Companies

Amid lockdown, fragrances and flavours industry smells increased competition from China

V Rishi Kumar Hyderabad | Updated on May 12, 2020

Lockdown disrupts supply chain; industry suffers 80% production loss

Amid the lockdown, the country’s fragrances and flavours industry is worried that it might lose ground to China, particularly as the latter is now operating in full swing.

“Our palette is very large. We are one of the biggest exporters and importers of ingredients,” said Rishabh Kothari, President, Fragrances & Flavours Association of India (FAFAI), in a statement.

“Due to the prevailing logistics issues in the country, as inter-State transportation is either restricted or difficult, there is a substantial impact on our industry. If the situation is not improved quickly, there will be a huge economic cost for us. China will benefit from the situation as we may lose some of our global customers to the neighbouring country, which will result in a significant business loss and market share for us.”

Fall in demand

While it is difficult to arrive at an accurate estimate of the loss, production has been hit to the extent of 80 per cent and exports and imports, too, have been similarly impacted by the pandemic, he said. The industry, which was growing at over 10 per cent, is likely to see a contraction, both due to the lockdown and the consequent likely drop in demand for consumer products and processed foods during the rest of the year, he added.

Fragrance and flavours products come under the essentials category, as they are used in the food processing industry as well as in hygiene and cleaning products such as sanitisers and handwashes.

The production and supply of the products — which are also used in the pharma, detergents, condoms, shampoos, soaps, toothpastes, agarbattis, perfumes and deodorants sectors — have been disrupted by the lockdown.

According to the Ministry of Micro, Small and Medium Enterprises, the domestic fragrances and flavours industry is estimated at $500 million, growing at 11 per cent per annum while the global industry is valued at $24 billion.

Future growth

Thanks to India’s rich diversity of flora, its fragrances and flavours industry is projected to grow exponentially in the coming years. Considered an ancillary industry to the FMCG and food processing and pharma sectors, it enjoys a good distribution network across the country. There are over 1,000 small, medium and large size enterprises from both the organised and unorganised sectors operating in it.

Established in 1949, FAFAI has grown to over 800 members.

Published on May 12, 2020

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