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Originally printed in the January 2009 issue of Perfumer & Flavorist magazine.
The advent of the New Year presents an opportunity to assess the state of the F&F industry and look into the long term for signs of what lies ahead. P&F magazine asked a number of industry experts representing flavorists, perfumers, executives, raw material suppliers and trend watchers to give us their unique short and long views. The results map a litany of challenges, opportunities and insights into future F&F innovation.
Consolidation In the wake of numerous small and large acquisitions over the past few months, consolidation of customers and suppliers remains on everyone’s minds. For example, a new report from Mintel Beauty Innovation “predicts a year of consolidation” for beauty companies in 2009. “[It] will be all about survival of the fittest in the beauty industry,” says head consultant Nica Lewis. “Consumers are going to demand real value for their money as well as visible results, and they will stick to the select number of brands they can truly trust.”
Ray Hughes, chairman, CEO and president of A.M .Todd adds, “[Consumer packaged goods] (CPG) company consolidation—this could speed up due to … economic issues, causing a decline in consumer spending and lack of organic market growth that can only be offset by acquisition of market share.”
Veteran flavorist John Wright, however, takes a slightly different stance. “Current wisdom dictates that consolidation of the flavor and fragrance industry still has a long way to go. I suspect this is greatly exaggerated. Many acquisitions in recent years have not even remotely met their financial targets, and in a tougher financial climate it will be harder to persuade wary bankers to provide finance. The recession will probably also hasten the segmentation of the flavor business into a high-end, quality driven sector, and a low-end ‘bang for the buck’ sector.