The flavours and fragrances industry (F&F) creates scents and tastes for use in a broad range of consumer products, including prepared foods, personal care and household products, fine fragrances, cosmetics, and beverages.
This multi-billion-dollar industry impacts daily life for consumers worldwide, often on multiple fronts: From the toothpaste we use, to the coffee, tea, and milk we drink, to the deodorants, ice cream, lipstick, fine wine and perfume, the F&F industry is subtle but extensively integrated into our daily lives
Global Industry
- The worldwide market is dominated by four major companies: Firmenich, International Flavours & Fragrances (IFF), Givaudan, and Symrise. Collectively, they controls up to 50% of the market share.
- As per IMARC research, the global flavours and fragrances market reached a value of US$31.7 billion in 2020 as compared to US$29.8 billion in 2019.
Domestic industry
- An estimated 70% of the organised market in India comprises international players while the remaining market is catered by domestic players. The market is fairly consolidated with the top 5 players accounting for 65% of the total market share
- The Indian F&F industry is valued at approximately US$1.4 billion in 2019 with exports forming almost 12% of the total production
End-User Industry
- The F&F industry is heavily reliant on the FMCG industry. The growth in FMCG will drive the growth for the F&F industry.
- With rise in disposable income and post pandemic “work from home” culture, the demand is expected to be robust in near future.
- Companies like HUL, Pepsico, P&G, Coca-cola, Colgate, The Kraft Heinz Company and other players are in constant requirement of the F&F raw materials for meeting consumer demand
Understanding Value Chain
The F&F industry value chain comprises of three segments- KSM manufacturers, Ingredient/intermediates manufacturer and formulator.
The KSM manufacturers provide the basic raw materials required for making the aroma chemical ingredients which are then used in blending flavours and fragrances for the FMCG industry.
Raw materials
- Petrochemicals and Pinene (derived from pine trees) are the only two key starting materials for the F&F industry
- In early times, extracts of flowers were used to make fragrances, however in modern times with scarcity of flora and fauna, the aroma industry is dependent on petrochemicals and pinene for their raw material requirement because it is abundantly available and cheaper to procure.
- Petrochemicals
- The aroma we get from fuels such as petrol, diesel and kerosene is because of the presence of volatile aromatic compounds in it.
- Petrochemicals are derived from fractional distillation of crude oil which has a rich content of volatile aromatic compounds and Olefins.
- These compounds are further extracted and processed into different aromatic compounds like Benzene, Toluene, and Xylene for application in the petrochemistry industry.
2. Pinene
- Pine coniferous trees are the richest source of pinene molecules. Pine trees are abundantly found in China, thus it is the largest manufacturer of pine based products globally.
- The pinene from pine trees is extracted from two main processes. One is from the Gum turpentine oil (GTO) recovered from tapping the pine trees and the other is extraction from Crude sulphate turpentine (CST) which is recovered from Kraft process in paper industries.
- Tapping process is most widely used, as the chemistry to procure pinene from CST is very niche and only few companies have the expertise to do it.
Major differences between GTO and CST
These KSM are used by the aroma chemical industry for manufacturing various aroma ingredients used in the F&F industry. The aroma chemical companies manufacture different notes of fragrance chemicals which are further used by the formulation companies to achieve the desired perfume or flavours.
Aroma Chemicals
- The aroma chemicals are classified as pine based and specialty based (petrochemicals).
- Terpineol, Camphene and Di-pentenes are are some molecules derived from pinene value chain, whereas benzenoids, musks, esters and alcohols are derived from petrochemicals
- 75% of the perfume composition is made of aroma chemicals, the rest 25% are essential oils, binders and fixatives.
Flavours and Fragrance Industry
Flavours and Fragrance Industry
- The final product derived from above value chain i.e Dihydromyrcenol, Terpineol, terpenes, OTBCHA/PTBCHA (ortho/para-tertiary butyl cyclohexyl acetate) are used by the perfumers to achieve the desired fragrance
- For instance, DHMOL (dihydro-myrcenol) is used in one of the renowned perfumes brand “Davidoff Coolwater”
- The F&F industry blends these chemicals in numerous permutations and combinations to meet the new taste pallet of consumers
- The person responsible to develop a fragrance is a perfumer and the one responsible for making flavours is a flavourist.
- The F&F industry uses the olfactive fragrance wheel to understand the fragrance notes and determine the composition.
