Production of essential oils in Ukraine decreased by 30% in just a year. One of the reasons was the rise in prices for raw materials, which are often purchased abroad, writes Daria Golosenina, an expert in the financial consulting department at Pro Capital Investment, in her blog on Agravery.
If in the first 11 months of 2016, about 500 tons of essential oils were produced, then in almost all 2017 there were only 346 tons.
At the same time, more than half of the products produced last year, more than 200 tons were exported from Ukraine. For comparison, the annual export of Germany exceeds 4,200 tons, and the export of the world’s largest exporter Brazil is about 14.4 thousand tons.
The demand for essential oils in the world is growing very rapidly, by 6.6-8% annually. This is due to the desire of consumers to use more natural and organic products.
In general, the global sales market in the segment of aromatherapy, which includes essential oil, is estimated at $8 billion.
Given these factors, Golosenina considers the launch of a new essential oil production in Ukraine to be topical.
According to calculations, such an enterprise will worth $300-350 thousand of investments. This amount includes the purchase of raw materials (72% of funds), dried or fresh essential oil crops, the purchase of a production line and other equipment (15.7%), renovation of the premises and its rent for 4 months (4.9%), registration and documentation management (2.5%)б and others.
Among these operating costs, raw materials will take 90%. Approximately 6% will be packaging costs, another 4% are utility bills and other administrative expenses.
With careful planning of production, marketing and sales, such an enterprise will pay off in less than 2 years.
At the same time, the expert notes that the final quality of products and their price will be greatly affected by raw materials. The same lavender oil can be sold in retail for 100 UAH for 10 ml, and for 450 UAH as well.