Flavorings firm Frutarom moves closer to ‘unicorn’ territory

Herzliya-based company now has a presence on every continent – and a projected near-billion dollars in sales for this year

A Frutarom R&D lab in Germany (Courtesy)
A Frutarom R&D lab in Germany (Courtesy)

Flavoring and ingredient firm Frutarom took a giant step toward becoming Israel’s next “unicorn” – a world giant with a billion dollars in sales – with its tenth acquisition so far this year, tying the record for number of companies acquired by corporation in a single year this century by a corporation (Massachusetts-based Alere Global bought ten companies in 2007). Over the weekend, Frutarom announced it was acquiring 79% of the shares of the Spanish company Nutrafur, a company that develops and markets specialty natural plant extracts bearing antioxidant properties.

The Spanish company was valued at $14.5 million, with Herzliya-based Frutarom’s share worth about $11.4 million. The specific terms of the deal were not announced.

With this year’s acquisitions, including one in Australia, Frutarom has a presence on every continent (except for Antarctica, so far), and is now the seventh-largest flavoring and ingredient company in the world.

Established in 1933, Frutarom offers a total of some 31,000 products, which are sold to more than 15,500 customers in 145 countries around the world – including Algeria, Kuwait, the United Arab Emirates, via its Flachsmann A/S subsidiary. 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.

All that acquisition activity has helped sell a record of $413 million of products in the second quarter, the company said. Thus, if, as many tech experts claim, one of the qualities of a “unicorn” – a uniquely successful company that is a world leader in its field – is achieving a major milestone in sales or other financial metrics, Frutarom is on its way to unicorn status.

Nutrafur specializes in extracting antioxidants from vegetation, particularly rosemary, olive and citrus, which are used in a wide variety of food ingredients, as well as in other products, like soap. In addition, the company makes a line of natural antioxidant-based preservatives. Nutrafur’s sales for the 12-month period ending June 2015 amounted to about $13 million, and sales for the company, as well as the healthy food and ingredient industry, said Frutarom, has been “growing by leaps and bounds.”

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 over 80 sales and marketing offices throughout the world, along with 34 production facilities in Europe, North America, Israel and Asia. Overall, the company has some 3,300 employees.

Ori Yehudai, president and CEO of Frutarom Group, said that “over the last few months Frutarom has made a major leap forward in strengthening its position as a leading global producer of natural specialty ingredients and the acquisition of Nutrafur fits in well with our rapid and profitable growth strategy while deepening and expanding Frutarom’s activity in the growing field of natural plant extracts and antioxidants for food products. We will continue investing in considerably expanding our global activity in this important and growing field both by means of strategic acquisitions and through collaboration with universities, research institutes and innovative product development startup companies.”

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