Expanding capabilities in integrated solutions
Integrated solutions is a part of our 2020 strategy that allows us to grow our business in ways which go beyond our core flavour and fragrance capabilities to enhance our Company’s value proposition to customers and enable new opportunities for growth.
In Flavours, we want to differentiate our offerings by developing multi-ingredient solutions where flavour and taste play a key role in formulations. One avenue of creating incremental value in this area of integrated solutions for food and beverages is through acquisitions. In 2016, we took a significant step forward as part of this strategy by acquiring Spicetec Flavors & Seasonings from ConAgra of the USA for USD 340 million (about CHF 331 million).
Spicetec brings complementary capabilities with its strong portfolio of spices, seasoning blends and natural solutions, and strengthens our offering to deliver integrated solutions where flavour and taste play a key role. We can now offer a tailored combination of flavour and functional ingredients that provide optimal performance to meet customers’ needs. By combining the synergies of flavours and taste with herbs and spices, gums and starches, we ensure differentiating performance in the finished food application.
This acquisition also strengthens our presence with existing and potential customers in North America which can be leveraged through the global Givaudan network. With 280 employees, Spicetec operates from three locations in Omaha, Nebraska; Carol Stream, Illinois; and Cranbury, New Jersey.
Spicetec brings an extensive portfolio of natural ingredients to the Givaudan portfolio. Economic trends and an increase in consumer focus on health and well-being in recent years have reminded many consumers of the benefits of going ‘back to basics’ with homemade products ‘just like mother used to make’ that evoke feelings of nostalgia and comfort.
Naturalness is one of the most important demand drivers in modern fast moving consumer goods markets as consumers look for products they can trust from recognised natural sources. And products tend to be trusted more if they are deemed to be natural: globally, 47% of consumers would be encouraged to buy food and drinks with the claim ‘contains natural ingredients’; and also globally, 46% of consumers would be encouraged to buy food and drinks with the claim ‘from natural sources’. (Datamonitor report on ingredients across FMCG).
For consumers, natural means ‘as intended by nature’ and is associated with healthy, fresh and organic. The less processed or complex the product, the more natural it is perceived. Consumers think differently about the role of natural flavours in different categories: Givaudan research in Europe indicates that natural flavours are seen as having a higher impact on taste in yoghurts and processed meat than in carbonated drinks and fruit juices, for example.
“Combining Givaudan’s leading flavour expertise with Spicetec’s portfolio of products enables us to deliver a broader range of solutions to our customers in processed meats, savoury retail and foodservice,” said Mauricio, President Flavour Division.
Natural flavours have always been important to Givaudan. We do not view such flavours through the narrow prism of an opportunity today to be capitalised on. Instead we have always focused on natural flavours and as a result, have an equally thorough approach grounded in our heritage as the leaders in the natural flavour market. As the largest flavour company in the world, we are the biggest buyer of natural raw materials in the industry. Through long standing relationships, partnerships, and collaborations, we ensure sustainable quality and supply of natural ingredients. In fact over 96% of our innovation resources are dedicated to naturals.
Our approach to natural flavours has a strong customer and consumer-centric foundation that is reflected in our broad, multi-faceted consumer understanding and R&D programmes. We work with our customers to bring them the best solutions from nature to their products, offering the broadest range of natural flavours in the industry. Our acquisition of Spicetec has broadened the range of what we can offer and strengthened our market position.