in recent years.

Growing importance of the online channel

The online channel is becoming very important in regards to distributing cosmetic products. Between **** and ****, the number of online consumers grew from *.* million to *.* million (***), vastly boosted by the Covid-** pandemic. 

Number of online cosmetic consumers Spain, ****-****, in millions of users Source: ****

The online channel, which in **** represented *.**% of the sales, now accounts for ...

4.1 The different essential oils available

There are * different aspects to consider when determining whether an essential oil is of good quality or not [***]:

The AEBBD (***) stamp: This stamp means that the essential oil comes from a certified lab and that the origin of it is known. An Ecological Farming stamp from the country which it originates from. Mentioning it is "***% Pure and Natural": This means that the product is not diluted, altered or synthetic. Price: Good essential oils are not cheap, therefore the higher the price, the better the quality tends to be.

Moreover, the essential oils can be consumed in * different ways:

Ingested - This requires the essential oil to be considered as a food supplement. Inhaled -  Here the essential oil can be poured into a diffuser, humidifier or just sprayed in the air or on textiles. Applied on skin - This is the potentially the most efficient way of consuming essential oils, given how quickly they penetrate the skin

4.2 Comparing the offer

While the production of essential oils in Spain seems to be somewhat concentrated on a few key players, the distribution of these is quite varied, with a number of different brands playing a part in the selling of these products.

Taking Amazon's top ** most sold essential oils as of April **** we can an idea of what type of essential oils the Spanish are buying and what is the price range.

Source: ****

From the table above, it can be seen that the offer is quite varied, with only * companies having more * products in the top **; Pranarôm, Naissance and Essenciales.

4.3 Stabilising prices

Following from an increase in the industrial price index of the manufacturing of essential oils in Spain between **** and ****, it seems as if since then, the price index has stabilised itself at around *** [***]. 

Industrial price index of the manufacturing of essential oils Spain, ****, base *** in **** Source: ****

5.1 Regulations

Being part of the wider cosmetics industry, the production and distribution of essential oils is very much governed by the regulations that rule over the production and distribution of cosmetic products.

Regulation (***) No ****/**** on Cosmetic Products, and its amendments

As taken from a document provided by the Spanish government, in the European Union, cosmetic products are regulated by Regulation (***) No ****/**** on Cosmetic Products, as amended [***], in which certain provisions specifically address the use of essential oils, especially Annexes II and III. The responsibility for ensuring that products placed on the market comply with the legal requirements rests with the responsible person.

The Cosmetic Products Regulation requires responsible persons to ensure that a cosmetic product has passed a safety assessment based on relevant information before it is placed on the market, and that a safety report is drawn up in accordance with Annex I. Guidance on Annex I is set out in Commission Implementing Decision ****/***/EU.

Annex II of Regulation (***) No ****/****, as amended, lists substances whose use is prohibited in cosmetic products. Among the substances listed in this Annex are:

Herbal ingredients that are banned in cosmetic products, regardless of their function Plants and their compounds that are prohibited in cosmetic products ...

6.1 Segmentation

• Ernesto ventos
• Lucta
• Givaudan Espagna
• Iberchem
• Symrise Espagne