January 4, 2018

Firmenich, the largest privately owned flavors and fragrances business in the world, announced it has acquired New Jersey-based organic and natural flavors business Natural Flavors for an undisclosed amount.

Founded in Geneva, Switzerland, in 1895, Firmenich is a leader in the global flavors and fragrances industry, committing 10 percent of its annual 3.3 billion Swiss Francs turnover to R&D initiatives that advance its sustainability and product offerings.

Located in Newark, New Jersey, Natural Flavors was the first company to commercialize organic certified flavors in North America in the late 1990s. Today, the company has built out an expansive line of certified organic and natural flavors to meet the demand generated by the burgeoning organic and natural food and beverage industries.

“Under the Stein family’s vision, Natural Flavors has established itself as a leader in certified organic flavors and a recognized pioneer of the organic movement,” said Patrick Firmenich, Chairman of the Board, Firmenich.

Flavor Rave

The global flavors segment has seen its fair share of consolidation and dynamic activity within the past few years as global players position themselves to expand beyond commodities and up the production chain in order to gain a foothold in higher margin businesses, while companies and investors seek to capitalize upon consumer trends that lean toward flavorful but healthy foods – trends that have made the natural flavors category one of the fastest growing in both developed and emerging markets.

As consumer demand continues to grow for organic foods and beverages, more than half of all U.S. households now purchase organic produce, according to the Organic Trade Association. By 2016 the natural and organic flavors industry generated $4.6 billion in revenue, and the industry is expected to continue to see a CAGR of 7.6 percent between 2016 and 2024, according to the report, Natural and Organic Flavors Market: Global Industry Analysis and Forecast, 2016-2024 issued by Persistence Market Research.

The most notable deal in the category happened in July 2014, when U.S.-based Archer Daniels Midland (ADM) beat a field of rival bidders to acquire Wild Flavors, a producer of flavorings for cereals, ice cream, dairy, and confectionery items for $3.1 billion from the U.S.-based private equity firm Kohlberg Kravis Roberts and Dr. Hans-Peter Wild. Once complete, the combination of ADM and Wild Flavors was expected to result in global sales of $2.5 billion.

ADM went on in October 2015 to expand its flavors portfolio with the addition of the natural and organic flavors company, Linsalata Capital Partners-backed Eatem Foods for an undisclosed amount, and in May of last year ADM built up its flavors business even further with the acquisition of Amazon Flavors – Brazil’s top producer of natural extracts, emulsions, and compounds.

More recently, last year, International Flavors & Fragrances Inc. (IFF), the third largest flavors company in the world behind Givaudan and Firmenich, agreed to acquire Philadelphia-based flavors company, David Michael & Co., for an undisclosed amount.

And less than two months ago, leading food and ag-focused private equity firm Paine Schwartz Partners announced it had made an undisclosed strategic investment in Lyons Magnus Inc. – a top developer and manufacturer of fruit-based flavor solutions for the dairy, foodservice, and healthcare industries.

For Natural Flavors, the tie in with Firmenich will give it greater access to the European market, which Food Dive reports is the dominant market due to the high popularity of ready-to-drink fruit drinks.

“By joining Firmenich, we are confident Natural Flavors is positioned to realize its full potential,”  said Jason Stein, executive VP, Natural Flavors. “Our longstanding goal of providing our customers with high quality natural and organic flavors is perfectly complemented by Firmenich’s culture of innovation, creativity and its world-class regulatory team.”

“Building on our shared family values, we look forward to taking their legacy forward to delight consumers around the world,” noted Patrick Firmenich.

-Lynda Kiernan