Kerry consolidates flavour position with new acquisitions

- Last updated on GMT

Related tags: Marketing, Flavor

Acquisitive ingredients firm Kerry will spend €170 million on four
bolt-on flavour acquisitions announced yesterday as the €3.7
billion Irish company continues to consolidate its position in the
highly competitive flavours market. The new buys stretch from the
US to Italy and bolster the firm's standing in the burgeoning
natural flavours market.

In the latest spending spree - one week after completing a €369 million deal to buy food ingredients arm of UK Quest from ICI - the Kerry group has acquired Manheimer, based in New Jersey, Los Angeles firm Flavurence, Laboratorios Krauss in Mexico. In addition, natural flavours firm Bergamo-based Fructamine from the Italian diagnostic imaging group Bracco, that posted flavour sales of €16 million in 2002.

The latest flavour acquisitions through the firm's Mastertaste division, that had combined revenues of €110 million in 2003, confirm the company's aim to carve a stronger position in the growing natural flavours market.

"Natural flavours for savoury, sweet and beverage applications are our strength. We have started from a small base but we are determined to grow our position,"​ a spokesperson for the Kerry Group tells

Not yet in the league of the major flavour players, namely Swiss group Givaudan and US International Flavors and Fragrances (IFF), Kerry said it is on the look out for further flavour acquisition opportunities.

Kerry Chief Executive Hugh Friel added that demand for more natural, varied and complex flavours was growing in line with increasing consumption of convenience foods.

On acquiring Manheimer - that includes the Manheimer Fragrances business - Kerry has entered the fragrance market for the first time. The Irish firm told that, in line with leading flavour houses, further opportunities to build a position in this new fragrance arena were likely.

The consumer desire for health-orientated food products - from dairy drinks to functional margarines - contributed to the 7.6 per cent rise in operating profit for 2003 - to €308.5 million - posted by the Irish company in February this year.

"All Kerry businesses are well positioned to lead new product developments to meet consumer nutrition and lifestyle requirements,"​ said Friel at the time.

Innovation is key to increasing market share in the competitive global flavours market valued at $5.45 billion in 2001 by researchers IAL Consultants. And competition in the European flavours scene saw US agri-giant Cargill making its first flavours acquisition in Europe earlier this year, when the billion dollar company purchased UK flavours firm Duckworth. Leading Danish ingredients firm Danisco also has ambitions in flavours, with clear aims to become one of the top five global flavours players.

The ongoing consumer desire for natural ingredients, combined with a growing interest in more complex and authentic flavours, will drive market demand for flavours and fragrances in the US to a value of $4.4 billion (€3.4bn) by 2007, according to a new report from US market research company Freedonia. The report estimates that the market will increase by a steady 3.5 per cent over the next three years, on the back of more expensive natural ingredients, complex flavours and a strong growth in low fat and low carbohydrate foods and beverages.

In 2003 Kerry spent more than €200 million on acquisitions, including the purchase of Florida-based natural flavours firm Crystals International.

Related topics: Ingredients

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