What India needs to do to boost its F&F industry

Synopsis

The market for flavours and fragrances (F&F) is thriving and rapidly expanding, thanks to a growing global population with rising disposable income. A market report estimates that consumers interact with F&F end-products 20-30 times a day.

Ever wonder who’s behind the scent of your favourite perfumes, soaps, cosmetics, incense sticks, cream and lotion? How about the taste of your favourite potato chips and noodles? What refreshes you with its flavour when you brush your teeth with your preferred brand of toothpaste?

It takes a skilled team of perfumers and flavourists to use molecules extracted from natural flowers, fruits, trees and man-made molecules in state-of-the-art facilities and labs.

The market for flavours and fragrances (F&F) is thriving and rapidly expanding, thanks to a growing global population with rising disposable income. A market report estimates that consumers interact with F&F end-products 20-30 times a day.

India’s vast treasure trove of sweet-smelling flowers, herbs, oils, spices, citruses and woods has contributed to creating some of the world’s most famous fragrances. It is home to a centuries-old history of scents – from the sweet jasmine, deep rose and floral-spicy marigold to the strong musk, earthy oud and refreshing mint. India makes for about 3% of the global F&F market despite having 20% of the world’s population. With our library of over 10,000 flavours and fragrances, India’s F&F sector has witnessed an almost 100% year-on-year growth in the last five years.

The new-found willingness among consumers and companies to experiment is not limited to deodorants and perfumes. Similar innovations are happening in many other segments as consumer demand surges for new products that taste and smell different. A recent analysis valued the worldwide F&F industry at $27.9 billion in 2018 and projected the market to be worth $35.1 billion by 2024. There is a market for newer fragrances in personal care, hair care, skincare and air fresheners, besides more unique flavours in the value-added foods business. The FMCG segment is looking closely at new consumer behaviours to effectively adapt and improvise at a never-before pace.

The domestic F&F market is valued at $500 million, a small slice of the global total. To keep up with demand, India must invest in providing both Indian and international customers with winning tastes and scents.

In the early 1980s, the Indian FMCG industry was primarily dependent on imported flavours and fragrances. Today, large-scale companies are focusing on adopting new technologies to stay ahead of the competition in the global market. The cosmetics and personal care industries are major F&F end-users, manipulating flavours and fragrances to improve the sensory appeal and product value for consumers in a highly competitive market.

Investing in world-class manufacturing facilities is critical to meeting current and future customer needs. Skilled labour is also essential to ensure cutting-edge solutions. The Indian F&F sector’s growth results from experienced perfumers and flavourists, including global talent, supported by excellent consumer insights teams and their deep understanding of local markets.

Unlike many other categories, home care has responded well to restrictions imposed by pandemic conditions. F&F continued a solid global performance, growing 5% in current value terms in 2018-19, and reporting $159 billion in sales. Products such as liquid soap with disinfectants and hand sanitisers have experienced a dramatic boost in sales. The demand for products with health benefits has also fuelled usage. Further, the adoption of sanitisation and social distancing has enabled eatable flavouring manufacturers to control the spread of Covid-19 and satisfy demand.

There are opportunities galore for foreign investors in India’s growing F&F industry. Distribution is a crucial area in which international partners can invest. The resilience and growth of the F&F industry in India are a testament that good tastes and scents are here to stay.

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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William Murphy

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