Flavor and fragrance giant Frutarom on buying spree

The next big billion dollar Israeli company is likely to be a high-tech company in the food sector. In a recent interview with Bloomberg, Frutarom Chief Executive Officer Ori Yehudai said that the company was on track to selling a billion dollars worth of products by 2016, or even this year.

Established in 1933, Frutarom creates, develops, manufactures and markets a wide variety of flavors and ingredients. The company offers a total of some 31,000 products, which are sold to more than 15,500 customers in 145 countries around the world; it has some 2,700 employees. Now part of an international holding group, ICC Industries, the company is still headquartered in Haifa and made a profit $63.6 million on revenues of $684 million in 2013.

Lest one think that producing flavors and fragrances is an “old tech” industry, Frutarom operates no fewer than 41 state of the art research and development firms around the world, where top scientists in the chemical and flavoring industry come up with new ways to impart the tastes that marketers have determined customers crave. Along with the R&D labs, Frutarom operates 79 sales and marketing offices throughout the world, along with 34 production facilities in Europe, North America, Israel and Asia.

Already the seventh largest seller of flavors in the world, Frutarom has been on a buying spree of late. Since 2001, the company has acquired 37 firms, the latest two top flavoring and ingredient firms in Spain and Britain. Spain’s Igrenat specializes in the research and development, production, and sales and marketing of natural extracts from plants which include, among others, paprika rosemary, bixin, alfalfa, and others, using them to deliver taste, color, and antioxidants for customers in Spain and abroad. The deal was worth about $9 million, and was closed last week.

Ingrenat has 28 employees, an R&D and sales and marketing center, and a production site in Murcia, Spain with large production capacity and the possibility of extensive expansion, of which Frutarom will look to gain full advantage and achieve significant operational savings, said CEO Ori Yehudai.

“Ingrenat fits in well with our rapid and profitable growth strategy which is based on natural flavor, health and coloring products. We are convinced this acquisition too will contribute to Frutarom’s continuing rapid and profitable growth as well as generate high value for our customers, our employees, and our investors,” said Yehudai.

Besides Igrenat, Frutarom last week acquired UK-based FoodBlenders, in a deal worth $2.4 million. FoodBlenders develops, manufactures, and markets savory solutions which mainly include spice and seasoning mixes, functional ingredients, marinades and sauces, mostly for the convenience foods segment. This is the third UK company making savory flavors acquired by Frurtarom; in 2012 and 2011 respectively, the Israeli firm bought Savoury Flavours and EAFI.

“The global savory flavors market is growing as a result of the rising standard of living and way of life and the accompanying changes in consumer habits which are boosting demand for processed and convenience foods,” said Yehudai. “Frutarom considers the field of savory flavors a vital strategic growth engine and invests heavily in developing unique innovative products with high added-value at its sites throughout the world. Acquiring FoodBlenders following the previous acquisitions in this segment is another step in establishing Frutarom’s leadership in this important area.”