The Current State of the Fragrance Oil Industry & What it Means for Consumers
Many of our customers have noticed an increase in pricing on several of our fragrance oils this past year and have been curious as to why some of their favorite fragrances are now much more expensive than before. Unfortunately, there has been a “Series of Unfortunate Events” that have led to these price increases, all of which are completely out of our control. We can assure you that increasing prices on our fragrance oils are not something that we wanted to do but, unfortunately, it is the nature of the beast sometimes when it comes to supply and demand. We are going to do our best to explain what events have led to these price increases and let you know what is being done on both our end and the manufacturer’s end to help keep pricing down now and in the future.
Everything began back in October of 2017 when there was a massive fire at BASF’s Citral plant in Germany. BASF (Badische Anilin- und Soda-Fabrik) is one of the world’s largest manufacturers and suppliers of high-end fragrance ingredients. Meaning, they produce and supply raw materials used to make things like fragrance oils and perfumes. This fire caused a huge supply-chain issue with many fragrance oils that contain notes of citrus. When there is a shortage of raw materials like this, the price of those materials goes up for the manufacturer and trickles down to the distributor (like us), the customer, and so on. The good news is that BASF was able to get their facilities back up and running by the Spring of 2018 and they are working diligently to continue keeping production on track.
Following the fires in Germany was the closure of 18 chemical production factories in China due to the Environmental Protection Tax Law that became effective in January 2018. Many companies were forced to either close their doors or relocate their facilities because these factories were polluting local water sources, soil, and the air. Like the fire at BASF, the closures of these chemical production plants resulted in a lack of raw materials needed to make certain fragrance oils. Production of such materials ceased as these companies prepared to relocate and settled into their new facilities.
The last major event that impacted the supply-chain was a fire at a chemical plant in India in April of 2018. This resulted in another hit to the global supply of raw materials needed to make fragrance oils that contain Citronellol as well as many other ingredients. This chemical plant is still in recovery and clean-up mode but is hoping to ramp up production in 2019.
So, what does all this mean? To put it simply, right now the demand of the consumer outweighs the supply of the raw materials, but the shortage isn’t expected to last much longer. These companies that produce and store raw materials have been working diligently to replenish their stock which will help balance out the supply and demand. Fragrance manufacturers are also working on replenishing their stock as well as building up their inventory in case there are any other shortages in these raw materials in the future. The supply of these raw materials is expected to level out sometime before the end of 2019, which is good news for everyone!
We wanted to share this information with our customers so that you would be aware of what is happening in the fragrance industry right now and what is causing the price increases for many of our fragrance oils. We can assure you that this is not something that we take lightly, and we are working very closely with our fragrance oil manufacturers so that we can stay up to date on what is happening with this situation. We never choose to dilute or “water down” our fragrance oils to save on cost! That is never an option for us as we always put quality FIRST. We promise that if our manufacturers drop the prices of the fragrance oils we will pass any price decreases on to our customers as well. We want to thank all our customers for being patient and understanding with us during these events and, we are looking forward to what the future holds for us all!