Flavour sales fall for Givaudan in Q1

Related tags Givaudan Switzerland Flavor

Givaudan, the world's number one fragrance and flavour player, saw
sales in its flavour division slipping by 6.5 per cent for the
first quarter, impacted by a loss of products and a fall in prices,
writes Lindsey Partos.

The Swiss firm saw overall sales fall to CHF 668.7 million (€431.4 million) for the first three months of 2005, down from CHF701.6 million, (€452.6 million) for the same period last year.

At CHF 395.6 million, the flavours division contributed nearly 60 per cent to overall group sales, a similar contribution to the year earlier period.

But figures at the division were knocked by price declines for natural ingredients, such as citrus and vanilla: prices for this expensive natural flavour have soared in recent years, but prices are now falling, and the firm is obliged to pass the reduction onto customers.

Givaudan also felt the impact of the firm's move to shrug off non-core ingredients from its FIS portfolio, the food ingredients unit bought from Nestle in 2003.

The company has dropped several product lines, including coffee extracts and some culinary aromas.

At a regional level, Asia-Pacific sales were up on last year, especially in China and South Asia, but Latin America is slowing down, although confectionery and dairy segments gave a boost to sales.

Ongoing intense competition evident in Europe with Givaudan reporting a decline in sales for western Europe: savoury segments were down, but growth posted in confectionery and dairy segmens. Central and eastern markets offered some counterbalance, the firm reported today.

Despite a "challenging first quarter"​, Givaudan's spokesperson Peter Wullschleger said the firm "remains confident to deliver another good result in 2005."

The intensely competitive market for flavours has, historically, been dominated by suppliers from the US, Japan and western Europe - in particular, France, the UK, Germany and Switzerland.

But if the climate is already tough, evident in Givaudan's results, it is likely to get tougher: a recent report from Freedonia​ warns that by 2008, the traditional flavour production areas will lose market share to developing areas of the world, as the product range and demand expands.

In 2003, the US and western Europe had a 23 and 21 per cent share of the market respectively, compared to Asia Pacific with about 30 per cent.

Swiss firm Givaudan continues to lead the flavours industry with an estimated 13.5 per cent slice of the market in 2003, followed by US International Flavours & Fragrances that has an 11.7 per cent share. Firmenich, equity-owned Symrise and ICI-owned flavours company Quest International are slated to have about 9.8, 9 and 6.1 per cent of the market respectively.

Eyeing the booming market for health positioned ingredients to leverage sales and profitability, the Vernier-based firm also announced today the roll out of 'TasteSolutions for Health & Wellness progamme' that provides food and beverage manufacturers with "essential ingredients, such as maskers, modifiers, and enhancers, along with the experience and knowledge to utilise this portfolio,"​ the firm said in a statement.

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