Danisco completes flavours sale to Firmenich

By Lorraine Heller

- Last updated on GMT

Related tags Danisco Flavor

Danisco yesterday announced that the much-anticipated sale of its
flavours division to Firmenich has been completed, but the firm
said it has entered into a partnership with the buyer, which allows
it to continue supplying certain products.

According to Firmenich, already a leading player in the global flavours and fragrances market, the DKK 3.36 bn (€0.45bn) sale will help it become "the world leader"​ in the arena. The deal, which was first announced in May, will allow Danisco to focus on biotechnology - areas in which it has seen organic growth, and channelled investment with the acquisition of Rhodia Food Ingredients in 2004 (cultures) and Genencor (enzymes) in 2005. The move marks the second big upheaval for the firm's 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 was 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). According to Danisco, the flavours divestment should be seen as a "value-creating and forward-looking initiative",allowing it to​ channel more financial and managerial resources into its other two ingredient divisions. At the same time, however, it said its new partnership with Firmenich will allow it to maintain "a unique product offering to its customers",​ while allowing both firms to consolidate their position in the food industry. The firm was unable to provide FoodNavigator.com with further information on the nature of the partnership in time for publication. But Firmenich said it is intended to bring together "the best in taste and texture to deliver comprehensive flavour and food ingredients solutions to targeted segments of the market".​ 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. In 2006, Leffingwell and Associates ranked Danisco in 12th​ place in the global flavours and fragrance market. The top five spots were occupied by Givaudan, IFF, Firmenich, Symrise and Quest. Since then, however, the market has seen major shifts, including Givaudan's acquisition of Quest, and Frutarom's acquisition of two UK companies and entry into the top ten (Leffingwell ranked it 11th​ in 2006). In 2006/7, Danisco reported revenue from its flavours business of around DKK1.5bn (€0.2bn) - only two to three per cent of the global market. In contrast, the company says it is now one of the top three players in the market for bioingredients, texturants and sweeteners. For Firmenich's part, the firm said that the acquisition complements its own position - particularly since Danisco has focused firmly on natural and nature-identical flavours. Specifically, the acquisition will expand its product offering and market coverage in vanilla, ice cream and beverage bases, and reinforce its position in citrus and the dairy sector. Jean-Marc Bruel, chairman of privately-owned Firmenich, said: "The purchase of Danisco's flavour division is in line with Firmenich's long term strategy based on industry-leading organic growth and targeted acquisitions that complement our product portfolio."​ Firmenich, based in Switzerland and founded in 1895, is the largest private firm in flavours and fragrances and one of the top three in the world overall. It saw revenues of CHF2.3bn (€1.4bn) in the year ended June 30 2006.

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