Wild acquisition strengthens European flavour position
the German company's position in the lucrative European flavours
The firm, which claims to be the world's largest private producer of natural flavour ingredients for the food and beverage industry, signed the agreement with Deutsch Schweizerische Früchteverarbeitungs (DSF) in order to expand its fruit preparation business.
The Nauen facility specialises in fruit preparations for the dairy industry.
"This facility will give us additional capacity in the production of natural flavour ingredients," managing director Hans-Peter Voss told FoodNavigator.com.
It should also strengthen the company's position in a difficult, though lucrative, industry. Market analyst IAL Consultants estimated recently that the global market for flavours and fragrances hit $11.6 billion (€8.6bn) in 2003, while according to Frost & Sullivan, the €819.9 million European and US fruit and vegetable extracts and powders market is on course to grow 4.5 per cent annually, reaching €1.07 billion by 2009.
As a result, Wild has been looking at ways of increasing its market share. "Our aim has been to double our business in five years, and we are on track," said Voss.
"This has been done through organic growth. Sometimes we look at acquisitions, but we are not desperate to grow this way."
The acquisition of DSF's plant in Nauen is therefore a bit of an exception. When DSF was acquired by Austrian company Agrana in July 2005, the German Antitrust Authority put down postponing conditions for approval.
The Antitrust Authority, which is looking to strengthen competition in the fruit preparations market in Germany, required that Agrana reduce its market share by selling part of DSF.
According to the contracting parties, this could be fulfilled by Wild's acquisition of the Nauen facility.
"We saw an opportunity to find an agreement and although it is still pending approval, we are confident that the acquisition will be completed quickly."
Wild also went for the deal because it believes that the acquisition fits perfectly into the infrastructure between the already existing fruit preparation facilities in Rouen (France), Heidelberg (Germany), and Mragowo (Poland).
"This closes the logistics gap," said Voss. As a result, the new production site should be easily integrated into and managed by the Food Product Group at Wild.
The strategic position of the new plant should also help ensure that transport costs are kept to a minimum. Energy and transport costs have been rocketing, putting incredible pressure on ingredient suppliers to pass on costs.
"Food markets do not enjoy increasing margins at present, and this has put price pressure on the ingredients industry," said Voss.
"Nevertheless, through innovation and the establishment of new products, new market segments can be established. This year for example we were able to double our capacity in Poland."