In recent years the world has
seen a growing awareness of health and environmental issues in particular in
relation to developing countries. A constantly growing number of concerned,consumers,
mainly in the industrialized countries, have generated this awareness. The
international community is more conscious of these issues, and government
policies in industrialized as well as developing countries are increasingly
formulated to encourage organic and other forms of sustainable agriculture.
Market opportunities for organic spices, herbs and
essential oils from developing countries
Most spices, herbs and essential oil crops are labour intensive and are
produced mainly in the tropics, and so
provide export opportunities for developing countries. Interest in organic
spices, herbs and essential oils continues to grow along with the overall
market for organic food and beverages.
Labour cost differentials between developing countries and target
markets and demand for tropical and arid climate products provide value adding
opportunities for developing countries in exporting finished products.
Generally these products will need to be marketed in co-operation with
marketing companies and under brands recognised in the importing markets - just as
for other processed or packaged products.
As value adding requires investments of money, skills and time, the
immediate marketing opportunities are currently in increasing the supply of
bulk spices, herbs and essential oils for repacking or as ingredients for
caterers and food manufacturers. While there are excellent opportunities for
producers of organic spices, herbs and essential oils, recommendations for
production of specific crops are not given in this manual. Markets are often niche
rather than broad-based and can be flooded by produce from newly certified
large producers changing the balance of supply and demand for crops in these
dynamic markets. It is therefore important that producers keep themselves well
informed of market developments, through information sharing, reading trade
journals and visiting the target markets in order to determine what crops to
grow, and for which markets.
Producers should seek to offer products that have organic (and when feasible also fair trade) certification, are high quality and reliably supplied. They should also endeavour to improve their marketing edge and overall company/product profile by offering their customers additional (and increasingly mandatory) quality certifications such as HACCP, EurepGAP and ISO.
Spices and herbs markets
The retail market for organic spices
and herbs is likely to remain relatively small depending on the range that supermarket chains offer. The foodservice/catering sector
offers potential for increased demand for organic spices and herbs, although sales are still very small.
Fast food chains are likely to continue to position themselves as healthy alternatives to home-cooked
meals and to distance themselves from the image of fat filled, unhealthy cooking, and offering
organic options helps convey this message. Food and drink manufacturers demand
consistently high quality and so tend to stay with suppliers who have proved reliable. As the
ingredient percentages of spices and herbs in food products are usually low, price has mostly been
of secondary importance compared with quality, but will become more important in the future. In some target markets there are
opportunities for value-added processing, including the packing of private brands, but in general,
market penetration can best be achieved in the industrial sector, which is
still the main outlet for spices and herbs exporters in developing countries.
Essential oils and extracts
markets
The flavourings market is expected
to grow fairly slowly, mainly due to the following constraints:
- lack of reliability of suppliers,
- high price premiums,
- and legislation allowing non-organic flavourings in organic products.
Cosmetics are probably the most
promising sector for the development of the organic essential oils and extracts business. The major
certification standards (EU, NOP, JAS) currently cover only food items. Some EU organic certification
agencies certify cosmetics against their private standards - e.g. Ecocert’s BIO standard and the UK
Soil Association’s standards. In spite of these and other
problems, the market for organic essential oils extracts is increasing from a small
base, and a high premium is often available for many oils.
Market size
International customs
classifications do not currently distinguish between organic and conventional produce so no detailed
official statistics exist as yet for foreign trade in organic products. Some of the basic data needed
for such statistics is now being generated as the major markets increasingly adopt mandatory organic
standards which require permits and the recording of organic imports and exports. Various working groups,
including government representatives and international organizations, are considering ways of obtaining
statistics on organic agriculture and trade. See for example, www.eisfom.org. Detailed estimates of
trade in specific organic product categories would currently need to be based on a world survey of
certification agencies’ records and information given by exporters and importers. Such surveys
have not yet been made available. However, ITC has estimated the world retail market for
organic food and beverages at approximately US$ 30 billion in 2006, with Europe and North America (USA and Canada) together accounting for
about 95% of the total. Smaller but important markets
include Japan, Australia, New
Zealand and Singapore. Some developing countries, including Argentina, Brazil,
Chile, China, Egypt,
India, Malaysia, the Philippines and South Africa, have developed small domestic
markets. World trade in organic
products has grown rapidly during the last decade and is expected to do so also in the future,
although growth rates will differ greatly between various markets and specific products. Organic spices, herbs
and essential oils have so far probably accounted for less than 1% of the total market for these
products (conventional and organic). A good statistical
source for the overall spice trade is the ITC publication World Markets in the Spice Trade 2000 - 2004 More references for
publications on market information and trade statistics
are given in Annex IV.
Adding value in the producer
country
Sourcing food products packed in the
country of origin of the raw materials provides additional income to producers, generates
employment, and has downstream benefits to local industries such as packaging companies. The quality
requirements of the importing markets act as a stimulus to development of export industries in
the developing world.
From the producer’s perspective,
given the high retail price per kilo of consumer packs, producers of dried spices and herbs often
consider whether packing at source in consumer packs to add value would be feasible. Niche marketing
of organic spices packed ready for retail sale at source has been achieved on a small scale - e.g.
spice jars with an integral grinder packed in South Africa. Opportunities also exist for export
of packaged food from developing countries, such as condiments, (garlic paste, basil pesto,
mustards, pasta sauce, etc.) which incorporate organic spices and herbs.
The economics of value added organic
spices and herbs packed at source vs. packing in the target market are similar to those of
conventional products, and a thorough analysis of prospects for these was conducted by the UK’s Natural
Resources Institute: Ground and Packaged Spices: Options and Difficulties in Processing at
Origin. (See Annex
IV).
Constraints on opportunities
include:
- The need to offer a full range of spices and herbs.
- High working capital requirement to finance stock of crops harvested
annually.
- Shipment transit times.
- Holding of buffer stock to avoid shortages.
Products aimed at niche markets may
have advantages where production in these markets involves a high labour input, but transport
costs will be higher for retail packs. Marketing costs are high for new brands, and products will
normally be marketed under brand names already recognised in the developed country market. Some
buyers recognise the marketing opportunities that exist in importing fair trade and “packed at
source” food products from developing countries - rather than importing
commodities for value adding in the target markets.
Major markets and
principal importers (spices & herbs)
European Union
(EU)
The EU organic market
received an early boost by the introduction of mandatory organic standards and regulations, which
have been in place since 1991, much longer than those in other major markets, and mandatory
standards for the USA and Japan were introduced
in 2001-2002. The main importers of
spices, herbs and essential oils increasingly trade throughout the EU, gradually reducing
differences between individual markets within the Union.
France
France is amongst the five largest
markets in the world for organic food and beverages and is a very important market for
spices and herbs. It is not only a significant importer from developing countries, but also a
large producer and exporter of culinary herbs. French consumption of peppers (white, black, red and
green peppercorns, chillies, cayenne pepper) is relatively high. Herbal tea is widely consumed.
Germany
Germany is the world’s second largest
market for organic food and beverages and the largest spice and herb market in Europe, although it is currently growing at a slower pace
than some of the neighbouring markets.
There is a growing base of organic specialist shops and supermarkets, as well as the long
established natural food shops (Naturkostläden) and traditional health food
shops (Reformhäuser), which
also carry some organic products. The demand for herbal plant materials used in organic health
care remedies and cosmetic and body care is growing rapidly.
The Netherlands
The country is a
traditional importer and trader in produce for the EU market, and this applies particularly to organic
spices and herbs, where Dutch trading companies are among the largest EU importers. The Dutch
market for organic spices and herbs has increased both in the domestic market and for re-export to the
EU. Demand for organic non- food herbal plants for nutraceutical/herbal medicines and
cosmetic/body care products has also increased significantly over recent years.
United Kingdom
The United Kingdom
is the third largest market in the world for organic food and beverages and is
a major market for spices
and herbs. Supermarket chains account for the majority of organic retail sales, as they do for
conventional food and beverages, but they currently carry only a limited range of organic spices and
herbs (dried or in paste form). Some specialist shops, Fresh’n Wild http://wholefoodsmarket.com/stores/freshandwild/index.html
and Planet
Organic http://www.planetorganic.com/, stock a wide range of
organic goods.
Spain
Spain is a relatively large market for
conventional spices and herbs and is a major producer and trader of paprika powder
and saffron - with some organic exports. As with conventional spices such as paprika, where
domestic production has largely been supplanted by imports, Spain’s
increasing labour costs will make
organic spice and herb imports more important in the future.
Canada
Canada is the sixth largest market in the
world for organic food and beverages. The market appears to be growing rapidly.
Sales of organic spices and herbs are small, but the market is growing. Most imports are currently
from the United States,
but there is a keen interest in diversifying sources of supply.
Japan
Japan is a large market for
"specially cultivated crops" or "green products" (grown
with reduced use of chemical pesticides
and fertilizers), which were long considered as organic products. However, with the introduction of
new standards (JAS), introduced by the Japanese Ministry of Agriculture in 2001, organic products
are now defined similarly to those in other major markets. The market is growing
rapidly following the introduction of the JAS, and as consumers are becoming increasingly
concerned not only with their health but also with the environment, but it is fairly small compared
with the other major markets in the EU and USA.
United States
This is the world’s
largest organic market. The introduction of a national standard, the National Organic Program (NOP),
implemented in October 2002, has made a significant impact on the development of the US organic
industry. Throughout the value chain, from the domestic or foreign farmer to the final
consumer, the NOP standards will increase the focus on organic products and help to regulate and
promote trade. Natural foods stores,
dominated by the two chains Whole Foods Market Inc. http://www.wholefoodsmarket.com
and Wild
Oats http://www.wildoats.com
still are
the largest sellers of organic food
sales, but mainstream supermarkets and grocery stores stock and increasing range of organic foods.
Farmers’ markets, food service and other non-retail outlets are also increasingly important
outlets. The USA
is a substantial producer of some organic herbs and a large importer of organic spices
and herbs. In 2006, Walmart (www.walmart.com) announced they would
be including a wide range of organic food products in the US. As the
world’s largest retailer, it purchases very high volumes and competes on cost.
ORGANIC ESSENTIAL OILS AND
OLEORESINS
Market size, organic premium and
structure
As with for organic spices and
herbs, no official statistics exist for trade in organic essential oils. Premiums paid for organic oils vary,
and prices are not easy to establish. A rough check can be done by comparing selling prices of
suppliers/buyers who carry both organic and conventional oils some of which are
listed in this report.
The main outlets for organic
essential oils include the following:
- aromatherapy/natural medicine,
- cosmetics,
- perfumery
- flavourings/food ingredient markets.
- used by larger companies in production of animal feed in the world, as a key component of the feed additive
The aromatherapy and cosmetics categories overlap, with many
suppliers offering both types of product. Legislation on the use of the word “organic” applied to compounded
products in the cosmetics and perfumery markets was not introduced with the detailed
mandatory EU standards for foodstuffs.
Traditionally, essential oils used
in aromatherapy were seen as “natural” and more or less organic anyway, and this perception limited
the uptake of organic certified oils for this market. However, many aromatherapy companies now
offer full organic essential oil ranges, in all major markets. Organic oils, with an audit trail
required to be in place under certification rules, are often perceived by company buyers as having a
reduced risk of adulteration. Furthermore, it is easier for larger aromatherapy companies to have
direct links to producers, and thus have more influence on quality.
Perfumery and cosmetics form the
largest market for organic essential oils and extracts. Regulations covering organic cosmetics are under
discussion in the EU. When questions such as whether synthetic chemical preservatives may
be used in organic cosmetics are resolved, demand for organic oils should increase. Some
individual certification agencies have developed their own health and beauty product standards, e.g. the
Soil Association in the UK.
However, more stringent labelling regulations in the EU might lead to
reduced use of natural essential oils with their multiple constituents and favour synthetic
single ingredient chemical alternatives.
In flavourings, the market
for organic essential oils and oleoresins has grown slowly and is limited by current regulations (e.g. for the
EU) which allow organic foods to contain natural (but not necessarily organic) flavours as
long as less than 5% is used. For example, non-organic essential oils like bergamot can currently be
used with organic tea to make an Earl Grey mix that qualifies as organic. The essential oils in
demand for the flavour industry are mainly spice oils, produced largely in Sri Lanka and Madagascar, and the herb oils from
the Mediterranean countries. Mostconventional spice and herb
oleoresins are extracted using a solvent (generally hexane) which is then largely evaporated out of the
mix. Hydrocarbon solvents (except organic alcohol) are not permitted for use in organic
processing. Organic alcohol based oleoresins are available and some producers of these are listed in the
Annexes. Liquid carbon dioxide gas is acceptable as a solvent under organic regulations, but the
process requires a high capital investment compared to standard solvent extraction.
