A tasty formula | initiation of coverage GIVAUDAN, ROBERTET
The ingredients (which have various uses, ranging from improving the nutritional profile to changing taste) market is worth USD440bn, with the sub-segments of fragrances and flavours worth USD28bn, posting robust growth (+4% on average over the next five years, in line with the previous periods).• The market is dominated by four groups Givaudan, IFF, Symrise and privately-owned Firmenich. Since the start of the 2000s, the ingredients industry has witnessed extensive consolidation moves driven by the aim of smaller players to find reliable partners with access to capital markets, brand notoriety and wide geographical presence.
• Acquisitions are also a source of growth and innovations for acquirors. It benefits from many structural advantages: high entry barriers, limited client negotiating clout (given their fragmentation) and the importance of smell and taste in the consumer purchase decision (whereas this only represents a small share of the product cost price).
• Clean labels and plant proteins are driving growth in the industry.
• Within this attractive sector with strong growth engines, we are initiating coverage of Givaudan and Robertet with a Buy recommendation on both shares and respective target prices of CHF4,200 and EUR1,060.
Givaudan is engaged in the fragrance and flavour industry. Co. provides its products to global, regional and local food, beverage, consumer goods and fragrance companies. Co. has two principal divisions: Fragrance, which manufactures and sales fragrances into three global business units: Fine Fragrances, Consumer Products, and Fragrance & Cosmetic Ingredients; and Flavour, which manufactures and sales fragrances into four business units: Beverages, Dairy, Savoury and Sweet Goods. In addition, Co. has distribution network in more than 40 countries.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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