Supply Chain

The essential oil market is primarily comprised of personal care products, holistic medicine, aromatherapy and cosmetics with very little mention of each oil’s beginnings. Brands will often display imagery of lavender plants, rose petals, herbs, fields and other references to the botanicals from which each oil is derived, but are rarely connected to the actual product they are selling. The most overlooked and underappreciated piece of information is the source of each botanical as well as the people and processes that are poured into their cultivation. We created PAN Aromatics to showcase this information and in our Industry Overview, we have compiled a high-level synopsis of the roles responsible for getting an essential oil from the farm to your nose.

Agriculture & Farmers

The essential oil industry is wholly rooted in agriculture, and usually industrial agriculture. Like most plants, each essential oil derived botanical is grown in specific regions and climates in which it thrives. Jasmine generally hails from India, Ylang flowers from the Comoros islands, Eucalyptus from Australia, etc. (the origin from where each botanical is derived is not always due to the climate, but also attributed to the culture, expertise, cost of labor and history). Many plants will grow in different parts of the world, but a new crop may fail due to a lack of local knowledge of planting and harvesting, or because crop cycles overlap with other better paying crops, and there aren’t enough people to do the work at the wage available.

Likely due to the lack of glamour, essential oil marketing often fails to illustrate that many of the raw materials from which the essential oil is produced are by-products of a separate industry. For instance, lemon and orange are not grown anywhere for the single purpose of being processed into essential oils for a major brand. The by-product from the juice industry is sold to producers/distillers who then break it down to extract the aromatic oil. Most cedar and pine oils are a by-product of the lumber industry, while allspice, pepper, and cinnamon are by-products of the spice/food industry. This not to imply that there aren’t essential oils derived from plants grown only for the purpose of essential oil extraction; most of the floral ingredients are just that. Rose, Ylang and Jasmine all have strong agricultural footholds simply for the production of essential oils, but this is usually the case only when the fiscal yield warrants the resources invested.

Producers and Distillers 

These roles are the most often overlooked, as they are not the farmland on which the plant is grown, nor are they the passionate company who is selling the material to the general public. Their story is one of finely tuned skills, technical acumen, and unfortunately the least visually engaging process.

Often, the production and distillation processes are integrated into the same company which farms the product, sells the oil, or both. There are many cases, however, where the producer/distiller is purchasing the raw materials (wood shavings, flower petals, resins, etc) from the farmer and breaking it down using one of several methods, then selling the finished oil to a large reseller, retailer, etc. Production of these materials is done in massive quantities, where multiple vats are used to produce drums upon drums of essential oil from each harvest.

Some crops grow many months out of the year, which allows the producers to have a constant production flow of any given material at a time. Other crops are only harvested for one month out of the year (such as rose), which causes the producer to depend upon multiple types of crops and products in order to thrive for the rest of the year. Each process is somewhat unique to each botanical, producer, and geographical location. For instance, a mint oil production will look much different in the Pacific Northwest than it would in the Midwest. These differences are expressed in the organoleptic qualities of the oil as well as the chemical constituents.

Spearmint (Mentha spicata) is mainly grown in four parts of the world: Midwest (USA), Pacific Northwest (USA), India and China and are all produced using steam distillation. Each essential oil will be different from one another due to a number of variables such as machinery used, knowledge and expertise applied to the extraction process, as well as the soil and weather conditions that affected the plants while they were being grown in their respective geographies. In this way, essential oils are very similar to wine or coffee.

Distributors and Re-sellers

Very much as one would assume, a distributor or re-seller of essential oil is just that. They purchase drums or liters of essential oil, repackage them into a branded container, and sell them to either another reseller, a retailer, or in a few cases, to the end consumer. This role involves a lot of work that the other links in the ‘farm to nose’ chain do not, and generally cannot offer. Most of which involves the collection and organization of information gathered over the life cycle of each material.

A reseller/distributor is generally the primary source of contact for all regulatory and marketing data, such as Safety Data Sheets (SDS), allergen information, animal testing, certifications, photos, descriptions, etc. They collect and maintain records of each botanical’s origin, chemical specifications, technical information, import/export documentation, government papers (when applicable), quality control records, as well as the information that helps their customer’s marketing staff such as the story behind many of these plants and their beginnings.

Some re-sellers go the extra mile of also being the direct-to-consumer retailer. What this means is that, in addition to their aforementioned responsibilities, they must also bottle, label, package and market their product. It is quite common for distributors to vertically integrate their product from the production company up, and in some cases from the farming up, but many distributors lack the funds, expertise, resources or general interest to do this and choose to carry out their role independently.

Retailers

As mentioned previously, there are cases when the retailer is also the farmer, producer and distributor (importer/exporter) of the essential oil that you are purchasing, but this is an extreme rarity. Essential Oils are not only used for Aromatherapy, but for general household uses, including bobbying, perfumery and even as food ingredients.

The primary role of a retailer is to package a product in an attractive container with a visible brand identity, and sell it to the end consumer at a profit. Although it may not seem like enough work to warrant the price in which a product is marked up, the profit markup is not unfitting. Most retailers must fight a long battle of packaging logistics and regulations, bottling/labeling/packaging equipment, quality control training, marketing/advertising, R&D, customer support and sometimes even litigation before they become a success. Retailers are the front line for the product being sold, regardless of who made it. Cost must be factored into the final price of a product as well.

Some retailers own, or have partnerships with, farms and producers of select (usually popular) ingredients that they sell, but throughout all of our research, there is not a single retailer who farms, produces and sells its entire library of products themselves. Many companies claim to have a superior grade product, when there is no standardized grading standard for essential oils (e.g. therapeutic grade). Some companies try to convince their customers that they are the only one who is selling a specific oil of a unique quality when more likely, multiple companies are working with the same exact supplier. These details may be unimportant to many consumers. We feel that accountability is important, especially in an industry that is so inconsistently regulated. People deserve to know what they are purchasing and where they are getting it from.

Large essential oil brands (retailers) often create a façade of transparency, but offer no real data or information to substantiate their messages and claims. These façades are branding/marketing campaigns created in response to the growing trend of consumers with an expectations of transparency. Photos, anecdotes, and often imaginative stretches of reality lead consumers on a journey from open hands in the soil, to walking in fields, to seeing machines processing precious aromatic plants, back into their clenched fists of branding, marketing and profit.

Essential oil brands also engage in all kinds of marketing ploys, offering special deals, promotions, educational demonstrations and memberships to get customers to purchase more of their products. Some companies even engage in Multi-Level marketing, giving members discounts and commission for either referring people, or selling the company’s products directly. These are the most common marketing behaviors we have seen, but there are countless ways that large companies squeeze the most profit out of their products.

For example: companies limit the size of the product sizes they sell to small (10ml-15ml) containers.  These sizes are great for people who are just trying essential oils, or those who use it sparingly. In order to further increase profit, companies often choose not to offer their products in larger bottle sizes, so customers have no choice but to buy an unnecessary sum of small bottles with extremely high profit margins. Ironically, these same companies are telling their consumers to use these products every day, for virtually every application imaginable. In these cases, it is difficult to argue that these companies really have their customers’ best interests at heart.

What Makes PAN Aromatics Any Different?

We, like any essential oil company, depend upon a profit to survive and grow. We add cost to our product after we have purchased it in order to account for labor, materials, and profit before a customer can buy. What we do not do, however, is pretend that we grow each plant, labor over the processes that take place in order to extract the essential oils from them, and tell our customers that our product is of a particular ‘grade’ that is not regulated by any regulatory agency.

The defining element in what sets PAN Aromatics apart from its competitors is that it does not confine its customers. We offer 1/2oz, 2oz, 8oz, and 1 Liter sizes of oils so that customers are free to purchase what they need for each particular applications demand. We share publicly on our website the ability to go directly to the manufacturer or producer of each product that we sell if the customer chooses to do so even if it is only to verify information. We do not commit our customers to purchase outside of their needs or means. Our site is open for anyone to purchase our products whether it is only once to try and evaluate, or as often as they would like. Finally, rather than giving some customers special treatment over others, we treat all of our customers equally. The price that you see on our site is the price that everyone gets. Discounts are provided in the quantity (volume) of product that a customer buys. The price per ml when purchasing 1 Liter of our product is significantly less than the price per ml when purchasing individual 15 ml (½ oz) bottles.

The information and resources that we share on our website are simply an extension of the knowledge passion that we are constantly gaining from this inspiring industry and the people behind it. We hope that you find value in our words and actions and, of course, in our products.

Key Essential Oil Trade Associations

International Federation of Essential Oils and Aromatic Trades Association (IFEAT)

American Herbal Products Association (AHPA)

European Federation of Essential Oils (EFEO)

Flavor, Fragrance & Cosmetic Trade Associations Affecting Essential Oils:

Research Institute for Fragrance Materials (RIFM) - International

International Fragrance Association (IFRA) - International

• IFRA North America (IFRANA)

International Organization of the Flavor Industry (IOFI)

• European Flavor Association (EFFA) - EU
• Flavoring Extracts Manufacturers Association (FEMA) - North America

European Federation for Cosmetic Ingredients (EFFCI) - EU

Personal Care Products Council

For a more complete list of North American Applicable Trade Associations, please click here: http://www.fda.gov/Cosmetics/ResourcesForYou/Industry/ucm077669.htm

How is the Essential Oil Industry Regulated? - (North America)

FDA - Food & Drug Administration

• Food Drug & Cosmetic Act
• FEMA (GRAS) - Generally Recognized as Safe

OSHA - (Occupational Safety & Health Administration)

EPA - Environmental Protection Agency

• OEHHA - (Office of Environmental Health Hazard Assessment)
• Proposition 65
• TSCA - (Toxic Substance Control Act)

Industry Regulated:

• IFRANA - International Fragrance Association
• AHPA - American Herbal Products Association

International Import/Export:

• REACH - (Registration, Evaluation, Authorisation and restriction of Chemicals)