The European market potential for avocado oil

There is a growing demand for natural ingredients in the European cosmetics sector, creating opportunities for exporters of avocado oil from developing countries. Avocado oil has a number of functional and active properties, giving it applications in a wide range of formulations. Avocado is a popular fruit with European consumers, encouraging personal care formulators to start using it in their formulations. It is expected that the demand for avocado oil will continue to rise in the coming years in Europe.

1. Product description

Avocado oil and butter are produced from the avocado fruit. Avocado (Persea americana Mill.) is native to Central America; the largest producing countries include Mexico, Dominican Republic, Peru, Colombia, Indonesia, Kenya and Brazil. The avocado belongs to the plant family Lauraceae and its name comes from the Aztec word ‘ahuacatl’, which refers to its oval shape.

Food ingredients like avocado are making their way into cosmetics and personal care products mainly because of their fatty acids content. Avocado oil also contains vitamins A, E and D.

Table 1: Fatty acid content of avocado oil

Source: sciencedirect.com

Avocado oil is usually produced from the flesh of the fruit, but the seed also contains some percentage of oil. The oil content can vary between different types of avocados. The oil is extracted using only mechanical processes and no chemical solvents. Avocado butter is a dry version of the oil. It has a thicker consistency and is sometimes combined with other vegetable oils.

Avocado oil has several applications in the cosmetics sector. It is mainly used for its moisturising and antioxidant properties. The skin care applications include:

- replenishing dry skin
- calming itchy skin
- moisturising skin
- protecting skin from ultraviolet radiation
- protecting against skin damage
- healing sore skin

Avocado oil is also known to protect the skin from drying winds, thanks to its fatty acid content. It also helps restore the skin’s hydrolipidic film. Avocado oil is also used in hair care products, as it is ideal for dry hair. Avocado oil makes hair smooth and shiny. Like most oils, avocado comes in different grades. These include extra virgin, virgin, pure and mixed avocado oil.

Avocado oil can be sold as oil or butter under HS codes 15159091 and 15159099. HS code 15159091 refers to ‘solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings of more than 1 kilogram not elsewhere specified (excluding for technical or industrial uses and crude fats and oils)’. HS code 15159099 refers to ‘solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings of less than 1 kilogram, or liquid not elsewhere specified (excluding for technical or industrial uses and crude fats and oils)’.

It is estimated that less than 10% of the global avocado production is processed; the lion’s share is consumed fresh. This report covers avocado oil used in the cosmetics sector in the European market.

Figure 1: Examples of cosmetics products containing avocado oil and butter in Europe

Source: Various

2. What makes Europe an interesting market for avocado oil?

The demand for avocado oil in the European cosmetics market is growing. European consumers are looking for personal care products with natural ingredients; they are avoiding synthetic ingredients in cosmetics and personal care products, such as parabens, petrochemical oils and phthalates. Avocado oil has unique properties and its widespread availability makes it a favourite choice for cosmetics companies.

According to Cosmetics Europe, Europe has the largest cosmetics market in the world. In 2018, the market was worth EUR 78.6 billion. Figure 2 shows that the personal care products market is growing at a modest rate. There is a growing trend towards ‘clean beauty’ / natural cosmetics products in Europe. Consumers are looking to avoid harmful chemicals in the products they buy, opting for safer, natural cosmetics.

A growing number of cosmetics companies are replacing synthetic chemicals with natural ingredients. This trend is generating demand for natural and organic personal care products. The European market for natural and organic personal care products is growing at a steady rate. Ecovia Intelligence Research shows that the European market is the largest in the world after North America. Healthy growth rates are projected in the coming years as consumer demand for natural and organic products is set to rise.

The COVID-19 pandemic is boosting consumer demand for natural products. Consumers are looking more closely at the health and nutritional value of the products they buy. It is expected that this trend will continue in the foreseeable future. This also applies to avocado oil as an ingredient for the cosmetics sector in Europe.

According to Blue Wave Consulting, the global avocado oil market was worth USD 587 million in 2018. The market is projected to grow at a compound annual growth rate of 5.3% until 2025. Avocado oil is in high demand in various sectors, including in the food, cosmetics and health products sector. The use of avocado oil in the cosmetics sector is increasing.

Figure 3 and 4 show EU imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings. These figures show that the intra-EU trade is bigger in terms of volume and value than the extra-EU trade. Please note, however, that HS Codes 15159091 and 15159099 also include vegetable oils and fats other than avocado oil.

According to feedback from the industry, demand for both conventional and organic avocado oil is growing. The rising demand for organic avocado oil is driven by the growth in sales of natural and organic personal care products. The European market for natural and organic cosmetics was worth EUR 3.9 billion in 2019. The market has been growing at a healthy rate (6–8%) between 2013 and 2019. The market is forecast to keep growing at a healthy rate in the coming years.

Food ingredients are also becoming popular in the cosmetics sector. This is one of the reasons why avocado oil is used by the cosmetics sector. Many personal care companies are introducing product lines based on food ingredients. Examples include Weleda, Dr. Organic and The Body Shop. The properties of avocado oil also make it a popular choice among cosmetics formulators.

3. Which European countries offer most opportunities for avocado oil?

Western European countries are the biggest importers of solid fixed vegetable fats and oils and their fractions. France, Germany and Italy have some of the biggest consumer markets in Europe. There is also increasing demand for certified organic avocado oil in Europe. Countries such as the Netherlands, Belgium and Sweden re-export raw materials to other European countries.

France

Table 2: French imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings, 2015-2019

Source: Eurostat

Table 2 shows the increase in French imports of solid fixed vegetable fats and oils with HS Codes 15159091 and 15159099. This data does not represent imports of avocado oil only.

France is the leading importer of solid fixed vegetable fats and oils. This is partly because the country has a robust processing sector. Valued at EUR 11.4 billion, the French cosmetics market is one of the largest in Europe. France has the second largest natural and organic cosmetics market. According to feedback from the industry, demand for certified organic avocado oil is increasing.

Leading importers of avocado oil in France include Interchemie and Olvea. Olvea has its own projects for sourcing avocados from Kenya. Personal care brands such as Avril, Mustela, Melvita and Yves Rocher use avocado oil. Some of their cosmetics products are sold by mainstream retailers.

You could target French buyers when exporting certified organic avocado oil, as it is in high demand in the French market.

Sweden

Table 3: Swedish imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings, 2015-2019

Source: Eurostat

Sweden is a leading importer of solid fixed vegetable fats and oils and their fractions with HS codes 15159091 and 15159099. Table 3 shows that Swedish imports increased in volume and value by double-digit levels between 2015 and 2019. Please note that this HS code includes a wide range of ingredients and not just avocado oil. Almost all Swedish imports come from Denmark, as companies such as AAK have processing facilities there.

Sweden has the largest consumer market in the Nordic region. There is a growing demand for natural and organic personal care products in Scandinavian countries. One of the key players on the Swedish market is AAK.

The Netherlands

Table 4: Dutch imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings, 2015-2019

Source: Eurostat

The Netherlands is the second largest importer of solid fixed vegetable fats and oils. It is also an important entry point for natural ingredients into Europe. Table 4 shows that Dutch imports increased in terms of both value and volume between 2015 and 2019. However, these HS Codes also include other vegetable oils and fats.

There are several importers of avocado oil on the Dutch market. These include IMCD and Tradin Organic. As the Dutch market trades large volumes, it offers good prospects to exporters from developing countries. Dutch traders re-export avocado oil to other European countries, as well as overseas.

Belgium

Table 5: Belgian imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings, 2015-2019

Source: Eurostat

Belgium is also an important entry point for natural ingredients into Europe. Table 5 shows that Belgian imports of solid fixed vegetable fats and oils and their fractions with HS codes 15159091 and 15159099 increased between 2015 and 2019. Around 80% of the Belgian import volume is imported from other EU countries. Please note, however, that these HR codes also include other vegetable oils and fats.

The main market players include Mosselman Oleochemicals. Personal care brands such as Biofore offer personal care products with avocado oil.

Exporters of avocado oil from developing countries could target Belgian buyers. Raw materials imported to Belgium are often re-exported to other European countries. Producers that can supply large quantities of avocado oil should target Belgian buyers.

Germany

Table 6: German imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings, 2015-2019

Source: Eurostat

Germany has the largest cosmetics market in Europe. According to Cosmetics Europe, the German personal care products market was worth EUR 13.8 billion in 2018. The German natural and organic cosmetics market is also the largest in Europe, valued at EUR 1.3 billion. German consumers are willing to pay extra for high-quality natural and organic products. The demand for natural and organic personal care products is expected to continue to increase.

Table 6 shows imports German imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings. Please note that avocado oil imports make up only small part of these imports in terms of both volume and value.

Major traders in avocado oil in Germany include Gustav Heess, Henry Lamotte, and Sanabio. Logona (L’Oréal) offers personal care products containing avocado oil. Other personal care brands that use avocado oil include Alverde and Terra Naturi.

If you are a supplier of avocado oil from a developing country, you should consider targeting German buyers, as they have a growing demand for natural and organic personal care products.

Italy

Table 7: Italian imports of solid fixed vegetable fats and oils and their fractions, whether or not refined, but not chemically modified, in immediate packings, 2015-2019

Source: Eurostat

The Italian cosmetics market is one of the largest in Europe. There is also growing demand for natural and organic cosmetics in Italy. According to Cosmetics Europe, the cosmetics market in Italy reached EUR 10.1 billion in 2018. The Italian natural and organic personal care products market was valued at EUR 425 million.

Table 7 shows that Italian imports of solid fixed vegetable fats and oils and their fractions with HS Codes 15159091 and 15159099 decreased between 2015 and 2019. However, it is worth noting that other oils and fats are also traded under these HS Codes.

Personal care companies that use avocado oil in their products include AAKON and Gale & Cosm. Italian traders often import avocado oil from within Europe.

Western European countries offer good prospects to exporters of avocado oil from developing countries. According to traders, demand for organic avocado oil is increasing, driven by a growing use of natural food ingredients in the cosmetics industry.

4. Which trends offer opportunities on the European avocado oil market

European consumers are familiar with avocado and therefore open to choosing products that contain avocado-based ingredients. This is one of the main reasons for the rising popularity of avocado oil in the cosmetics sector. However, the production of avocados is quite unsustainable, which is expected to dampen demand for avocado oil in the near future. The global COVID-19 pandemic caused major disruptions in the trade of avocado oil. This has affected prices and also caused delays in deliveries of avocado oil to Europe.

Increasing demand for food-based ingredients in cosmetics products

There is a growing demand for exotic food-based ingredients on the European cosmetics market. Exotic ingredients offer novelty to personal care formulators and consumers. This provides an opportunity for avocado oil because it is considered exotic, and European consumers are familiar with it. Cosmetics formulators are also looking at the use of food ingredients because of their functional and active properties. The demand for food ingredients in cosmetics products is partly driven by growing consumer demand for natural and clean cosmetics in Europe.

Exotic food ingredients are used in personal care products as botanical extracts, essential oils, vegetable butters, waxes and their derivatives. These ingredients are becoming popular, driven by the perception that healthy food is also beneficial to personal beauty. Increasing awareness of harmful effects of synthetic ingredients is also a driving factor.

The ageing population and rising disposable incomes are also boosting growth in the food-based cosmetics market. Older consumers are looking for natural alternatives to conventional products and they are also willing to pay for high-quality products. However, concerns about the safety of raw materials is a key factor limiting growth in the food-based cosmetics market.

Nevertheless, this trend of growing demand for food-based ingredients presents an opportunity to exporters of natural ingredients from developing countries. According to an importer in France, exotic oils are fashionable in Europe. However, the feedback from the industry is also that the trend often shifts from one exotic ingredient to another, which affects the price of raw materials.

Exporters of natural ingredients from developing countries should take advantage of this trend. Exotic food ingredients from developing countries offer European personal care formulators a wide range of beneficial properties, as well as an opportunity to create an interesting marketing story.

Growing need for international monitoring and standards of avocado production

The demand for avocados and avocado products has been increasing in recent years. Despite this positive development, avocado production causes substantial environmental damage. There is a need for sustainable production standards in the industry. Growing consumer awareness of the high environmental footprint of avocado production will have a negative effect on demand for avocado products.

Intensive avocado production has caused deforestation, biodiversity loss and soil degradation. The large-scale monoculture production of avocados has a significant environmental impact that is comparable to crops like soya, cocoa and palm oil. Unregulated production and sourcing practices are common in the avocado trade. There is an increasing demand among European buyers for ethical and sustainable sourcing practices. It is expected that this trend will slow down the demand for avocado oil.

You could take note of this trend and ensure that your raw materials are ethically sourced and come from sustainable production. Since European consumers are becoming more environmentally conscious, buyers are placing more emphasis on sourcing ingredients with a low environmental impact.

As this trend is expected to become more important in the coming years, you should make sure your supply chain is sustainable and traceable. This will give you a competitive advantage over other suppliers of avocado oil on the market.

Supply chains disrupted by COVID-19

European importers of avocado oil experienced disruptions in the supply chain, such as delays in delivery and increase in prices, due to the coronavirus pandemic. The pandemic disrupted the trade in commodities, including avocado oil. Although trade has resumed, there will probably continue to be challenges in the foreseeable future.

Import and export restrictions on goods and quarantine and lockdown measures imposed by governments are key challenges faced by exporters, as they disrupt global supply chains. An importer of avocado oil stated that they experienced a “delay of shipment” due to the pandemic. Delivery costs have also increased because of flight cancelations and closures. 

There are a number of preparations you can make to minimise disruptions in supply chains. This includes visiting the website or contacting representatives of the government ministry of trade or trade promotion agencies in your country. They are likely to have the latest information about COVID-19 restrictions and may be able to provide export assistance. You can also contact logistics providers to determine the impact of the pandemic on exporting goods before agreeing terms with European buyers, and speak to buyers and keep them updated.

Exporters of avocado oil should communicate honestly with their customers when they are experiencing issues with production and delivery. Having relevant insurance coverage can mitigate losses in the event of further disruptions in supply chains.

This study was carried out on behalf of CBI by Ecovia Intelligence.

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