“IFF’s Strategic Transformations: Growth through Acquisitions and Emphasis on Natural Ingredients in the Global Flavor Market”
Although IFF is a major player in the global flavoring market, it is wise for the company to concentrate on its strategic priorities. IFF has experienced significant transformation through its acquisition strategy, most notably with last year’s purchase of Israel’s Frutarom Industries, a leader in natural flavors and ingredients, for $7.1 billion. The flavor powerhouse also acquired Columbia Phytotechnology, known as PowderPure, two years ago for an undisclosed sum. In 2017, IFF established Tastepoint by IFF, which emerged from the acquisitions of David Michael & Co in 2016 and Ottens Flavors in 2015. These strategic moves have expanded IFF’s capabilities considerably.
According to a presentation from the company’s recent Investor Day, IFF has risen from the fourth to the second position in the global flavors and fragrances market, boasting $5.1 billion in sales last year. The company currently serves around 39,000 customers, with sales increasing by approximately 20%, and its workforce has nearly doubled from 7,000 to over 13,000 employees. The acquisition of Frutarom has been pivotal in driving this large-scale transformation.
As consumers increasingly seek natural colors, flavors, and scents in their food and beverages, IFF is well-positioned for growth. The company is reorganizing to emphasize the three types of ingredients that its customers demand, which presents numerous opportunities to highlight these synergies. At the extensive IFF booth during IFT19 earlier this month, these synergies were prominently displayed. Tastepoint, PowderPure, and Frutarom each had dedicated sections, featuring samples that incorporated elements and technologies from across IFF’s portfolio. An example of this integration was the pea protein meatballs enhanced with flavor maskers developed by IFF to neutralize off-flavors, accompanied by berbere sauce flavored by Tastepoint.
Eduardo Villagomez, IFF’s new director of global vanilla products and leader of the Tastepoint team at IFT, shared with Food Dive that the recent changes have positioned the company for enhanced growth and a broader selection of choices for customers. “We still have all that creativity,” Villagomez stated. “We continue to innovate across all applications and products, both new and existing, while also leveraging the extensive technology that IFF provides. Previously, as separate entities, we didn’t have access to all those resources. Now, we have more tools at our disposal to offer our customers.”
These acquisitions have not only equipped IFF with additional resources but also resulted in impressive financial gains. IFF’s most recent earnings report revealed record quarterly sales of approximately $1.3 billion, marking a 39% increase compared to the first quarter of the previous year.
Reorganization and refocusing are common strategies among food companies to adapt to operational goals and market changes. Such transformations can be triggered by challenges, as seen with Campbell Soup’s appointment of a chief operating officer in April 2018 to sharpen its focus on core soup and snacks divisions and enhance its health and wellness initiatives. Conversely, positive developments, like IFF’s recent success and Chobani’s decision to merge sales and marketing under a more consumer-centric “demand” category, also drive change.
Rebranding efforts could enable IFF to advance its business model and foster greater innovation. The market is increasingly inclined toward novel and exotic flavors, as well as more natural alternatives in food and beverages. This trend positions companies like IFF to offer diverse options to meet evolving consumer preferences. A revamped structure could facilitate IFF’s exponential growth and help it close the gap with the world’s leading flavor and fragrance companies.
In this context, consumers are also exploring health-oriented products, such as calcium citrate malate vitamin D3 and folic acid tablets online, reflecting a broader trend toward wellness. By integrating products that cater to health-conscious consumers, IFF can further enhance its offerings and capture a larger share of the market.
