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Tell me about the top three suppliers of flavors, essential oils and specialty food colors for U.S. consumers. What is the competitve mix?
OVERVIEW
Greeting and thanks for using Wonder.
I am glad to provide an overview of the US market and examples of major suppliers of food flavors, essential oils and specialty food colors and give an overview of both markets and the current position of your client, LorAnn Oils. Below you will find a synopsis of three markets and a summary of observations about their competitor's websites.
METHODOLOGY
To retrieve the information for this research I first looked for major market research summaries for the three different markets you requested: food coloring, essential oils and food flavors, focusing on the US market. Using that information, I continued with my web search and found several similar competitors to LorAnn (in terms of products and probable target markets) and studied their website for similar products. For each of the three markets, I found a completely different set of competitors and a different brand positioning landscape. So, for each market I found the websites of competitors to LorAnn (some similar, some for comparison) for your review.
FOOD COLORING US MARKET AND COMPETITORS
- Food Coloring US Market. I found that the food coloring industry is dominated by global multinationals such as Chr Hansen holdings, Royal DSM, and Sensient technologies, with no market clear leaders. The North American market size is expected to be 27% of the world market ($21 bil), about $5.7 billion, by the end of 2018. The market overall is being driven by the North American region's increased awareness of and preference for natural (and organic) vs synthetic sources for food additives; that drive is expected to continue.
- As an example of a multinational player, Sensient (originally Univeral Foods) is presently upscale (see its website for spectacular graphics) and defines itself as in the flavor and fragrance industry.
-Since LorAnn is probably not in direct competition with large multinational groups, I searched for food color retailers/small wholesalers in the US that targeted similar markets. Wilton (est $703m annual revenue) offers a large selection of food color products. They are also most known for their extensive Cake Decorating classes which gives them a significant leg up with name recognition, especially in the US. Americolor, the most similar to LorAnn, was started in 1995 in the US with the slogan "The World's Finest Food Color"; its focus is tightly concentrated on color products.
ESSENTIAL OILS US MARKET AND COMPETITORS
- The essential oils market has undergone startling growth in the past two years, especially for the two top (MLM) companies, Young Living and doTerra. This growth has been driven by a rising megatrend in health and wellness and the demand for more natural options in North America. The North American market was a little more difficult to find; I estimate it (reading off a graph) to be between $1.5 and $2bil in 2017. The market share concentration is quite low. The four largest companies together are estimated to be less than 10% of the market.
-The two largest essential oil manufacturers and distributors are Young Living and doTerra. Both companies are identified as high-end products, by their focus on quality,control of manufacturing process and the cost of their products. YL describes its Seed to Seal process in great detail, which is significant marketing advantage. doTerra has a similarly sleek website that describes its many quality processes in detail.
- A quick online search shows many other small (mom and pop) companies that are focused on creating the best quality essential oils they can. The focus of the industry in the US is towards more natural and organic and ecological awareness. Often the source materials are "wildcrafted" also, that is picked from the wild - away from pollution and in an ecologically sustainable fashion. As an example, Floracopia, a mom and pop endeavor, focuses on ecological responsibility, offers rare and unusual oils, and offers classes in traditional plant-based healing. That is one example of the high bar set for entry into this market, especially in the US.
FOOD FLAVORS US MARKET AND COMPETITORS
- The detailed global food flavors market numbers were sequestered in reports for pay. I used a reverse calculator to estimate the PV of the global market to be $11.6b (from a future global market estimate of $15.1b over 5 years with a CAGR of 5.4%). The market is dominated by the North American market, but I could not find any market percent. If we estimate it at 30%, that puts the NA market at $5b. The top three global manufacturing food flavors companies are Givauda, Firmenich, and IFF.
The essential oil segment of the food flavors market is increasing with the "growing consumer preference for natural products". Companies with a clear and detailed marketing vision of essential oils as natural products will be more likely to thrive.
- For example, Gold Coast, a California food flavor supplier, uses its website to be very clear to define the terms that they use to describe their flavors and to differentiate between natural, non-GMO, concentrated, and certified organic. Gold Coast is primarily a B2B flavor distributor. There seems to be less emphasis on "nature" and "organic" on their website.
- However, within the market of smaller companies that sell essential oils directly to individuals, I discovered a strong disagreement, perhaps critical to your client, since LorAnn specifically markets essential oils to be used as flavorings as well as in aromatherapy. The issue has to do with the question of whether essential oils are safe to be ingested orally. Here are two links with opposing views. The first is on the YL website, and, in short, offers a webpage on cooking with essential oils. The second link is from an aromatherapy practitioner who presents a detailed case that no essential oils should be ingested orally.
CONCLUSION
All three markets will be influenced by the growing focus of consumers in North America on natural sources for food additives and natural options for health and wellbeing.
Both the food flavor and food color industries are dominated by large and entrenched multinational corporations. There is a place for LorAnn, especially if they find a way to specialize or differentiate themselves to the US market especially.
The essential oil market in North America in the greatest opportunity for growth (by the numbers). This is a significantly difference competitive marketplace, especially in the US; the marketplace is not as mature or entrenched. To LorAnn needs to define its offerings more clearly in order to differentiate itself.
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