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The production and use of flavors and fragrances on an industrial scale started in the nineteenth century with the isolation of single chemicals responsible for the characteristic aroma of natural products (e.g., cinnamaldehyde isolated from cinnamon oil, or benzaldehyde from bitter almond oil). The synthesis of aroma chemicals that reproduced the characteristic odor and taste of natural products became commonplace and gave rise to a new branch of chemical specialties. The rapid expansion of the flavor and fragrance (F&F) industry worldwide, however, dates only to the last 100 years, and has been driven by the demand for a bewildering array of consumer products that contain flavors and fragrances.
The flavor industry developed from its main centers in Europe and later was established in the United States. From Europe, essential oils as well as compounded flavors and fragrances were exported overseas as countries opened up commercially. In the early twentieth century, many of the larger flavor houses established their own local manufacturing facilities in order to better serve the growing industry.
Flavor and fragrance ingredients are the most numerous single group and highest-value intentional additives utilized by the food and personal care industries. They are also the most profitable and show the highest rate of growth in recent history among food and personal care product ingredients. Several factors have contributed greatly to stimulating the widespread acceptance of flavors and fragrances in consumer products, including the following:
- The industrialization of the worldwide economy, leading to a proliferation of flavored or scented products manufactured in large volumes, like processed foods and beverages, soap and personal care products, detergents and household cleaners, and oral hygiene products. This allowed the incorporation of sizable quantities of flavors and fragrances, which, in turn, justified the emergence of a specialized F&F industry.
- Social developments tied to economic affluence that increased the number of people who could afford flavored or scented consumer products.
- Considerable sophistication in the art, science, and technology of manufacturing, compounding, and using flavor and fragrance raw materials; rapid developments in the field of analyzing, identifying, and preparing new and important F&F ingredients; and the development of functionally improved synthetic flavors and fragrances that could economically replace those derived from natural sources.
During the past ten years the industry has restructured, and about sixteen large companies (each with over $100 million in annual sales) have emerged as the dominant players in the F&F industry worldwide. Today, these companies operate on a multinational level and account for over two-thirds of F&F product sales worldwide. Moreover, they introduce most product innovations and creative developments that are associated with the launch of fine fragrances anywhere. This concentration into fewer large companies is continuing with several recent mergers of leading companies.
Globalization has greatly changed the operations of the major companies of the industry. Major companies in the past built their factories in various parts of the world in order to meet local demand. These plants were established to service local demand at reasonable prices. Often, manufacturing in these countries was the only way to overcome the high duties that prevailed on imported high-value aroma chemicals. As tariff barriers become less restrictive the need for continuing some of these plants diminishes. Therefore many companies (such as IFF, Firmenich and Givaudan) have reduced the number of operations and have constructed new plants with more efficient, less labor-intensive operations that have enabled production at a higher standard and consistency than the older operations.
Consumption of F&F products in 2006 is estimated at well over $15 billion worldwide, composed of 13% aroma chemicals, 10% essential oils and other natural extracts, 29% fragrance compositions, and 48% flavor compositions. Not included is an estimated 10–12% in additional value, mainly related to raw materials that may be used captively for compounding some fragrances and flavors.
The following pie chart shows world consumption of flavor and fragrance chemicals:
The United States, Western Europe, and Japan accounted for as much as 74% of total consumption. Further analysis by product category shows that consumption of flavor compositions since 1982 has steadily gained share and that the utilization of essential oils and extracts of natural origin has increased at the expense of synthetic aroma chemicals.
The demand for F&F products is fairly mature for most applications in the developed countries, and the potential for growth can be identified only in several expanding economies that include countries in Eastern Europe, Asia Pacific, and especially China and India. Although the outlook for the F&F industry as a whole remains positive, the results may vary depending on the region. The financial challenges confronting economies during recessionary times could stunt both industrial development and improvements in the standard of living that typically drive the consumption and sales of consumer products.
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