A report from Markets and Markets indicates that the flavors and fragrances market is projected to reach $37.3 billion by 2026, growing at a 5.1% CAGR. The natural ingredients segment is projected to be the fastest-growing segment from 2021 to 2026.
Although the natural ingredients segment is projected to grow at the quickest rate, the synthetic ingredient segment accounted for a larger share, in terms of value, in 2020. There is a stronger demand for natural ingredients due to increasing availability and rising awareness of its benefits. Although stricter regulations on synthetic flavor and fragrance use could negatively impact the industry, overall, the report states that synthetic ingredient growth is driven by low costs and growing use in various end uses, such as beverages, packaged food products and home & personal care products.
The bakery industry is expected to grow at the highest rate in the flavor market during the forecast period. Changing lifestyles, growing working-class populations and rising demand for gluten-free bakery products are the major factors contributing to the growth of the bakery segment.
The fine fragrances segment is projected to grow at the highest rate in the fragrance market during the forecast period. The rise of research laboratories and innovation centers for fragrances in developing countries like China, India, Thailand and South Korea are considered contributors to the projected trend.