Innovation and developing markets underpin Givaudan flavours

By Kacey Culliney

- Last updated on GMT

Related tags Taste

Givaudan springs off innovation in its flavours division, according to industry analyst
Givaudan springs off innovation in its flavours division, according to industry analyst
Success in the developing markets of Latin America, Africa and Asia combined with an ‘impressive’ innovative platform has secured strong Q1 results for Givaudan’s flavour business, according to one analyst.

The Swiss flavour giant pulled in CHF 561.2 million (€466.54m) of sales for its flavour division between January and March 2012, representing a 3% increase in Swiss Francs.

Givaudan flavours reported its strongest sales growth in Latin America at 14%, underpinned by stronger market traction in Argentina, Colombia and Mexico and sales were up 9.4% in Asia Pacific with China, India, Indonesia and Thailand proving strong.

Overall the company said that beverages and snacks had fuelled most of its sales growth across these markets.

Deborah Aitken, senior analyst at Bloomberg Industries, Food Manufacturing, Household and Personal Care, told that Givaudan’s strong performance in flavours was a result of “high exposure into developing markets and an impressive innovative platform.”

Givaudan’s investment in innovations has been clear as it teamed up with scientists at the Massachusetts Institute of Technology (MIT) in January this year to develop a ‘flavour algorithm’ set to one day replace human taste testers.

The Swiss flavour giant has also been heavily investing in reduced-calorie formulations, injecting capital into ensuring mouthfeel and taste is not hindered when using less fats and proteins.

Minerva Calatayud, global product manager, Taste at Givaudan, said that innovative work on mouthfeel and tastes looks to resolve “challenges in applications, technology gaps and sensory requirements.”

Aitken detailed that new wins in dairy and savoury across the developing markets of Asia, Latin America and Africa had boosted sales and “Givaudan continues to drive sales in flavours ahead of the global food market.”

Spiking prices

Givaudan announced a price hike strategy in Q3 of 2011 to soften the impact of higher raw material costs, particularly citrus and orange oils.

The company said that its strategy continues to be implemented in 2012 to compensate for these input cost increases.

Aitken suggested that so long as companies “are at the forefront of their game when it comes to delivering value-added, innovative products to food manufacturers, then prices can be successfully passed on.”

She noted that Givaudan has likely managed to succeed in balancing raw material increases with price hikes due to having long term customers, with long term contracts that have agreements in place for price changes.

Future tactics

Aitken said however, that high commodity cost inflation will continue to be a challenge that needs to be addressed by the Swiss flavour giant.

She noted that future growth strategy should be directed towards developing innovative products “in the highest margin and lowest sales volatile categories,” ​as well as securing further growth in developing markets.

Givaudan has said it plans to “grow organically”​ in the mid-term at between 4.5% and 5.5% per annum over the next five years.

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