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Market Trends
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Wellbeing is an umbrella term for physical health, mental health and beauty. “Aromatherapy” is considered to be part of “well being”, falling within mental health, although it is used in beauty (cosmetics) and as herbal remedies for physical health as well.
The following are some of the market trends pushing aromatherapy:
- Consumer trend is towards health and wellbeing.
- Pull factors: aging population and increased health awareness – people aged over 50 years own more than 70% of the nations’ net wealth. Seniors are the fastest growing market segment. (Moosa, 2002.)
- Push factors: manufacturer, media and retailers boosting growth of wellbeing trend. (Moosa, 2002.)
- Trend is neither gender nor age specific – is a “consumer group”.
- Americans spend more than twice as much on anti-depressants as is spent in Europe (Moosa, 2002.).
- Skincare category major user of natural active ingredients derived from essential oils or herbs – logical as the base of skin care products tend to be oil based which are good carriers for essential oils or herbs .
- Use of essential oils themselves likely to be used by practitioners and a small group of consumers who religiously use these products as an alternative to synthetic medicine.
- Personal care companies such as Body Shop and Coty taking term “aromatherapy” beyond niche status.
- Home décor trend – candles – giftware.
- Aromatherapy has been adopted by many as a method of relaxing, recuperating and recharging or improving total well-being. The market drivers for natural personal care are highest in the U.S., U.K. and Germany.
- “According to the 2003 Health and Wellness Trends Report offered by the Pennsylvania-based Natural Marketing Institute, aromatherapy is used by an average of 34.4% of the total population, with 46.9% under the age of 35, suggesting some serious growth opportunities as the population ages.” (Global Cosmetic Industry, 2003)
- The consumer has a desire for ‘natural products’. Consumers today are seeking a way to achieve balance, harmony, health and peace in an increasingly stressful world. (Bennis workshop, 2003)
Issues
Technical
To begin an essential oil processing facility on the farm, a heavy initial investment is needed. Many of the plants used for therapeutic essential oils are perennial crops, that have little available agronomic information, and thus no costs of production established. It is difficult to establish a production budget.
The critical production issues for aromatic crops are site selection, adaptability, seedbed preparation, seeding, fertilization, weed control, harvesting, storage and processing. Alberta producers experience limitations that do not challenge competing countries. A short growing season and harsh winter weather dramatically limit the number of plants that can be economically grown. The cost of labor for hand weeding and/or hand harvesting is prohibitive for many of the crops that do not tolerate herbicides or mechanical harvesting. There is lack of grower experience with perennial, multi-year crops.
At present, there is no reliable assurance of the botanical integrity of the active ingredients. Different varieties of the same crop species can contain varying concentrations of the active ingredient and changing growing conditions can alter the content of the active ingredient. The extent of this variability should be known and established by reliable parties (lab and researchers). In the case of “wild crafted” species, the chemical profile of their essential oils is very unreliable. This is because in nature, wild plants exhibit enormous genetic variations. Documentation supporting the botanical authenticity is often poor or lacking.
Production and processing information is seriously lacking at the primary producer level. At primary production, plant management techniques which increase active ingredient levels need to be understood and practiced. On the oil end, extraction protocols are often proprietary and testing results vary from laboratory to laboratory.
The basic usefulness of standards for essential oils is an aid for trade. They can be used to help determine the authenticity, geographical origin and quality of the oils. There are two types of standards, which should be considered by the Alberta therapeutic essential oils industry. These are the actual specification and the method of analysis. Extraction protocols are not currently standardized for many essential oils and most standardized handling and packing procedures at the primary producer level do not exist in Alberta.
Environment
In this study, plants adaptable to Alberta are being considered for use in therapeutic essential oils. Not only plants that are commercially available are being suggested but plants that are growing naturally in various areas of Alberta. Growers will need to consider the environment and ecosystem sustainability when considering the production of naturally grown Alberta plants, and taking them into cultivation.
As outlined from the study, the market is demanding high quality oils with specific chemistry. When a wild plant species is brought in under cultivation, for essential oil production, the plants that produce the highest yields, are the most vigorous and have a certain chemotype are harvested. Breeding and selection occurs by scientists to allow for consistent quality under cultivation.
Selection of individuals from wild populations for yield or chemotype can produce unnatural selection pressure. The individuals removed would in all probability be the plants with the greatest vigor, the highest seed production, and, through the essential oils, have the best defense and/or attraction odor. Their genetic material would have given them an evolutionary advantage. Shift would then occur in the wild population to less attractive or less vigorous individuals. This can be a risk to the biodiversity of an area. Any process that reduces the natural diversity of populations or ecosystems diminishes biodiversity.
Translocated plant species are those that have been introduced beyond where they naturally occur. This includes introduction of individuals of species that may occur in the new locality, but have “genetic stock and/or populations that are distinct from those in the source area”. Translocated species may establish as weeds in the new locations. (Parliament of Victoria, Au. 2002)
Besides translocation, genetic pollution can occur. Genetic diversity within populations in a given area represents a resource on which future generation of the species can draw to meet changes and new hazards. Introduction of individuals from populations with different genetic characteristics can change the genetics and ultimately the physical characteristics of a wild population. (Parliament of Victoria, Au. 2002)
Regulatory
Natural Health Products (NHP’s) in Canada are currently regulated as either a food or a drug under Health Canada's Food and Drugs Act. Under the proposed new Natural Health Products Act of the Natural Health Products Directorate (NHPD), Health Canada places NHP's as a subset of drugs. All products sold as a NHP will include health claims, therefore any product that is not a drug, and makes a health claim will have to meet the new NHP regulations. The new regulations have been posted under the Canada Gazette II June 2003
(http://canadagazette.gc.ca/partII/2003/20030618/html/sor196-e.html), and include some transitional provisions as it is implemented.
The NHP regulations place requirements on persons who sell NHP’s – manufacturers, distributors, importers, packagers and labelers. Growers who produce and sell a raw product, and health care practitioners, (e.g., pharmacists, Aboriginal healers, Traditional Chinese Medicine practitioners, herbalists, naturopathic doctors, etc.) who compound products at the request of a patient, are not included within the manufacturer definition and therefore essentially exempt from the regulations. “Although growers are exempt, any product they intend to sell to manufacturers of NHP products must meet the Good Manufacturing Practices (GMP) Specifications outlined for manufacturers in the new NHP act.”
The NHP Act will have implications for therapeutic essential oils. Any therapeutic essential oil products that make health claims will have to meet all of the requirements of the NHP standards and regulations before it can be sold. This will include product sold to health care practitioners, and other alternative health practitioners, retail outlets or individuals. Otherwise, the product would be considered a cosmetic, without any health claims, and would be expected to meet the requirements of Health Canada for cosmetics.
In 2003, the Canadian National Coalition for Herbs and Spices moved into Phase II in developing a Hazard Analysis and Critical Control Point (HACCP)-based On-Farm Food Safety (OFFS) Program and companion Good Agriculture Practices (GAP). The GAP’s that growers will be expected to follow, are being developed to flow directly into the Good Manufacturing Practices (GMP’s) that manufacturers are expected to follow under the NHP Act. Once the committee has completed the draft and reviews, it will be submitted to Canadian Food Inspection Agency (CFIA) for approval. Approval is expected to occur in 2004, followed by implementation of this voluntary program. As many buyers of natural health product ingredients demand GAP records, a CFIA approved OFFS program and GAP program will improve market access and global competitiveness for Alberta growers.
Defining the Market for Alberta Agriculture
Focus Group Results
For a full summary of the focus group report see Appendix B.
Two focus groups were held in October 2002 – one in Edmonton and one in Airdrie, Alberta. A mix of participants was selected which were deemed reflective of the Alberta therapeutic essential oil industry and included aromatherapists, spa retailers, massage therapists, naturopaths and wholesalers.
The focus groups were used to learn more about the consumers of therapeutic essential oils in Alberta as seen by the end users. The discussion focused on client profiles and why they use the oils and what trends the end users were seeing in the industry. The conversation looked at what factors an end user looks for when purchasing a therapeutic essential oil and what would make them consider using an Alberta oil. Information gathered from these focus groups was used in development of a telephone survey conducted in early 2003.
From the focus group discussions, it was clear that there was a great variety in the kinds and types of essential oils used and the reasons they are used. There seemed to be interest in a locally grown product/Alberta native plant, provided it was of good quality and available on a consistent basis and at a competitive price range.
Results from the focus groups indicate that the typical Alberta consumer is white Caucasian women between the ages of 16-50, and who is open to alternative health. The primary reasons they choose aromatherapy is for: stress, injuries, hormonal, skin care, immune stimulant, muscle and revitalization.
The key factors that Alberta end users consider when purchasing essential oils include:
- Quality and Purity
- Organic Product
- Local Product
- Affordable
- Clear and Concise Labeling on Product
When participants were asked what was stopping them from obtaining a “perfect therapeutic oil product” they mentioned that there was a lack of quality control, availability issues and a lack of government support to the industry especially in the testing, research and development areas. Participants felt that suppliers needed to ensure the quality of the product, be a credible and reliable source of information and be able to maintain a consistent quality and quantity of product.
Participants indicated there is an opportunity for industry and government to help jumpstart this industry, especially in the testing and research and development areas.
Telephone Survey Summary
For a full analysis of the survey see Appendix C.
In 2003, 185 therapeutic essential oil users in Canada and the Pacific Northwest of the U.S. participated in a telephone survey. Of the total sample, 17% were from Alberta, 63% were from British Columbia, 10 % from other provinces of Canada, 9% from the U.S., including Oregon, California, Washington and Idaho and 1% unknown.
The survey specifically targeted professionals (users) who use essential oils for therapeutic purposes in their occupations. The general public who may buy pure essential oil or pre-blended oils at a retail outlet for general well-being experiences were not included in this survey. Over half of the survey respondents were massage therapists, followed by aromatherapists. The third largest category of respondents was in the health and beauty fields (e.g., estheticians and alternative health practitioners). A small percentage of the surveys were conducted with main-stream and holistic veterinarians, equine and/or canine massage therapists. Answers in regards to essential oils used were mostly given as a common name for a plant rather than botanical nomenclature.
Key Messages/Observations:
- Essential oil growers and processors need to know who the wholesalers/retailers are and to understand the specific product/requirements their customers are requesting. See Figure 3, 4 and 5.
- Growers and processors must be aware who their target end-user is and what they are looking for in an essential oil product. (e.g., producers/processors selling essential oil to health practitioners, must have several high quality oils available). If the target market is to the massage therapist, a good quantity of popular oils is important. In either case, having detailed records, Good Manufacturing Practices (GMP) -- as detailed by the Natural Health Products Act --, and being aware and preparing for upcoming On-Farm Food Safety requirements will be imperative.
- End users want high quality oils (e.g., unadulterated and minimally processed) and want proof that the oil is pure and unadulterated through chemical analysis such as gas chromatography.
- Top 5 therapeutic essential oil treatments were for anti-anxiety (stress/anxiety), analgesic (general pain relief/back pain/muscle soreness/injury), anti-inflammatory (arthritis/joint pain/migraines/sports injuries), anti-infectious (cold/flu/ear ache); and anti-spasmodic (muscle spasms/ muscle sprains/ asthma). For a full listing of essential oil treatments for various health symptoms see Appendix A.
- Top 5 therapeutic essential oil treatments and most effective oils: Lavender - used mostly as a treatment for anti-anxiety and anti- inflammatory; Rose – general even usage for top 5 treatments; Peppermint – mostly used as an anti-inflammatory treatment; Rosemary – used for all top treatments except not for anti-anxiety; Eucalyptus – mostly used as an anti-infectious treatment.
- Lavender, peppermint and rosemary are used equally by massage therapist and aromatherapist for the top 5 essential oil treatments; eucalyptus is used more by massage therapists than by aromatherapists; chamomile is used more by aromatherapists than massage therapists.
- Users were interested in trying high-quality Alberta essential oils as a new or substitute oil to a more commonly used oil.
- Interest in using Alberta essential oils (Total Survey Users) in order of importance: wild bergamot (66%); wild mint (63%); common yarrow (56%); black spruce/hyssop (55%); french tarragon (51%).
- Users preferred the plant to be grown organically and to have proper documentation describing how it was processed.
- Others suggested small test samples of Alberta essential oils with documentation to educate the user would be beneficial. It would give them a chance to see if the product was suitable.
Overall Survey Findings
- Users were interested in trying out high-quality Alberta essential oils as a new or substitute oil to a more commonly used oil.
- Current and potential users and wholesalers of Alberta therapeutic essential oils want pure, natural, preferably organic, steam distilled high-quality traceable product back to the farm level that shows proper documentation from seed (botanical authenticity) to harvest and distillation.
- Users are looking for a product that includes educational materials about the product and how to use it.
- Better education and information was suggested for the whole chain…the grower, user and consumer.
- Test samples of product was suggested to help users determine the suitability of the product for their particular occupation.
Alberta Therapeutic Essential Oil Industry Defined
Product development, utilizing 90% or more Alberta based agricultural commodities makes good economic sense from a rural development, business and marketing perspective. The potential advantage of western Canadian therapeutic essential oils would be to ensure that they are grown according to good agricultural practices (GAP). Products with a traceable history back to seed/transplant botanical authenticity are more desirable to the end user. The best strategy in Alberta would be to aim for high value, high quality therapeutic essential oils at the top end of the market, rather than the cheaper commodity oils.
Disadvantages to development of a therapeutic essential oil industry in Alberta include labour costs. Many oils used by the therapeutic industry are imported from developing countries where labor is cheap and oils can be purchased relatively inexpensively.
Marketing to establish a presence and reputation on world market can be achieved by attending conferences and conventions with oils for sample and sale, and a good brochure outlining quality and purity (with gas chromatography analysis); system of farming (organic or traditional); main use (health symptom this oil treats); and how to use. All samples need to be labeled with origin, botanical nomenclature, and batch number to emphasize traceablility at the farm level. If Alberta therapeutic essential oils have a unique edge, such as chemotype, organic, or less than 1000 litres produced worldwide a year, there is potential to break into the therapeutic essential oil market. (Rogers. 2003)
There are some essential oil plants grown in Alberta that are already established oils in the existing aromatherapy market, while others are more experimental. Established oils have the advantage of being recognized by an educated market, whereas experimental oils have more of a "niche market" appeal also desirable to those in this field. (Rogers. 2003)
The following are some of the field cultivated or woodlot plants identified in the telephone survey and cross-referenced to the five essential oil treatments being used by the top end users (massage therapists and aromatherapists), that Alberta could have some potential in growing and distilling. For a full analysis of the Consultant’s report see Appendix D.
| Anti-Anxiety | | |
| Top Species | Massage Therapist | Aromatherapist |
| Wild Bergamot (Monarda fistulosa var. geraniol) - aerial parts | a | a |
| Common Yarrow (Achillea millefolium) - aerial parts | a | a |
| German Chamomile (Matricaria chamomilla or Matricaria recutita) - aerial parts | a | |
| Pineapple Weed (Matricaria matricarioides) - aerial parts | a | a |
| Analgesic | | |
| Top Species | Massage Therapist | Aromatherapist |
| Anise Hyssop (Agastache foeniculum) - aerial parts | a | a |
| Wild Bergamot (Monarda fistulosa var thymol) - aerial parts | a | a |
| Birch (Betula papyrifera) - bark and leaf buds | a | |
| Aspen Poplar (Populus tremuloides) - branches and buds | a | a |
| Balsam Poplar and Western Cottonwood - (Populus balsamifera, Populus deltoides) - branches and buds | a | a |
| German Chamomile (Matricaria chamomilla or Matricaria recutita) | a | |
| Anti-Inflammatory | | |
| Top Species | Massage Therapist | Aromatherapist |
| Arnica (Arnica chamissonis) - aerial parts | a | a |
| French Tarragon (Artemisia dracunculus) - aerial parts | a | a |
| Wild Bergamot (Monarda fistulosa var. thymol) - aerial parts | a | a |
| Birch (Betula papyrifera) - bark | a | |
| Common Yarrow (Achillea millefolium) - aerial parts | a | a |
| German Chamomile (Matricaria chamomilla or Matricaria recutita) - aerial parts | a | |
| White and Black Spruce (Picea glauca and Picea mariana) - needles and branches | a | a |
| Aspen and Balsam Poplar (Populus tremuloides and Populus balsamifera) - buds and branches | a | a |
| Anti-Infectious | | |
| Top Species | Massage Therapist | Aromatherapist |
| Anise Hyssop (Agastache foeniculum) - aerial parts | a | a |
| Summer Savory (Satureja hortensis) - aerial parts | a | a |
| German Chamomile (Matricaria chamomilla or Matricaria recutita) - aerial parts | a | a |
| Wild Bergamot (Monarda fistulosa var. thymol) - aerial parts | a | a |
| Russian Sage (Perovskia atriplicifolia) - aerial parts | a | a |
| Anti-Spasmodic | | |
| Top Species | Massage Therapist | Aromatherapist |
| Anise Hyssop (Agastache foeniculum) - aerial parts | a | a |
| French Tarragon (Artemisia dracunculus) - leaf | a | a |
| White and Black Spruce (Picea glauca and Picea mariana) - needles and branches | a | a |
| German Chamomile (Matricaria chamomilla or Matricaria recutita) | a | a |
German chamomile has growth potential for essential oil production on the prairies. Pineapple weed is a perennial relative that contains similar anti-inflammatory, anti-anxiety, skin care, hormonal and digestive properties. Common yarrow shares all the above properties, with the added advantage of smaller world production, as well as being a hardy native, drought resistant perennial.
Both anise hyssop and wild bergamot - thymol type have good market potential. The carvacrol and thymol content make these two plants worthy substitutes for rosemary, thyme, oregano, and tea tree. While nowhere identical, their unique characteristics, climatic tolerance, and easily adapted agronomy requirements make them worthy of further exploration.
The therapeutic essential oils with the greatest woodlot, or managed forest potential are aspen or balsam poplar oil. Produced from the branches and buds, the oil has unique concentrations of anti-inflammatory, analgesic, antiseptic, and immune stimulating compounds, that can create a worldwide interest. Black spruce will always have a demand, and with value added product development, will continue to be a sought after oil. Of particular importance is the therapeutic application by both aromatherapists, and massage therapists, for immune, endocrine and respiratory health issues. Substitutes for eucalyptus include black and white spruce, tamarack, pine needle, and balsam fir. The potential for co-ventures with existing forestry companies, from an ecological and economic perspective, make this opportunity more inviting.
Birch bark oil may also be considered. Today, it is nearly impossible to obtain true birch or wintergreen oil, as synthetic methyl salicylate dominates the market. Niche opportunities exist, however, for pure birch oil, on the international market, if proper documentation and authentication are attached. (Rogers. 2003)
SWOT Analysis for Alberta
Strengths
- Existing industry organizations (Alberta New Crops Network) with growers actively producing essential oils.
- Alberta oils showing very high quality in regards to chemistry.
- Sophisticated labs available in Alberta (e.g., Olds College Essential Oil Testing Laboratory, private industry labs with new processing/extraction technologies).
- Existing provincial government support for new emerging industries.
- Existing strong research capacity.
Weaknesses
- Lack of grower knowledge in economics, business, marketing, production and processing of essential oils for commercialization.
- Lack of commercial processing infrastructure (steam distillation) and information for producing high volumes of high quality therapeutic essential oils.
- Lack of specialized flower harvesting equipment.
Opportunities
- Alberta can produce high quality, high value oils.
- Alberta plants offer new and unique special chemotypes of oils to the market place.
- In global markets, Canada offers greater security of providing timely supply of consistent high quality essential oils.
- Growes who implement HACCP-based On-Farm Food Safety and Good Agricultural Practices in their operations will have a marketing advantage. (traceability, botanical verification).
- Import replacement or substitution of raw materials and essential oils currently imported into Canada (e.g., may be reinforced by new Natural Health Products Act).
Threats
- Large volume of essential oils currently produced in developing countries with low costs anc cheap labor resulting in oils traded below the cost at which they can be produced in Alberta.
- Environment-weather, pests and other production related challenges.
- Non-tariff trade barriers and other new regulations such as US Bioterrorism.
- Lack of consumer knowledge, media influence, and use of non-therapeutic essential oils by personal care market capitalizing on "aromatherapy" term.
Conclusion
Barriers
The following are barriers to the growth of a therapeutic essential oil industry in Alberta:
- The therapeutic essential oil industry is dwarfed by the fragrance and flavor industry. The market place is dictated by these industries and it is difficult to break into these industries without large volumes.
- Many of the plants that may be looked at for growing in Alberta for the therapeutic essential oil industry are perennials. Alberta does not have good information on growing perennials for this type of industry.
- There needs to be a good supply of potable water to produce high quality therapeutic essential oils.
- Cost of production per acre is high as many of the plants must be transplanted and row cropped. Organic systems may need to be incorporated to meet market demands.
- Cost of distiller is high for individual grower.
- Natural Health products regulations may be a barrier if a portable steam distiller is being considered. It may be hard to uphold the cleanliness standards of the Good Manufacturing Procedures (GMP) that are cited in the regulations, forcing processors to build more expensive infrastructure in the form of permanent distillation plants.
Market Opportunity
At present, the therapeutic essential oil industry in Alberta is niche status.
There is potential for growers/distillers to enter the market place under the following conditions:
- The oil is a high quality oil with no contaminants.
- Consistent quality and supply is met every year. Perhaps consider group distillation to ensure supply until the industry is recognized.
- Gas chromatography chemical analysis is done on every batch distilled. Use only certified labs to do the chemical analysis and know what the analysis means.
- Unique oils can be produced but know the therapeutic benefit of the oils produced and target the market accordingly.
- Target the market. Use the information from this document to know who the oil is being marketed to and why. Do one-on-one visitations, attend conferences, attend trade shows, but be sure volumes demanded can be supplied.
- Provide samples and supply supporting information documents on how to use and what to use it for.
- If making a therapeutic health claim, know all the regulations involved in the Natural Health Products Act and label accordingly. Follow the Good Manufacturing Procedures (GMP) guidelines set out in the NHP regulations.
- To improve market access and global competitiveness, growers should implement a HACCP-based On-Farm Food Safety Program, and use Good Agricultural Practices. This ensures traceability back to the farm gate, including botanical identification of the raw product. Although the programs are currently voluntary, the market is increasingly demanding these requirements, and growers not able to meet these requirements will not be able to sell into these more lucrative markets.
- Know the botanical authenticity of the plants distilled.
- Record all the information about the growing of the plants, the harvest of plants, and the distillation procedure.
Recommendations
- The best strategy in Alberta would be to aim for high value, high quality oils at the top end of the market, rather than the cheaper commodity oils.
- There is potential for this industry as a niche status now with the alternative health trade.
- By working in the alternative health area now, Alberta growers/distillers will build their expertise in the distillation of high quality therapeutic grade oils. This study gives very targeted market focus to Alberta growers/distillers to begin development of an industry.
- Marketing will play a major role in the building of this industry, from growers, through processors, manufacturers and distributors/retailers. Growers who implement a HAACP-based On-Farm Food Safety Plan and Good Agriculture Practices will be able to improve their market access and global competitiveness.
- Agronomy and chemistry will have to work together for production of consistent economically viable high quality grade oils. There is a need to conduct research work on the agronomy of the plants identified in this report and to document their chemotypes and how they can be used in the therapeutic essential oil market.
- There may be future potential in the personal body care area and these market opportunities may be identified through the current AAFRD departmental Ag-industrial key initiative.
- Alberta Agriculture, Food and Rural Development can play a role in the development of this industry by giving support in the areas of business development, business structures (value chains and/or new generation co-ops), marketing strategies, new market opportunities for ingredients in the personal body care markets and agronomy of perennials for specific therapeutic essential oil quality.
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