Advertisement

If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.

ENJOY UNLIMITED ACCES TO C&EN

Food Ingredients

IFF to buy Frutarom in flavor and fragrance consolidation

Natural ingredients deal spices up flavor and fragrance sector

by Marc Reisch
May 11, 2018 | A version of this story appeared in Volume 96, Issue 20

A pie chart showing the different areas of Frutarom's sales.
Tasty

Three-quarters of Frutarom's 2017 sales were in flavors.
 a. Includes sweet and savory flavors for food and beverages. 
 b. Includes ingredients for dietary supplements and personal care products, botanical extracts, essential oils, natural colors, and natural food preservatives.


Frutarom, the acquisitive Israeli flavor and fragrance firm, will soon be itself acquired by International Flavors & Fragrances in a $7.1 billion cash and stock transaction. The deal continues a rush among big ingredient suppliers to buy natural ingredient assets.

Frutarom’s $1.6 billion in projected sales this year will bring IFF’s sales to about $5.3 billion when the deal is completed in the next six to nine months. IFF, now the fourth-largest flavor and fragrance maker, will vault ahead of Firmenich to occupy the number two spot just behind Givaudan, IFF says.

IFF CEO Andreas Fibig calls Frutarom “extremely attractive” for its “broad expertise in naturals and diverse adjacencies, with capabilities beyond our core taste and scent business.” Among those adjacencies are fast-growing categories such as enzymes, antioxidants, and natural colors.

For Frutarom, the acquisition is a final chapter for a company that started as a maker of extracts and essential oils in 1933 and grew by acquisition to become the world’s sixth-largest flavor and fragrance maker. The firm has made 39 acquisitions in the past five years and boasts 5,600 employees, including 600 in R&D.

IFF, which employs 7,300 people, 1,600 of them in R&D, has not been so acquisitive. Since 2015, the firm has made five deals, the most recent of which were for Fragrance Resources, a fine fragrances firm, and Powder Pure, an organic flavorings firm.

John Leffingwell, of the flavor and fragrances consulting firm Leffingwell & Associates, foresees “a lot of indigestion” in bringing IFF and Frutarom together. For one thing, he says, the two firms have very different target markets.

Frutarom focuses on sales to smaller companies interested in quality and price, Leffingwell says. IFF is more comfortable with developing relationships with large clients’ technical and commercial people. “Everyone is wondering if IFF can effectively put the two firms together,” he says.

The boards of both IFF and Frutarom have approved the deal, as has ICC Industries, a New York City-based firm that owns a 36% stake in Frutarom. The companies still needs to secure regulatory approvals.

Article:

This article has been sent to the following recipient:

0 /1 FREE ARTICLES LEFT THIS MONTH Remaining
Chemistry matters. Join us to get the news you need.