Los Angeles, CA (PRWEB) September 17, 2013
Favorable shifts in consumer demand and market expansion have helped the Essential Oil Manufacturing industry thrive in the five years to 2013. “Disposable income has increased each year since experiencing a recessionary decline in 2009, contributing to downstream demand from several key industries, including soap manufacturers, cosmetic and beauty product manufacturers and cleaning product manufacturers,” according to IBISWorld industry analyst Jesse Chiang. Furthermore, a growing consumer shift to natural, eco-friendly products is also contributing to revenue growth. As a result of these trends, demand for essential oils increased an annualized 1.3% from soap and cleaning manufacturers and an annualized 1.6% from cosmetic and beauty product manufacturers in the five years to 2013. Imports have captured much of the domestic demand in the five years to 2013, however, increasing at an average annual rate of 4.6%. Over the five years to 2013, industry revenue has grown an average of 2.6% annually to $1.2 billion, including a 0.9% increase rate in 2013.
Additionally, operators in the Essential Oil Manufacturing industry have continued to expand to new markets in the five years to 2013, contributing to industry growth. “Manufacturers have made significant investments in developing and researching essential oils and essential oil products that may act as remedies or provide relief for different ailments,” says Chiang. By diversifying and entering the medical and homeopathic market, essential oil manufacturers have been able to experience growth despite the recent economic recession. Regulation from the Food and Drug Administration (FDA) regarding the various health claims put forward by essential oil manufacturers threatens to limit market expansion, however. Additionally, market share concentration in this industry is low; no company accounts for more than 5.0% of industry revenue in 2013. The level of concentration has been slowly rising over the past five years as Young Living Essential Oils and doTerra continue to establish their brand names and thereby increase their market shares. Although market share concentration has been slightly rising over the past five years, the level of concentration is expected to remain low over the next five years. A moderate level of barriers to entry will allow new companies to enter the market to take advantage of the rising revenue over the next five years, keeping market share concentration low.
In the five years to 2018, the Essential Oil Manufacturing industry is expected to grow rapidly. Key downstream markets are expected to continue to demand industry products, while operators seek to establish a presence in the medical and homeopathic markets. Furthermore, tariffs and tightened regulation will decrease demand for foreign essential oils, and as a result, imports are expected to decline in the five years to 2018. These trends are projected to cause an increase in industry revenue in the next five years. Looming threats to sustained industry growth remain, however, as rising chemical input costs and increased regulation from the FDA may limit growth in the next five years.
For more information, visit IBISWorld’s Essential Oil Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Essential Oil manufacturing industry develops and produces concentrated hydrophobic liquids that contain aroma compounds from plants. An oil is "essential" in the sense that it carries a distinctive scent or essence of the plant. This industry does not include products manufactured for medical, pharmacological or culinary purposes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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