Frutarom CEO talks acquisitions, consolidation, efficiency

30 Oct 2017 --- 2017 has been a significant one for Frutarom so far. Earlier this summer the company reported a record quarter as it continues to implement its growth strategy. With nine acquisitions having been made in 2017 so far, it looks as though it is certainly going to plan. For the past 30 years, the company has been able to double its size and revenue every four years, and Ori Yehudai, Frutarom’s President and CEO believes the business is in the best position for even further future growth.

The company announced their ninth acquisition this year so far just today. You can read the full article here. Speaking to FoodIngredientsFirst, Yehudai said that 75 percent of Frutarom sales of natural products offer the right position, allowing Frutarom and to grow faster than the market internally and add to that very strong pipeline of future acquisitions. 

“Clean label products, no E-numbers or chemicals work very well with Frutarom’s strategy as one of the leading players of ingredient solutions,” he explains. “We position ourselves as a key differentiator and bring value to our customers; we can do that through, the visibility of a product, availability, quality and innovation.”

Yehudai explains investments through R&D and collaborations with start-ups have significantly strengthened their position in the natural ingredients space. “We have strategically entered into several acquisitions in the past two years, in the natural food colors arena, and in the natural antioxidants sectors which has significantly enhanced our leadership in both natural food colors and the natural food protection area.”

“Through these acquisitions, we are meeting demand,” says Yehudai. “We became one of the leaders in the natural color of turmeric, which is steadily increasing in consumption, some of the biggest manufacturers of food are moving to a natural form of synthetic colors. So, all of these trends keep the food industry growing.”

“We are currently working on many solutions, including solutions for food protection, not only antioxidants but microbial solutions too. Natural ingredients are really bringing a lot of opportunities to allow ourselves to bring better, safer, longer shelf life solutions at an affordable value, which is also why we shouldn’t underestimate the affordability of these products which is part of Frutarom’s strategy these days.”

There has not only been huge growth in acquisitions, increased position and market share and opportunities for cross-selling but also in increasing capacity. “We are able to grow very quickly with our natural ingredients portfolios, primarily with our botanical extracts,” Yehudai explains. “Around two years ago, we began working on a very important strategic plan through acquisitions that we made in acquiring botanical extraction companies, capabilities and technologies. Between them, two are in Spain, one is in Slovenia, one is in Germany and one is in Brazil.”

As part of this growth strategy, Yehudai noted that moving production to more efficient sites and expanding capacity there has allowed the business to grow quickly and explore relevant areas, such as the natural botanical products, tastes ingredients natural colors, natural antioxidants and also the health and nutrition ingredients. In conjunction, Frutarom is investing in the last year and will continue to do so in the coming years, by building their own plantation, for partnerships with farmers and using their own investments in R&D. “We aim to supply our own raw materials to at least 50 percent for our largest core natural ingredients customers,” Yehudai adds.

“I believe we are in a fascinating position to supply affordable solutions that our consumers are looking for when they are looking for non-synthetic and healthy ingredients. In many cases, these ingredients are much more expensive to source and there are traceability issues,” he explains. “So that encourages many food manufacturers to move much faster to those natural ingredients solutions which are also affordable and widely available. That is an important part of Frutarom’s strategy in 2017/18 increasing our portfolio, increasing our investments in R&D and innovation, and collaborations on the agricultural side of the business.”

“Countries in Latin America, Asia, Eastern Europe and Israel, are markets that are continuously growing and are the right places where we can use our own expertise in developing partnerships and with research institutions both in and out of Israel, and being able to really build a new future in the way of growth in the natural ingredients area. During the past five years, our many acquisitions have given us around 10,000 new customers who are now buying many solutions that we could not offer them in the past,” he notes. With these new customers and seventy-five R&D labs, Frutarom is able to sell to 40,000 different customers in 150 countries, a variety of solutions that offers solutions in the natural area.

Frutarom is able to come up with more innovations, that are suitable for the main trends in the market, such as reduced sugar, calories and salt by using only natural and affordable products.

70 percent of Frutarom’s customers of smaller and mid-sized customers, out of them, one-third are from the private label sector which is growing faster than many of the branded products, these customers really look to Frutarom to be able to tailor make solutions that include not only flavor, not only natural colors, antioxidants, health ingredients, but solutions that they can include in their food in a safe way. “I think that there is something that we bring to the market which is unique and differentiates us from a lot of smaller competitors that don’t have the right resources for our larger customers,” he adds. 

“Frutarom is able to grow at double rate and the growth of the market is a combination of several factors and that we put over the past few years as part of our strategy,” Yehudai continues, “Our geographical spread has expanded a lot over the last five years and the growing power of emerging markets is around 43 percent compared to 26 percent five years ago, all these contributors are helping us to grow much faster than the markets, excluding acquisitions, and they will support Frutarom in the next five years to achieve our goals of US$2 billion in sales and potentially even before 2020,” he finalizes. 

By Elizabeth Green