With the recent mergers of Firmenich and Danisco Flavors, Givaudan and Quest, and Frutarom’s ongoing shopping spree, consolidation is on everyone’s minds. Raymond Hughes, president, ingredients, flavors division at A.M. Todd, sees something larger at work.
Yet consolidation may not fulfill its promise, says Robertet CEO Philippe Maubert: “Consolidation does not necessarily translate into organic growth. Because products in the flavor and fragrance industry are customized to work in a specific application—with the result a consumer product that is different than all other products in the market—the true key growth is to continuously deliver the most creative and cost-effective products. There is no evidence that merged companies with increased business complexities a can deliver this more effectively than they could before a merger."
drom’s president Ferdinand Storp concurs. “You shouldn’t be big just to be big,” he says. “… [M]arket share isn’t a healthy way to look at this.” Storp feels that creativity must be the driver of moves within the industry, pointing to the example of Daimler Chrysler in which the company’s growth paralleled decreasing quality. “This demonstrates that you can’t be everything to everyone,” Storp says, “and there will become a need to seek out specialists who can be counted on to do the job right.”