Flavours and Fragrances (F&F) are the essential ingredients that lend taste and smell, respectively, to food and personal or home care products. If health and hygiene are the reason behind selecting a product, flavours and fragrance are the reason, why you remember a certain product and choose them again.
The industry today stands at a worth $22.8 billion. The five largest companies in the industry are Givaudan, International Flavours & Fragrances (IFF), Firmenich, Symrise and Takasago. All of these companies spend a big share of their budget in research. IFF invests heavily in research, spending about $185 million annually to develop new smells for products like deodorants, shampoos and perfumes, and to create fresh flavours for snacks, packaged meals and drinks.
The international flavouring industry is a concentrated and competitive industry. Consolidation has been ongoing for many years, but intensified in 2006-09 when major deals were struck by two of the world leaders, Givaudan and Firmenich. The industry has become more concentrated and the top three companies: Givadudan (Switzerland), IFF (U.S.) and Firmenich (Switzerland) hold 45.5 per cent of the global flavours market.
In the Indian market flavours comprise 45 per cent of the market whereas fragrance comprise of 55 per cent.
Adventurous consumers are embracing bolder, more extreme flavours and scents. They desire variety and novelty. These consumers are looking for excitement and new sensations in life, which naturally leads to greater sensory experiences in their food and fragrance choices. So a change in the trend is constant. Commenting on the trends, Dough Tough,CEO, IFF said, “These trends keep changing. 20 years back, market was inclined towards more soft products, Onion flavour was in demand. But today consumers look for low salt and low fat products. People are a lot health conscious and majority of the trends are focused around low fat low salt products. Our research helps us figure out these trends and we market the products accordingly”. When asked to pick the best selling flavour and fragrance so far, he said, “In flavours segment, it has been the Tomato flavour. In soups it is widely used in majority of the countries, and then it is used in chips which are again having a big share of flavours, then condiments also. So, tomato is the king of all flavours. In Fragrance segment, it’s citrus which is very widely used. Citrus or lemon is something which connotes clean. This is why most of the wash related products use lemon flavour as an essential ingredient”.
As consumers graduate from using basic soaps and detergents to higher end products such as skin creams, lotions, hair gels and other applications, the demand for more sophisticated and expensive fragrances will increase. In the flavour market too, as processed foods grow at over 12 per cent on an average, the demand for flavours in the savory and beverage application areas is growing. This is fuelled by rising disposable incomes in urban areas and an increased willingness to consume store-bought foods.
But in a country like India where the market is stacked with brands and competitors, innovation and ability to foresee new trends will be the key for any company to spread its fragrance across the region.