Givaudan bolsters growth in natural colors arena with DDW acquisition

12 Oct 2021 --- Givaudan has its sights set on boosting its position in natural colors, as part of a 2025 strategy to expand the company’s global Taste & Wellbeing business. The Swiss flavor manufacturer is on track to acquire DDW, The Color House, a US-based colors company.

The acquisition is expected to see Givaudan become a key player in natural colors, diversify its color portfolio and elevate food experiences through taste solutions.

The transaction is expected to close in Q4 2021. No financial details of the deal have been disclosed. However, Givaudan plans to debt fund the transaction. DDW’s business would have represented around US$140 million of incremental sales to Givaudan’s results in 2020 on a proforma basis.

A bright future ahead?
Speaking with FoodIngredientsFirst, Louie D’Amico, president of Taste & Wellbeing at Givaudan, says the combination of both companies will enable Givaudan to become the number two global player in natural colors. He believes the move will help build a worldwide natural color platform and strengthen the company’s ability to create multi-sensorial food experiences.

Givaudan’s latest financial growth was mainly achieved in Beverages, Snacks and Sweet Goods.“DDW’s product portfolio provides an extension to Givaudan’s current offering and footprint in colors and will bring many complementarities to our current business.”

D’Amico further highlights how DDW will bring Givaudan a broad portfolio of products across natural colors, coloring foods, caramel colors and burnt sugars. “DDW has a robust innovation pipeline for stable natural blue, natural brown, green and red, which supports the development of a diversified color portfolio.”

Harris Williams, a global investment bank specializing in M&A advisory services, has advised DDW on its pending sale to Givaudan. The transaction is being led by Tim Alexander, Brant Cash, Andy Warczak and David Stead of the Harris Williams Consumer Group.

“DDW is a pioneer in natural colors and is a vital partner to a wide range of companies in the food and beverage industry,” notes Tim Alexander, a managing director at Harris Williams. 

“DDW developed a leadership position across the color spectrum and through its combination with Givaudan will continue to expand its global presence.”

Andy Warczak, a director at Harris Williams, adds: “We are continuing to see strong interest from strategic and financial investors in the food ingredients industry with a particular focus on companies that offer natural solutions.” 

A boost for natural colors 
Headquartered in Kentucky, US, DDW is a privately-held company specializing in natural colors, with 12 global manufacturing facilities.

Founded in 1865, the company has developed a crucial market position from its origins in the brewing industry through its capabilities in caramel colors.

“I am confident that we will continue to flourish as part of Givaudan,” notes Ted Nixon, DDW’s chairman. 

“We believe that we have a strong set of shared purpose and values with Givaudan and that this transaction represents a very positive step for DDW’s customers and associates.”

Latest financial results
In the first nine months of 2021, Givaudan recorded sales of CHF 5,067 million (US$5,461 million), an increase of 7.7% on a like-for-like basis and 5.8% in Swiss francs. Taste & Wellbeing sales were CHF 2,716 million US$2,928 million), an increase of 7.2% on a like-for-like basis and an increase of 4.8% in Swiss francs.

As the COVID-19 pandemic continues to impact on a global level, Givaudan has sustained “good business momentum” while maintaining its operations. 

The company reveals that strong growth was achieved across all product segments and geographies, with the mature markets growing at 6.6% and the high growth markets at 9.2% on a like-for-like basis. 

“We have made excellent progress in our 2025 strategic growth initiatives, and while the external environment still contains many uncertainties, we have demonstrated a strong focus on execution, in supporting our customers and in playing an important role in the global supply chain,” says CEO Gilles Andrier.

“New wins”The transaction is expected to close in Q4 2021.
Givaudan’s strong sales performance in Taste & Wellbeing was driven by new wins and good business momentum across all regions and customer segments. 

• Asia Pacific

Sales in Asia Pacific increased by 6.8% on a like-for-like basis. China and Malaysia delivered double-digit growth followed by solid single-digit growth in Indonesia and Vietnam. Singapore delivered double-digit growth in the mature markets, followed by single-digit solid growth in Australia and Korea. 

• South Asia, Africa and the Middle East

Sales in South Asia, Africa and the Middle East increased by 5.1% on a like-for-like basis. Double-digit growth was achieved in the markets of India and North West Africa, followed by good single-digit growth in Egypt and South Africa. The Beverages and Dairy segments drove the growth in the region.

• Europe

Sales in Europe increased by 5.2% on a like-for-like basis. Strong single-digit growth was achieved in the mature markets of Germany, Spain and Italy. There was “very good” business momentum in the high growth markets driven by double-digit growth in Russia, Ukraine and Poland.

• North America

Sales in North America increased by 5.0% on a like-for-like basis. The performance resulted from new wins and the growth of existing business in Beverages and Savory, as well as the continued recovery in foodservice.

• Latin America

Sales in Latin America increased 24.6% on a like-for-like basis across all markets, led by strong double-digit growth in all countries and across all segments.

Lifestyles evolve and demands soar
Givaudan’s business was impacted during the first six months, as its foodservice segment struggled with COVID-19 pandemic outcomes. The flavor house previously reported “strong recovery” in Q2 due to lifted out-of-home restrictions. 

Speaking with FoodIngredientsFirst in a previous interview, Nathalie Pauleau, global product manager for natural colors at Givaudan, said that consumer demand for natural products with perceived benefits has increased as consumers look to improve their lifestyles to reinforce immunity.

The demand for natural colors is on the rise outside of traditional concepts such as confectionery.In the same month, Givaudan revealed it was reorganizing its Taste & Wellbeing product portfolio, centering on three food experiences that “inspire, feel good and do good” for consumers. 

In this space, “layered wellness” and functional ingredients were tipped to star in NPD, as previously highlighted by Givaudan.

Last week, the flavors supplier unveiled its research on “mindful drinking,” sharing insights into what consumers are looking for in low- and no-alcohol drinks.

Colors pick up pace
The demand for natural colors is on the rise outside of traditional concepts such as confectionery, according to DDW. 

Last November, the company discussed piqued interest in natural green, black and purple hues.

Similarly, global consumers are looking for refreshing food products that stimulate the senses and provide a burst of positivity after challenging times. 

By Elizabeth Green