Moneycontrol

Budget 2021

Associate Partners:

  • SMC
  • Samsung
  • Volvo

Moneycontrol

Budget 2021

Associate Partners:

  • SMCSamsungVolvo
Webinar :Join an expert panel for a webinar on Smart investments for a secure retirement January 28, 2021. Register now!
you are here: HomeNewsBusiness

Losing sense of taste & smell: Indian fragrances and flavours industry fears falling behind China

The Indian Fragrances and Flavours industry size is estimated at around $500 million which is growing at 11 percent per annum 

May 27, 2020 / 01:21 PM IST

The extended lockdown has disrupted the supply chain of fragrances and flavours (F&F) industry that has affected the production and exports by as much as 80 percent.

The Indian fragrances and flavours industry is considered one of the fastest growing industries in the segment globally.

It is also a significant competitor to China in terms of exports.

However, due to the temporary lockdown in the country, F&F industry is fearing losing its ground to China as the latter is currently operating in full swing.

“Our palette is very large. We are one of the biggest exporters and importers of ingredients. Due to the prevailing logistics issues in the country, as inter-state transportation is either restricted or difficult, there is a substantial impact on our industry. If the situation is not improved quickly, there will be a huge economic cost for us,” said Rishabh Kothari, President, Fragrances & Flavours Association of India (FAFAI).

Close

“China will benefit from the situation as we may lose some of our global customers to the neighbouring country which will result in a significant business loss and market share for us,” he added.

F&F industry impacts our daily lives in a major way. Right from the morning toothpaste and soap while bathing to throughout the day and night in the eatables we consume such as bread, biscuits, or medicines.

Unless they are used in food, cakes, biscuits, chocolates, ice-creams, or even the soaps, detergents, creams, lotions, and the countless items we consume or use, these items cannot be sold in the markets.

F&F can mask, provide, enhance, and accentuate the taste or smell in whichever product they are added.

According to Kothari, amid the pandemic it is difficult to accurately estimate the total quantum of losses, but he feels that production has been hit to an extent of 80 percent and exports and imports too have been similarly impacted.

The growth of the industry, which was cruising at over 10 percent is likely to become negative both due to the lockdown during the pandemic and the consequent likely drop in demand for consumer products and processed foods in the rest of the year.

As per the Ministry of Micro, Small and Medium Enterprises, Government of India, the Indian fragrances and flavours industry size is estimated at around $500 million which is growing at 11 percent per annum while the global fragrance and flavour industry is valued at $24 billion.

With its rich diversity of flora and fauna, Indian fragrances and flavours industry is projected to grow exponentially in the coming years due to increasing demand for personal care products, brand awareness, growing demand from the middle class due to rising disposable incomes and products now being available at affordable price points, Kothari said.

Globally, there are about 300 key natural fragrant raw materials out of which about 50 percent are cultivated and the rest are collected from the wild habitations.

Out of the cultivated raw materials only 110 are widely used that account for about 95 percent of the global fragrance oil production.

With about 31 key raw materials, India has made a significant impact in global fragrance oil markets by producing essential oils of menthol mint, sandal wood, jasmine, tuberose, and spices.

Similarly, there are more than 1,000 synthetic aromatic molecules or ingredients of which around 250 constitute more than 90 percent of global aroma chemical production. A large majority of these are manufactured as well as exported from India to key international markets making India a key player in global fragrance supply chain.

Considered as an ancillary industry to FMCG and Food Processing and Pharma industries, the Indian fragrances and flavours industry is well distributed across the country.

There are over 1,000 small, medium and large size enterprises operating in this industry - which is in the form of organized and un-organised sector.

A large part of the ingredients come from extracts of natural plants while the rest is aroma chemicals and synthetics that are used in this industry.

As almost all the food, pharma, FMCG industries are dependent on fragrances and flavours, F&F industry leaders believe it is imperative to resume the operations of units involved in production of these products.

“It will take another 4-6 weeks to resume our operations completely even after the lock down is lifted. Supply of manpower will again become a major problem as most of them have gone to their native places. Hence, the government should bail out the industry by announcing an appropriate fiscal stimulus package which will stimulate demand rather than only a 3 month moratorium which favours the banks than the enterprises. Otherwise, the industry will acutely suffer apart from losing its competitive advantage in the global markets,” Kothari added.
Himadri Buch
first published: May 27, 2020 01:21 pm

stay updated

Get Daily News on your Browser
Sections