Analysis and forecast of investment in China's essence industry in the next five years

1、 Market demand for essence

In terms of demand, China's demand for essence and fragrances has maintained a high-speed growth, but the growth rate has dropped in 2019. With the development of domestic food and beverage, cosmetics, chemical industry and other industries, China's demand for essence and fragrances maintained a high-speed growth from 2011 to 2018, with a compound annual growth rate of 10.56%. In 2019, the domestic demand for essence and fragrances reached 1.325 million tons, with a year-on-year growth of 2.63%. The growth rate declined, but the growth trend remained unchanged.

2、 Sales scale of essence

From 2005 to 2019, the market sales of the domestic essence industry continued to grow. In 2005, 2010 and 2015, the sales of the national essence industry were 13billion yuan, 20billion yuan and 33.85 billion yuan respectively. In 2019, the annual sales volume of essence products in China was about 44.9 billion yuan, with a compound annual growth rate of 11.12%. Due to the late development of the domestic market, which is far from reaching the saturation state, it is expected that after 2020, China's essence industry will continue to show a sound and rapid development trend.

3、 Production scale of essence

With the continuous improvement of the quality of essence products and the increase of product types, the scale of enterprises is expanding and the output is increasing. In 2019, China's output of essence and fragrances increased to 18.5 million tons, a year-on-year increase of 3.29%.

4、 Development trend of essence

1. Take the comprehensive development path of integration of science, industry and trade

Some farsighted essence enterprises have gradually developed into larger enterprises integrating science, industry and trade. They have combined with domestic and foreign R & D institutions, colleges and universities to establish joint R & D bases, strengthen and improve the connection between technology, scientific research and products, and develop from "formula" to "technology resource" and from "imitation" to creation.

2. The product structure will develop from "single" to "composite". From the perspective of product structure, CIC expects that in the future, more and more essence enterprises will adjust the proportion of natural flavor, synthetic flavor and essence by making full use of modern biotechnology, fermentation technology, catalysis technology, separation technology and high-precision analysis technology, so as to significantly improve the product quality. In addition, the proportion of featured and "representative" products will increase, and the "homogenization" of essence will be stopped.

3. From middle and low-end market to high-end market

In terms of market expansion, domestic essence and fragrances enterprises will still focus on the medium and low-end markets, and will start to "engage in close combat" with international multinational companies in the high-end market.

4. Mergers within the industry have increased, and competition among enterprises has become more intense. With the food industry becoming saturated in developed countries in Europe and the United States, the corresponding enterprises have set off a wave of mergers. Their mergers have correspondingly affected their domestic operations. In the process of integration, they will also consider the integration of essence suppliers, strengthen the evaluation of suppliers and put forward higher requirements. So far, in addition to a few essence companies, foreign essence companies with a certain scale have entered China, and a large number of small and medium-sized enterprises have emerged in China to occupy the medium and low-end market. There are at least 1000 enterprises in China. No matter what grade, their supply capacity is far greater than demand. Every enterprise is trying to expand its market share, and it is important that the budget growth targets of many multinational companies exceed the actual growth rate of the market. All these will lead to intensified competition among enterprises.

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