Essential oils for cosmetics in Germany

Germany is a very interesting market for essential oils for cosmetics. It is the largest market for cosmetics in the EU, as well as the largest and most advanced EU market for natural cosmetics. Moreover, it is the largest EU importer of essential oils and also EU’s largest importer sourcing from DCs.
Germany – Largest and most advanced market for natural cosmetics
  Behind France, Germany is the second largest EU producer of cosmetics products, with production amounting to € 4.5 billion, or 17% of the EU total in 2007. Germany is known as the most advanced EU market for natural cosmetics. Natural cosmetics are firmly established in Germany, as they represent over 5% of total cosmetics sales. Organic and natural cosmetics combined is expected to account for 10% of the market in 2012. In terms of volume, Germany is the largest producer of essential oils in the EU, while in terms of value France is by far the largest. Production of essential oils in Germany amounted to € 83 million or 12 thousand tonnes in 2008, showing respectively an increase of 12% and 32% compared to 2004 (ProdCom, 2010). In 2008, Germany was the largest importer of essential oils in the EU, accounting for 9% of total EU imports, totalling € 151 million / 19 thousand tonnes. Imports increased by 6% annually, significantly above the growth level in the EU. In terms of value, the leading suppliers of essential oils were France and India. DCs accounted for 47% of all imports into Germany, indicating an average annual increase of 12% between 2004 and 2008. Leading suppliers from DCs are Brazil, China and India. Germany mainly imported orange oil, extracted oleoresins and other essential oils that are traded in small volume, which are not specified by the HS-codes. Germany is the third largest exporter of essential oils in the EU. Between 2004 and 2008, exports had an annual increase rate of 11% amounting to € 86 million / 7.6 thousand tonnes in the latter year. Germany is the third largest exporter of orange oil and extracted oleoresins in the EU. According to industry sources, re-exports of essential oils originating in developing country oils are increasing. Buyer requirements for essential oils are provided in the module on ‘Compliance with EU buyer requirements’.

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Understanding the German market
 German cosmetics producers are looking for opportunities to add value by using organic, Fair Trade and specialty oils. This increasing demand also offers great prospects for DCs, because Europe cannot meet the demand for all interesting natural essential oils.

Germany has a very large extraction industry producing essential oils. This industry forms a strong competitor to producers in other countries of these products, if they are also

Essential oils for cosmetics in Germany

produced in Germany. Also, due to the high quality demand, these German producers can meet standards such as those for supercritical extraction. However, German producers are looking for suppliers of essential oils, especially for those which are not produced in the EU, or organic / Fair Trade ones. The industrial demand for essential oils, therefore, continues to increase. This trend offers market opportunities to DC exporters. According to industry sources, currently around 20 to 30% of the natural extracts used in cosmetics is also available organically certified. Although this percentage is expected to grow, organic products will not reach 100% coverage of the ingredients market, as some products are very difficult to supply organically. Pricing and availability are the constraining factors in this, as cosmetics companies are only willing to pay a moderate premium for organically certified extracts, because end-consumers are only to a limited extent aware of differences between the products. Interesting for exporters in DCs to know is that the supplied product has to be of good quality (amongst others no adulteration) and offered at a competitive price, however, organic / Fair-Trade certified and ethical sourcing can add value to the product.

Market entry
 The recommended market entry strategy depends on the offered essential oil, whether being an existing oil in the market or a new oil. The two strategies can of course overlap.

Trade channel for existing essential oils The most interesting trade channel for exporters in DCs dealing with existing essential oils, meaning oil already known to the market, will be importers/ traders and processors. German importers/traders supply cosmetics manufacturers and perfume houses. As they have strong ties to the cosmetics producers they can promote and support your products. Manufacturers of final products tend to purchase from intermediaries rather than purchase directly from suppliers in DCs, although due to the fact that essential oils can be sold in small volumes some manufacturers may be interested in direct purchasing. Please note that big companies like IFF or Givaudan have their own sources. Processing companies add value to essential oils before selling them to the end-product manufacturers. Current tendency shows that EU buyers, particularly perfumery manufacturers, are also increasingly looking for fractions of essential oils, in which the required properties are isolated. Exporters in DCs must compete on quality, price and reliability. Chances of successful market entry are larger, if the exporter offers a product that can be distinguished from other products that already are available on the market. Factors like availability of the oil, price, history of use in the country of origin (story telling) and quality (purity, no adulteration!) are of major importance. However, meeting standards such as ISO, IFRA, organic, FSC, Fair Trade and FairWild is an added value and will strengthen the position of the exporter, especially with considerations about the sustainability of the plants. Essential oils are commonly sold on the basis of their origin. However for some downstream users the origin is not critical. Hence exporters could consider opportunities to develop an alternative origin for an essential oil, taking account of legislation on access to plant species and the quality, price and reliability of the final essential oils. Trade channels for new essential oils Exporters in DCs, who are interested in launching new essential oil in the market, are recommended primarily to trade in existing oils in order to build up a reliable relationship with the German importer and to gain experience of the industry. There are considerable

Essential oils for cosmetics in Germany

challenges to introduce a new essential oil that should not be under estimated. New essential oils are primarily of interest if they offer a new fragrance and hence is of particular relevance to the perfume sector. An importer may be able to guide the exporter in introducing a new oil to the market, which is a difficult process, due to complications concerning strict EU regulations, especially if volumes exceed certain minimum thresholds. It is estimated that the whole process can take about 1 to 2 years before a new essential oil can be traded in the market; Exporters need to pay attention to the sustainability of the plant species when developing new essential oils as well as ensuring that sufficient quantities are available for a viable business. The following channels are especially relevant for producers of new essential oils:  Large companies with screening programmes sub-contract brokers, research institutions, and other intermediaries. These intermediaries collect samples in a similar way as for the pharmaceutical industry, but with greater emphasis on traditional use, and an eye towards raw material sourcing strategies, which are of immediate concern to companies in the personal care and cosmetics industry.  Specific research and training centres specialised in extraction and purification processes, offering services to companies involved in the food industry, pharmaceuticals and cosmetics.  Since quality demands for cosmetic ingredients are very high, joint ventures or other forms of partnership are popular and increasingly necessary to be able to surmount issues, such as costly safety tests. German importers search for new suppliers in DCs by visiting the country of interest, through recommendations, and a limited number also through trade fairs. The most common ways for developing country exporters to approach German customers are through direct (e)mail, personal visits (as follow-up), inviting potential German customers to visit them in their country, building your network and visiting international trade fairs. Interesting companies focusing essential oils for cosmetics are:  Henkel KGAA - - also local sourcing in developing countries  Maurer + Wirtz GMBH & Co. KG - perfume manufacturer  Dr. Kurt Wolff GMBH & CO. KG - specialised in hair care products  Aroma-Zentrum-Alsfeld - organic essential oils  CPL Aromas - aroma chemicals, essential oils and fragrance trader and processor  ERAMEX Aromatics GmbH - trade in raw materials and essential oils for flavours, fragrances, cosmetics and pharmaceuticals  Folf Schneider Handelsgesellschaft - essential oils trader Other alternative points of departure in searching for more information and trading opportunities on the British market for essential oils is the International Federation of Essential Oils and Aroma Trade (IFEAT) - An excellent reference for the trade of essential oils is the European Federation for Essential Oils (EFEO) export market. Also, the International Fragrance Association (IFRA) - is useful to find information. Other interesting sites to visit for additional information, especially current trade leads and companies, are the following market places or buyer guides:

Essential oils for cosmetics in Germany

and Greentrade -, an online marketplace serving as an important reference point for organic products is of interest. Assistance with market entry can also be sought through local business support organisations, import promotion organisations such as CBI and branch organisations focusing on the cosmetics, natural cosmetics and natural ingredients sectors.  German trade associations which could be of interest are IKW: the German Cosmetics, Toiletry, Perfumery and Detergent Association -; GROFOR: the German Association of Wholesale Traders in Oils, Fats and Oil Raw Materials -; and BDIH: the Bundesverband Deutscher Industrie- und Handelsunternehmen - Many trade fairs are held in Germany each year. The biggest cosmetics trade fairs are Cosmeticsa Berlin -; and Beauty International in Düsseldorf - Regarding organic natural ingredients, BioFach - is an interesting trade fair, increasingly paying attention to natural ingredients.

COSSMA is a very valuable, innovative, tri-lingual magazine, giving news from the areas of perfumery and cosmetics, aerosol and spray technology and marketing and marketing surveys - It is published by the Health and Beauty Group, an international media company covering more than 30 professional magazines and trade fairs in 14 countries. The headquarters is located in Karlsruhe - SÖFW-Journal is the leading German magazine on cosmetics formulations -