IFF acquires clean-label beauty and fragrance ingredient maker Frutarom

10-May-2018 - Last updated on 10-May-2018 at 16:48 GMT

This week International Flavors & Fragrances announced that it's buying the competitor in a deal valued at over $7 billion. The two companies combined anticipate leading the industry on a global scale.

Just as legacy beauty companies have been acquiring natural beauty and personal care brands to reach consumers who are increasingly passionate about clean, green, and natural products; so too are ingredient players now acquiring their counterparts with strong natural ingredient businesses.

This month, for instance, the beauty ingredient distributor Univar acquired Earthoil, a company that over the last 15+ years has become well established, growing, processing, and selling seed and nut oils to beauty makers around the world. Read more about that deal here on Cosmetics Design.

Naturals account for 75% of Frutarom’s sales; and this is a key reason IFF moved to acquire the company. According to the media release announcing the acquisition deal, “The transaction creates a global leader in natural taste, scent and nutrition.”

Better together

Together the two companies will cooperate to serve more clients better. “We have long admired Frutarom and have a great deal of respect for its team and all of its dedicated and talented employees around the globe,” Andreas Fibig, chairman and CEO of IFF, tells the press.

And he describes the acquisition as “a big win and a fantastic outcome for shareholders, customers and employees of both companies.”

“Frutarom has an extremely attractive product portfolio, including broad expertise in naturals and diverse adjacencies with capabilities beyond our core taste and scent businesses. It also has significant exposure to complementary and fast-growing small- and mid-sized customers. By combining our deep R&D expertise with Frutarom’s, we are offering our customers a broader range of solutions and accelerating our growth strategy,” says Fibig.

“We believe this combination will lead to faster and more profitable growth, enhanced free cash flow and generate greater returns for our shareholders.”

Intentional growth

For Frutarom, the deal is a logical progression: “Frutarom has had a fascinating journey of accelerated growth, far above our industry benchmarks through our investment in unique technologies and focus on natural products in the growing world of health and taste,” Ori Yehudai, that company’s president and CEO, says in the media release.

Frutarom got its start in 1933 and has since grown to serve customers in an array of industries: food, functional food, beverage, flavor, pharmaceuticals, fragrance, cosmetics, and more. The company currently operates 41 research and development labs and makes more than 31,000 products. And, Frutarom itself has made several acquisitions over the past 20 years.

Yehudai credits the company’s chairman for much of Frutarom’s growth and success: “I would like to personally thank Dr. John Farber, our Chairman, for his vision and tireless support together with the contribution of our devoted excellent employees in the transformation of Frutarom from a small, local company to a global leader in the fields of taste and health.”

And, he believes that “today marks the culmination of a decades-long vision to become a global leader in taste and health. This combination provides great opportunities for both our dedicated employees and highly valued customers who will enjoy our combined technologies and global reach while maximizing value for our shareholders. Frutarom and IFF are committed to maintaining a presence in Israel, and I look forward to working with Andreas and the team to ensure a seamless integration of these two terrific companies.”

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Deanna Utroske, CosmeticsDesign.com Editor, covers beauty business news in the Americas region and publishes the weekly Indie Beauty Profile column, showcasing the inspiring work of entrepreneurs and innovative brands.