Danisco discusses sale of flavour division

By Jess Halliday

- Last updated on GMT

Related tags Flavor

Danisco has confirmed the truth of market rumours that it is
involved in negotiations over the possible sale of its flavours

Other than saying that more information will be made available to investors and employees within the next seven days, the company is playing its cards close to its chest.

A spokesperson declined to discuss the matter with FoodNavigator.com and could not give details on where or how the rumours had arisen.

If the divestment goes ahead it could be the latest instalment in the story of the international flavours and fragrance market that has seen several big shifts so far this year.

For 2006, Leffingwell and Associates ranked Danisco in 12 th place in the global market.

The top five spots were occupied by Givaudan, IFF, Firmenich, Symrise and Quest.

Since then, however, major moves include Givaudan's acquisition of Quest, and Frutarom's acquisition of two UK companies and entry into the top ten (Leffingwell ranked it 11 th in 2006).

For Danisco internally, the mooted sale would be the second big upheaval for the Ingredients business in six months, following a structural shake-up in late 2006 when the company consolidated from nine divisions to just four.

Danisco Flavours is one of three divisions in the company's Ingredients unit, alongside Bioingredients (cultures and Genencor) and Texturants & Sweeteners.

(The fourth, which is independent of Ingredients, is Sugar).

The aim of the reorganization was to strengthen efficiency and competitiveness by having larger units centred around product groups and technologies.

This, the company said, would enable intra-group synergies in the value chains and a less complex organization and management structure.

R&D was also consolidated into the four product divisions, and global sales organisation for food ingredients strengthened by integrating application activities.

In the first nine months of the present fiscal year (up to January 31), flavours reported revenue of DKK 1,163m (€156.1m) compared to DKK 1170m (€157.0m) for the prior year period.

This represented 11 per cent of sales for ingredients overall.

EBIT was DKK 83m (€11.1m), compared to DKK 55m (€7.3m).

However the margin in creased to 7.1 per cent from 4.7 per cent - a performance the company said was "obtained in the wake of the extensive restructuring of recent years".

"These initiatives have been aimed at reducing the fixed cost base, adapting the product range and increasing customer focus.

These initiatives are starting to improve our competitiveness".

Danisco Flavours has its headquarters in Brussels, Belgium, employs around 700 people.

With a range comprising natural and nature identical flavour products in liquid, paste and powder form, the company claims to rank among the world's experts in vanilla, milk, chocolate, butter, citrus, cola, savoury, and soft fruit flavours.

According to a market report published by IAL Consulting last month, the global flavours and fragrance market was worth US$12.6bn in 2006, with annual growth of 3.5 per cent predicted.

IAL expects that the emerging markets of Eastern Europe, Asia, the Middle East and Africa offer the most growth potential to the market in value terms.

The more mature markets of Western Europe and North America, on the other hand, "offer much higher value and more sophisticated products."

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