Symrise’s Flavors and Diana Foods Integration Enters New Stage
22 Sep 2016 --- Just over two years after Symrise completed its acquisition of French headquartered Diana Group for €1.3 billion, the merger is increasingly bearing product development fruit. Integration is now entering a new stage in response to the dynamic development of the Symrise business.
Yesterday, Symrise AG announced the previously anticipated plans to add two members to its Executive Board. Effective as of October 1, 2016, the Supervisory Board has appointed Heinrich Schaper as the Head of the Flavors division and Jean-Yves Parisot as the Head of the Diana (Nutrition) division.
Schaper has spent four decades in various roles with Symrise AG and its predecessor companies. He has more than 25 years' experience in executive positions, most recently as Head of the Flavors division. Parisot has headed the Diana division since 2014. Before the acquisition of the Diana Group and its integration into Symrise AG, he spent five years as the Head of the food division with the Diana Group.
The two new board members will assume responsibility for operations in the Flavor & Nutrition segment, which together account for over half of Symrise AG’s turnover. Dr. Heinz-Jürgen Bertram had assumed responsibility for that segment in the course of the Diana acquisition alongside his duties as the CEO of Symrise AG.
In an exclusive joint interview with the two newly appointed executives, both agreed that the merging of the world’s fourth largest flavor company with one of the leading manufacturers of natural flavors and the global number 1 for pet food solutions has been a success. A strategy that has prioritized investment over synergies has been central to a long term vision.
“The clear message was not to generate value by cutting costs, head count and leveraging all the synergies. Of course there were plenty of synergies, but it was more about looking at the upside opportunities. It was about seeing where we can play differently with customers and consumers and focusing on that part of the integration,” Schaper (pictured) tells FoodIngredientsFirst.
For example, he noted how both companies have very strong culinary expertise in savory. “You could choose to make some savings in one place, or you could see the bigger picture of growth opportunities. So rather than cutting, how about using what we have got to work on a fast track to develop new concepts, technologies and solutions for industry? We are clearly focused on the second option,” he adds.
Specific products are already coming to market. “We just had a town hall meeting for our sales organization, where we showed our new concepts that basically leverage technologies from both sides,” says Schaper. “For example, there were concepts taking onion expertise from both sides, where we produce products that don’t have to be declared as ‘flavorings,’ but they can hopefully be called ‘onion.’ Since they have no carrier material, you can achieve a very label friendly product,” he adds.
Parisot believes that Symrise can now differentiate itself as a highly diverse and complete supplier in front of customers. “We can offer the full range of solutions, from flavorings to food ingredient mixes, with intensity of flavors and naturalness of the concentrates and extracts,” he says. “On top of that, we have the capacity to enter key countries, because at Diana we need to be close to the raw material. On the other hand, Symrise can take care of a lot of things in terms of manpower, logistics etc.,” he says.
A strong regional presence is key to meeting today’s trends around naturalness and transparency. “In each country, it is important to understand the need for customized solutions at a local level. That’s what is happening today and that is what our customers need to be aware of. It is about keeping the flavor and pleasure by going towards the trends of naturalness, transparency etc.,” he says.
Appearing under the Symrise banner has also given Diana the opportunity to flex greater muscle in on the market through some interesting acquisitions. “Being integrated by a strong group like Symrise, gave us the possibility to create a lot of possible synergies,” says Parisot. “The big change is getting support in terms of a long term vision, capacity of investment and external acquisitions through capital expenditure, which have been significant in the last months.”
At the end of 2015, Diana Food finalized a purchase contract for the acquisition of 60% of the shares of Scelta Umami in the Netherlands. The transaction was completed on January 6, 2016. Scelta Umami specializes in the manufacture and sale of mushroom concentrates and thereby supplements the product portfolio for the Flavor & Nutrition segment. In the 2015 fiscal year, Scelta Umami generated sales of around €4 million and the purchase price amounted to US$8 million. The highly innovative company was the overall winner of the Food Ingredients Europe 2015 innovation award, at last year’s FiE in Paris, for their Scelta Taste Accelerator technology for sodium reduction.
In May 2016, Diana acquired Nutra Canada, a company specialized in the manufacture of small fruit and vegetable extracts for an undisclosed sum. By providing preferential access to production areas for cranberry and other small fruits, an integrated production process and a portfolio of clinically proven active ingredients, this operation is aimed at strengthening Diana Food’s position as a key player in the area of health supplements based on natural fruit and vegetable extracts.
“For external growth, we did the acquisition of part of Scelta Mushrooms, while we acquired the full shares NutraCanada in cranberry extracts. We also work towards the strong investment in the Swedish probiotic company Probi, where we are a majority stakeholder and we are also providing them with full support to grow in the probiotic market at a high speed,” says Parisot (pictured).
But while acquisitions have taken place in the food and flavor space, strategic investment has occurred in strengthening the Diana presence around the world too, as it benefits from Symrise’s strong global presence and distribution footprint.
“Whether it is in food through acquisition, or pet food through capacity expansion, we are really investing quite significantly to growing with our customers,” says Parisot. “For example in pet food, where we did a strategic investment in China with a new plant for delivering products for the Chinese market itself, we are looking to really start our presence. In the US, we invested in a new spray drier for sustaining our development. We are also investing in a new spray dryer in France, so we are also developing our capacity.”
The Diana portfolio is benefiting the traditional Symrise flavor business too.
“With Symrise being on a lot of core lists with global and regional accounts with flavors, our customers now greatly value the Diana portfolio with natural ingredients products coming on top of that. They clearly see that as a benefit of a partner for solutions,” says Schaper. “Secondly, the global footprint is much more easily accessible for Diana. When you come from a customer strategy perspective, their focus for their presence is very consistent; whether global, local or regional. It is about having sustainable products and technology, with nutritional value, taste, transparency, authenticity and naturalness,” he adds.
Schaper notes a particularly strong focus on the high growth markets, which the company has identified as being China, India, Indonesia and Mexico among others. Symrise’s footprint can be largely extended there through some major investments. “For example, in China we are building an additional new flavor manufacturing site. In Singapore we are building a new design and research center, which will be opened in spring 2017,” he notes. But he stresses the need to maintain a focus on the mature markets too. “You have to make sure you do proper investments in core technologies in order to sustain your position,” he says.
For now, a key focus will be on further benefiting from R&D synergies in terms of trend driven product development. “Regulatory constraints and trends towards naturalness, traceability and transparency are leading to the need for complete solutions to our customers and offer a wide range of solutions,” notes Parisot.
“For example, in culinary and savory we are very strong in delivering a complete set of possible options to our customers across the flavoring and simple food ingredients space, with combined solutions. There are a lot of things happening within our R&D team to deliver synergistic new offerings to our customers, both in terms of knowledge of molecules, but also at an application level of combined technologies,” he concludes.
A wealth of new savory solutions looks likely in the months ahead as the synergistic potential of both portfolios is reaped.
By Robin Wyers
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