EUR 850.00 For Business Accounts Only

Morningstar | Strong Organic Growth Continues for Symrise

Symrise is the fourth-largest company in the global flavor and fragrances, or F&F, industry, with 12% market share. The company creates customised flavour and fragrance formulations from over 10,000 natural and synthetic raw materials for customers that manufacture consumer staples such as food, beverages, and household-care products. F&F companies occupy a strong position in the value chain because their products make up only a small portion of the final product cost, but play a decisive role in the consumer’s purchasing decision. Symrise spends heavily on research and development because innovation is critical to ensure a steady stream of new products are available to satisfy changing consumer preferences. Current trends have consumers demanding healthier, safer, and more natural products. Accordingly, regulation has increased significantly over the past decade as consumers demand to know what is in their food and household products, and where the ingredients are sourced. The increased complexity and costs incurred through regulation and raw material procurement have made it difficult for smaller companies in the F&F industry to compete. As a result, the industry has been slowly consolidating, benefiting the leading companies. Compared with its peers, Symrise has a high level of exposure to local and regional customers, at about two thirds of total sales. This benefits the company because these smaller customers are growing significantly faster than the large multinational consumer staple companies. Symrise was also the first F&F company to expand into adjacent categories such as cosmetics ingredients and pet food. This strategy has been successful because these areas have higher expected growth rates than the traditional F&F end markets in consumer staples. The acquisition of U.S.-based Pinova has caused its exposure to high-growth emerging markets to fall modestly to 43% of sales. Symrise expects to increase this number to 50% by 2020.