KEY INTERVIEW: Industry Consolidation Will Help Nactis Flavours Achieve Growth and Unlock Potential
14 Oct 2015 --- French flavors and fragrance house Nactis Flavours has implemented an ambitious growth project that it hopes will double its size by 2020. This will be through a very carefully orchestrated series of acquisitions that it hopes will tap into the best resources that the industry has to offer. Newly appointed chief executive Daniel Faguer took FoodIngredientsFirst through his strategy that will make Nactis Flavours a leading player in this fragmented market.
Predominantly a French company, with 60% of sales within its home territory, Nactis is hoping to reverse that ratio so that 60% of business comes from outside of France. In order to achieve this, it is on the acquisition trail outside France, setting its sights on Northern Europe and Central & Eastern Europe, as well as Spain and Portugal.
“When I started we carried out a detailed strategic review which defined our key priorities,” explains Faguer. “The key priority is to double in size, both organically and through strategic acquisitions and partnerships. This could be in France as we have a very good track record in our own territory, but the geographic priorities will be outside of France. Expansion outside of Europe will also come, probably to North American first, but we will focus on one thing at a time. We can’t embrace too much at any one time, but already I can see that after the US, which is a strategic market in our business, South and East Asia will be the second step outside of Europe.”
Unlike other areas of the food industry, Faguer sees that there are many opportunities in the flavors industry as it has not yet consolidated to the extent of other areas. “We believe that there are opportunities for mergers and acquisitions as there are so many small companies with very specific techniques. Our experience with the Belgian Robertet acquisition has encouraged us to keep going and any partnership can bring synergies and widen our product range and capabilities.”
So as Faguer describes this as a turning point for Nactis, will it mean diversifying into new areas? “No. We can bring additional technologies and products, as well as expanding into new territories, but we will always remain focussed on flavors and ingredients. Taste, if you like.”
There are certainly further opportunities for growth in flavors, and one that Faguer highlights is that of the trend for natural flavors. “The industry is moving more and more towards natural flavors and this is a trend that we can embrace with our own technologies but it is a good example of how we can partner up with other experts in the field and tap into their sources and technologies,” says Faguer.
So what of the future for the flavors industry and for Nactis? “Well, I’ve already talked about the drive to consolidate, and this will be led by the big companies. This is being demonstrated every day. But I do see a polarised market, one dominated by a few big companies, but also many small, specialised, niche players that are highly proficient in one type of product. The natural trend, particularly, will allow smaller players to have a unique offering and to thrive.”
Faguer continued: “As well as clean label and natural, organic is one to watch. The trend is picking up and could present an opportunity as a differentiating point for manufacturers who experience barriers in the control of supply upstream. There can be a skill to mastering and securing access to ingredients and developing sources with limited supply. Again, this could present significant opportunities.”
Closer to home, Nactis has another focus: “For Nactis, we recently announced a significant investment plan of €8m to modernise our plants, along with our R&D capabilities and to increase capacity,” says Faguer. “The new Application Laboratory and Culinary Centre will allow Nactis to be more efficient in the development of new flavors and also to collaborate and communicate with customers better. What may have taken two weeks to achieve, could from next year take just two days, as customers will be able to come to the Application Lab and work with us on what they want. A central application lab at our head office in southern Paris will also benefit the business, I believe.”
And for the industry as a whole, Faguer predicts a general trend towards both traditional, homely flavors that allow consumers to reminisce, and conversely, more ethnic, oriental flavors that replicate what consumers taste when travelling. The somewhat conflicting trends will work together, says Faguer, to create a marketplace that combines comfort and adventure.
With a new chief executive at the helm, expansion, investment and acquisitions, Nactis Flavors is in a good position to overcome the technical challenges that this new era will bring.
By Kelly Worgan
