Naturex CEO: “We Want to be a Predator, Not Prey”

15 Sep 2016 --- "We want to be a predator, not prey," says Olivier Rigaud, the chief executive of Naturex, which has reported revenues up 2.7 percent to €208m ($234m) in the six months to June 30 and is now sizing up further acquisitions. Operating income was up nearly 50 percent to €18.6m ($21m), helped by strong organic growth in emerging markets, although new stringent rules in the US nutraceutical market, such as stricter regulations on DNA testing on botanicals, hurt its performance across North America.

Organic growth was 32 percent in Latin America and 20 percent in Asia-Pacific at the French-based plant extract company which makes colorings and flavorings.

Speaking exclusively to FoodIngredientsFirst, Rigaud said Naturex had a "nice momentum in emerging markets."

He said: "We have good prospects [in emerging markets] because we are in the natural ingredient space and momentum on the consumer side is still very high."

As an example, he pointed to the emerging middle classes in these markets which were driving sales of the French company’s products.

However, like-for-like sales were down 1.9 percent in North America, partly down to regulatory pressures, but Rigaud said this was a "temporary situation" and the "food business is performing pretty well.”

He added: “There is also a big momentum in the US, because it is still very much behind Europe in terms of conversion to natural, primarily in natural colors.”

However, he said the six percent organic growth in Europe, Africa and Middle East could be viewed as inflated as it was bolstered by contract manufacturing deals with China, which are likely to be one off, and that organic growth was closer to two percent.

Naturex suffered a tough 2014 enduring four quarters of negative growth, forcing it to reassess and rejig the business in 2015.

Central to this overhaul was introducing its BRIGHT2020 plan which runs across a raft of areas including sustainability, people & culture, consumer focus, innovation and science, developing markets and set financial targets.

Rigaud, who took over as CEO in 2014, said Naturex was now on the acquisition hunt, after its finances were in more robust health.

He said: “When I joined the company we focused on reorganizing and making sure we were in the starting blocks to deliver the five year plan. And we said would not do an acquisition in 2015 because it was just about putting the company back in the right order of parts.”

"This year we have a renewed focus because the situation has improved and Naturex plans to be back on the M&A front."

Naturex acquired the US business Vegetable Juices in 2014 and has also made acquisitions in Chile and India.

Riguad said Naturex would not be "shooting at everything that moves" but said that future acquisitions are likely to be in the US or emerging markets.

He said: “We want to be very focused on companies that will bring us new technology or very disruptive new things. The aim is to go for a more bolt on approach. It is important for us because we are still operating in a fragmented market. There are a lot of opportunities in the space."

"Naturex wants to also play as a consolidator ,we don't aim to be a prey, but we want to be a predator."

Amid a fragmented market, there is constant speculation about increased consolidation, but Rigaud insisted that Naturex is not "for sale" and that it had not received approaches from other companies.

In the past 12 months, Naturex has closed a plant in Spain and sold its joint venture US krill extract business to Norwegian partner AKER BioMarine, though there has not been any additional cuts to headcount.

Naturex has around 1,700 employees globally and Riguad said an indication of the company's close cost control was that all new appointments had to be validated by him.

Speaking of new trends shaping the market, Rigaud pointed to consumers increasingly demanding less processed ingredients and the growth of high pressure pasteurization.

He said: "They [consumers] want us to find a way to make sure you supply something that is clean in terms of micro, where you do not apply heat treatment and where you are going to destroy the good stuff."

"It is getting big in the States and I strongly believe it will come to Europe pretty fast."

By John Reynolds

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