Our 2020 strategy and key achievements Our 2020 ambition is about creating value for our stakeholders through sustainable and responsible growth and about shared success.
Being the partner of choice for our customers is a strategic ambition, and the measure of this ambition is the value we create with customers through sustainable, responsible growth. Part of being the partner of choice is shared success with our employees, suppliers, and our partners in science and technology, all of whom are critical in delivering on this ambition.
Our 2020 ambition is to create further value through profitable, responsible growth by building on the three strategic pillars of growing with our customers, delivering with excellence, and partnering for shared success. This growth ambition translates into financial targets of an average 4-5% sales growth and an average 12-17% free cash flow over a five-year period by 2020.
Two years into our strategy, we remain on track to achieve our financial targets and continue to make strong operational progress in each of our strategic pillars.
1 average over five years
Read below about our strategic achievements for each pillar.
Growing with our customers Delivering with excellence Partnering for shared success
Growing with our customers
Leveraging capabilities to drive success 4.9% Organic sales growth
High growth markets
With customers at the heart of our business, we leverage our knowledge of markets and consumer preferences to help customers grow their brands.
We set an ambitious financial target of 4-5% average organic sales growth over the five-year period by 2020, and are well on track in 2017 with sales of CHF 5,051 million, an increase of 4.9% on a like-for-like basis.
We focus our resources on further building our presence in markets where we see high growth opportunities and can accompany our customers in growing their business.
Key achievements in 2017:
Celebrating Silver Jubilee in Singapore. Our site in Singapore celebrated a great milestone: 25 years of success and achievement in the market.
New fragrance encapsulation centre in Singapore. With foundations laid and operations expected to start in 2018, the centre will enhance our leadership in encapsulation technology and production capabilities.
Fragrance Creative Centre opened in Mexico City. Strategically situated close to key customers and their markets, the new centre offers expertise in fragrance creation together with custom-built fragrance evaluation services.
China fragrance production hub. Foundations were laid during the year for our new facility in Changzhou, Jiangsu province, which will substantially increase our manufacturing capacity in China. With a total investment of about CHF 100 million, it is our largest investment in China to date.
Health and well-being
There are many opportunities for us to provide customers with solutions to help them meet the increased demands of consumers around nutrition and healthier lifestyles.
Key achievements in 2017:
Taste attributes playing a key role in the success of healthy products. We made significant headway supporting customers in many areas of taste including thinking beyond sugar replacement, and advancements in taste technologies to deliver delicious plant and dairy proteins in nutritional beverages and meat analogues.
Awards for Revivyl™. We made progress with microbiome, winning two major industry awards for a unique microbiome-based ingredient and gaining market success.
Partnership with Draco Natural Products. A strategic partnership was established for the development of a new proprietary line of bioactive botanical ingredients, based on Chinese traditional medicine, for our Active Beauty business. Draco’s expertise in effective naturally derived products will bring innovative solutions to our ingredients portfolio.
BisaboLife™ launched by Active Beauty. This sustainable molecule, produced by an exclusive fermentation process, is fully bio-sourced and cares for a sensitive skin and scalp.
Consumer preferred products
We put customers at the heart of what we do, making them feel valued, confident and understood. We are a true partner at each step of the creation and value chain.
Key achievements in 2017:
Expanding our natural flavour portfolio. Our procurement strength in naturals and our existing knowledge base and expertise in natural flavourings combined to position us as our customers’ naturals solutions provider.
Creating awareness in naturals. Unique posts about naturals were shared across all of the Company’s social media channels as part of Flavour Division’s digital campaign, designed to showcase our expanding capabilities in natural flavours and natural food solutions.
Condé Nast partnership. We trained students in fragrance appreciation and understanding at Condé Nast’s Center of Fashion & Design in Shanghai, engaging Chinese consumers in the universe of perfume.
Reinventing citrus. We source the best qualities of citrus essential oils from Italian suppliers and with innovative crafting technologies to create new exclusive ingredients: seven ingredients have been added to our perfumers’ palettes bringing new olfactive signatures to consumers from fizzy green notes to long lasting citrus effect.
Negotiations to acquire Expressions Parfumées: This acquisition will expand our presence with local and regional customers, and grow our capabilities in natural ingredients.
We look at opportunities to grow our business through ways that go beyond our core flavour and fragrance capabilities, enhancing the Company’s value proposition to customers and creating new avenues for growth.
In 2016 we completed the acquisition of Spicetec Flavours & Seasonings, strengthening the breadth of our industry-leading natural ingredients, flavour and taste solutions. In 2017 we further continued to expand our capabilities in naturals and integrated solutions, bringing added value to customers.
These acquisitions included:
Activ International, acquired in January, which strengthens our capabilities in natural savoury solutions and extracts;
Vika B.V., acquired in September, which extends our portfolio of natural dairy solutions and extracts;
Centroflora Nutra, the nutrition division of Centroflora Group, which will further build our global offering of natural extracts and expand our presence in Brazil. We announced our intention to acquire this company in September.
Delivering with excellence
Driving excellence across the value chain 11.8% free cash flow as % of sales
Excellence in execution
Givaudan Business Solutions
Givaudan Business Solutions (GBS) is the foundation of our commitment to deliver with excellence and is designed to improve internal efficiencies, leverage best practices from across the organisation and increase our agility. GBS will enable us to offer our customers a superior experience and contribute to meeting our 2020 financial targets.
We have a comprehensive approach supporting the organisation during GBS implementation, and we are building on our strong position to create the structure that best fits Givaudan, doing so progressively over the next three years.
Key achievements with GBS in 2017:
Implementation started. We started the implementation of GBS for pilot sites in Europe and for a limited scope of activities in Asia Pacific.
Activities moved. The activities of the former Givaudan Finance Services were moved into GBS, with the Budapest and Buenos Aires locations established as the GBS centres for Europe and the Americas respectively.
Asia Pacific centre opened. Kuala Lumpur, Malaysia is the location of the GBS centre for the Asia Pacific region. The centre was inaugurated in December 2017.
Information Management & Technology (IM&T)
As part of GBS, our IM&T teams offer continued support to our business. By optimally leveraging digital trends and technology, they develop differentiating services and new ways of working with our customers, partners and employees. This is achieved by using state-of-the-art technologies in processes such as supply chain, master data management and procurement to make them faster and smarter.
Key achievements for IM&T in 2017:
CentraleSupélec collaboration. We established a three-year partnership with this French institute of research and higher education in engineering and science which will focus on data science applied to our world of taste and smell.
GBS enablement. We were able to offer GBS the best of starts, thanks to the delivery of digital solutions in areas such as advanced planning and service management, leveraging artificial intelligence and robotics process automation techniques.
Soliance, Libragen, Induchem France and Spicetec integrated. These recently acquired companies were integrated into Givaudan systems, in support of our 2020 strategies.
Educative beauty app developed. A new app for Active Beauty is to be used by experts to share Company advances in scientific expertise with customers and consumers worldwide.
Superior customer experience
From innovation to sales, our business divisions drive initiatives to ensure we deliver with excellence and offer a superior customer experience.
Key achievements in 2017:
Superior Customer Experience (SCE). Our Flavour Division introduced SCE, engaging all employees through an SCE programme. SCE is about making our customers feel valued, confident and understood, by creating positive impact and consistently great experiences at all points of contact.
SCE core principles. Six core principles make it easier for Flavours employees to understand SCE. These core principles are anchored in our DNA, define our behaviour in the working environment and help us build our customer-centric culture. For employees in all roles, the principles make it easier to understand what SCE means.
Top supplier awards. Consumer products and fine fragrances customers from around the world awarded us for our creativity, sustainability and collaboration.
Excellence in operations
We are fully committed to excellence in climate action and are implementing an ambitious agenda in taking action for the environment across our operations and beyond.
Key achievements in 2017:
Science based targets. We announced ambitious science based targets to reduce absolute Scope 1 and 2 GHG emissions by 30% between 2015 and 2030. We also aim to reduce Scope 3 GHG emissions by 20% over the same period.
CDP ‘A’ listing. For the third year, we gained a listing on CDP’s ‘A’ list of companies leading the corporate response to climate change.
Partnering for shared success
Building to be the partner of choice We nurture and value true partnerships with our key stakeholder groups for shared success. These collaborations, which drive responsible and sustainable growth, are with innovators, suppliers, employees and communities in which we operate.
Driven by a culture of innovation, we create new horizons for our business and offer differentiated and sustainable solutions to our customers. By connecting and collaborating, we want to strengthen internal and external collaborations for a Company-wide, holistic approach to partners, customers and suppliers.
Key partnerships in 2017:
Start-ups targeted. We piloted MISTA, a programme that focuses on delivering services to start-ups primarily in the Bay Area of San Francisco and expands our New Product Development business model which targets emerging start-ups in the food and beverage industry.
Academic partnership. Students at the University of California, Berkeley are involved in a market opportunity to transform the meat industry. We are helping students create flavours and aromas for enticing non-meat proteins.
Sensorwake investment. A one-time investment was made in Sensorwake, a French start-up company leading innovation in the consumer technology sector and which is responsible for creating the world’s first olfactive alarm clock.
Our divisional and global Science & Technology teams, drive value in innovation. Achievements by these teams during 2017 helped to create value through innovation, supporting and growing the business today and looking for opportunities for business growth tomorrow and the day after tomorrow:
Freshness captured. Launch of FreezeFrame® in Flavours: a technology for capturing the moment when ingredients are at their freshest. It brings a fresh taste and vibrancy to convenience food as if fresh ingredients were just added.
Cheese capabilities boosted. We strengthened our capabilities in cheese with the acquisition of Vika.
Protection on delivery systems expanded. We continued to build our delivery systems portfolio with the granting of seven additional patents and six newly filed.
Mechacaps® Kiln launched. This is a novel delivery technology for controlled fragrance release in powder and liquid detergents, including single unit doses.
Global Beauty Industry Award. We gained Best Colour Cosmetics Ingredient award for PrimalHyal™ Gold, a new ingredient from Active Beauty. Created by means of sustainable manufacturing processes, the ingredient allows the incorporation of hyaluronic acid in oil-based formulas such as pressed powder, body oil and suncare oil.
Juicy bloom booster. A very potent and diffusive fruity and nature-identical odorant, Esterly™, was added to the perfumers’ palette. It supports and boosts juicy, matured and fruity impressions, and adds a remarkable radiance and signature to many perfumer creations.
Sleep quality optimised. We launched DreamScentz™, a patent-pending Fragrance technology to optimise the quality of sleep. Through the link between fragrance, positive mood states and a proper night’s sleep, we strive to provide breakthrough solutions for people to sleep better.
Fine Fragrance with skin protection announced. Active Beauty unveiled a concept called [Yu], a patent-pending innovative fine fragrance featuring the active ingredient Revivyl™, a holistic skin renewal accelerator.
Matcha tea inspired. Tea Dione™ was added to our perfumers’ palette. It originates from a successful research programme as a nature-identical version of a molecule found in matcha tea and praised for its clean, milky matcha green tea note refreshed with anisic facets.
We seek to generate maximum value with suppliers through long-term and sustainable partnerships. These collaborations aim to create mutual value on supply continuity, quality, cost, innovation, responsibility and our ability to deliver the best ingredients. As a result, they enable us to differentiate our product offering to customers.
Key achievements in 2017:
Supplier partnerships extended. We created additional partnerships and long-term agreements with suppliers to secure supply and reduce price volatility.
‘Sourcing for shared value’ introduced. A comprehensive approach was announced that further strengthens our long-term commitment to sustainable procurement practices.
Vanilla bean agreement. A joint venture agreement with Henri Fraise & Fils, called SOMAVA, gives us access to 70 years of experience in sourcing and curing vanilla beans from Madagascar.
Guarana supply secured. This agreement concerns the long-term supply of guarana and helping local communities by working in partnership with a local supplier in Brazil to support a cooperative of over 80 producer families in the southern Bahia region. The venture contributes to securing a stable source of income for the producer families.
Supplier Enabled Innovation. A new Procurement Innovation team was appointed to accelerate the creation of mutual value through Supplier Enabled Innovation.
Indirect Materials and Services. We worked closely with suppliers in several areas in Indirect Materials and Services such as logistics, maintenance and packaging to identify and implement joint improvement projects.
We are committed to fostering a great place to work where our people are motivated to perform at their best, impact their world and contribute to the Company’s success. To ensure sustained success, we develop the skills of our people, nurture a pipeline of industry experts and future leaders, and strongly promote a diverse workforce that works in an agile and collaborative way.
Key achievements in 2017:
Talent management developed. We continued to build development plans in our talent management process. Our Global HR talent council met four times during the year to discuss cross-business talent development. The Executive Committee, in addition to the in-depth talent reviews at the beginning of the year, held dedicated talent reviews at the EC meetings throughout 2017.
Masterclasses extended. Our investment in targeted technical and functional training continued with Masterclasses now in place in both our business divisions. We also organised academies for finance and controlling, and IM&T.
Leadership Senses completed. Designed to strengthen our leadership capabilities, four Leadership Senses programmes are now established, completing the rollout. Over 600 leaders have benefitted from the programme’s focus on specific leadership needs.
Flavourist trainees graduated. Our global Flavourist School programme ensures all flavourists are trained in the same curriculum. Graduation of flavourist trainees took place in EAME and Asia Pacific.
Employer branding boosted. An employer branding film was launched to strengthen our global employer brand.
‘Pay for Performance’ strengthened. We strengthened our ‘Pay for Performance’ philosophy and increased transparency of pay linked to individual job levels.
ONE Givaudan piloted. An engaging global onboarding programme called ONE Givaudan was piloted. A first for us, the programme reached 90 participants in pilots in four global locations.
Local communities where we source raw materials contribute to our business. We are committed to working together with these communities in causes that benefit them and our raw material supply chain. Our cross-functional site Green Teams are dedicated to driving local sustainability activities.
Key achievements in 2017:
Waste management progress. Our Cuernavaca site in Mexico continued to make progress towards their sustainability goal of zero waste to landfill by 2020. Further site initiatives in 2017 included identifying local waste management partners who can guarantee disposal with positive environmental effects.
Recycling citrus oil. Our Riverfront site in Pudong, China has found ways of reusing citrus oil, a byproduct of flavours production. Two local companies now use the oil so we can avoid incineration and related energy consumption.
‘Year of Giving’. Employees in Dubai gave their support to the ‘Year of Giving’ initiative by the United Arab Emirates president through blood donations and donations of clothes, toys and books to labour camp workers.
Healthy eye programmes. Employees at our Jigani site in India continued their support for healthy eye programmes, in partnership with the Vittala International Institute of Ophthalmology (VIIO) of Bangalore.