Page 132 - CW E-Magazine (8-4-2025)

Point of View

their synthetic organic chemistry and process development & optimisation skills, to produce bulk aroma chemicals that have gone
out of patent protection, at world-beating prices.

But as in many other chemical value chains, intense competition is putting pressure on margins for many. Capacity to
supply several now exceeds global demand by at least 100% and eroded margins. Staying profitable needs scale, advanced
technology and product diversification strategies, and not all are equipped with these skills. While more than 100 companies
are involved in manufacture of synthetic aroma chemicals in India, only about a dozen have the scale and the sophistication
to participate consistently in global markets. The products they offer are largely large volume, low price, multi-supplier ones;
while specialities, typically offered in lower volumes and higher prices, still remain the domain of large F&F houses keen to
protect their intellectual property.

Regulatory pressures mount
One of the challenges the ingredients’ industry today faces is regulation, largely originating from the developed world, particularly
Western Europe.

A number of ingredients are under scrutiny for causing serious harm, such as endocrine disruption, or even less drastic
impacts such as skin allergies. For the former – e.g., phthalates – outright bans loom. For the latter – including some
high-volume essential oils – the emphasis amongst industry participants is on communicating the drastic impacts that
disproportionate responses such as outright bans could have on livelihood of farmers and essential oil producers – small,
family-owned businesses, say in Indonesia, Brazil or India. India’s essential oil industry will do well to pro-actively engage
in lobbying against such efforts.
Sustainability efforts
At a global level, the F&F industry is taking sustainability seriously. Some goals of companies include reducing energy consumption
& carbon intensity, and optimising water consumption. The industry is also leveraging biotechnology and embracing upcycling initiatives.
Biotechnology is offering alternative routes to some ingredients. Examples include nootkatone without grapefruit, vanilla without
vanilla pods, and even chocolate without cocoa beans! Upcycling efforts include cedarwood oil from sawdust; peach extracts from
fruit wastes; apple oil from apple juice pulp; and rose absolute from exhausted petals.
Indian market developments
The Indian F&F industry is disproportionately small for the size of the country’s population and economy, but it is one that has the
attention of almost all global players – both for the market opportunity it affords and as a base for sourcing ingredients. It would not
be a stretch to say that India is the last big market that offers significant headspace to grow demand from the food & beverage, and
home & personal care industries, amongst others.

While multinational players with international brands have a strong presence in the Indian FMCG space, local brands too are
gaining a foothold by developing value offerings to meet the unique needs of Indian consumers.

While the markets for F&F ingredients and compounds in India are certain to grow with rise in living standards, there are changes
wafting in from overseas that could alter the way the industry operates. India is probably one of few large markets that operates
out of the ambit of international guidelines that govern safety of ingredients used, but it cannot do so for long. Most leading MNCs
operating here offer safer alternatives, and local producers who don’t will be forced to operate in the fringes, catering to low-value
markets. This is not a base from which sustainable and healthy growth can happen.
More fundamentally, India’s indigenous F&F industry must turn to innovation, by attempting to offer truly unique products through
concerted and inspired efforts at compound creation and using safer alternatives to suspect ingredients. While such efforts are beyond
the means of many in the industry, some have the scale and ambition to take on this task. To give a comparison, a few from India’s
generic pharmaceuticals industry have made efforts – albeit feeble – at discovering novel chemical entities in an attempt to create
intellectual property. Can India’s F&F industry do likewise?
Ravi Raghavan

132 Chemical Weekly April 8, 2025

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