The Tel Aviv-based maker of flavours for food and functional food industries will pay €3.5 million for the business activities in France, complementing and completing the €30 million acquisition of IFF's fruit preparation operations in Germany and Switzerland cleared in August this year.
The sale of IFF's activities in France had been delayed as union workers discussed the deal with the owners. Frutarom reported today on the 'successful completion of the consultation process…to close the site in Dijon', paving the way for Frutarom to complete on the French business that represented some 30 per cent of IFF's European fruit preparation business in 2003.
"Completing this acquisition is another significant milestone and brings Frutarom closer to its target: to achieve sales revenues of US$300 million (€234m) and become one of the ten largest multinationals in the flavour and fragrance industry," said Ori Yehudai, president of the Frutarom group.
Buying into IFF's fruit and vegetable extract business gives Frutarom a firm foothold in the growing natural ingredients market. Growth in the fruit and vegetable extracts market has risen in parallel to the burgeoning functional food trend, itself driven by the consumer's desire to improve health and prevent disease through food and beverage consumption.
The €819.9 million European and US fruit and vegetable extracts and powders market is on course to grow 4.5 per cent annually, reaching €1.07 billion by 2009, estimate market analysts Frost & Sullivan.
"The IFF unit purchase perfectly complements are existing activities in flavours and botanical extracts, making us a 'one-stop shop' and providing full solutions for our customers," Yehudai recently told FoodNavigator.com.
But Frutarom will have to battle for a position with Danish ingredients company Danisco and French flavour and fragrance house Mane that both had estimated sales in the region of $300 million in 2003 and currently hold the ninth and tenth position in a market dominated by €1.78 billion Swiss firm Givaudan. IFF takes the second position with €1.54 billion in estimated sales.
Under the recent acquisition Frutarom will acquire the fruit preparations business - renamed 'fruit systems unit' by the new owner - of IFF's European operations that develop and produce fruit compounds and other natural ingredients used as natural flavour materials in a wide range of food products, including dairy and bakery applications.
The deal includes activities at plants in Emmerich, Germany and Reinach, Switzerland, as well as related inventory and intellectual property. In 2003 the German and Swiss activities contributed 70 per cent of the $90 million sales from IFF's European fruit preparation business. The firm is slated to transfer production activity from the Dijon site to the production sites in Germany and Switzerland.
The CEO added that Frutarom already has a strong sales force in this region, mainly due to the recent acquisition of Swiss botanical extracts firm Emil Flachsmann, which they will build on. But this latest purchase will bring new customers from 'multinational food manufacturers' into their client portfolio.
Looking ahead the CEO told FoodNavigator.com in August that there are more acquisitions for the public-traded Frutarom in the pipeline, but none are planned for 2004.