Givaudan confident price hikes will offset crippling input costs

By Jane Byrne

- Last updated on GMT

Related tags: Developing country, Switzerland, Swiss franc, Givaudan

Givaudan confident about price increase strategy
Givaudan confident about price increase strategy
Flavours and fragance house Givaudan, while posting third quarter results, said its decision to increase its prices will soften the impact of higher raw material input costs for products such as citrus and orange oil in 2011 and fully cover them in 2012.

Its third-quarter sales dipped 10.9% to CHF966m, which was short of analysts’ expectations.

In the first nine months of 2011, the Switzerland based supplier logged sales of CHF 2,971m, a decline of 9.5% in Swiss francs compared to 2010 but an increase of 4.7% in local currencies. In the same period, the flavour unit’s sales hit CHF 1,395m, a decline of 9.4% in Swiss francs.

The company’s reported strategy is to generate half of its sales in faster-growing emerging markets by 2015; it stressed that sales for its flavours division in such developing countries showing an “improving momentum”​ in the third quarter.

“Growth was mainly driven by the developing markets of China and India as well as a good performance in Japan,”​ notes the Swiss group.

Givaudan also flagged up the “exceptional” double-digit growth from its beverages, dairy and snack flavours categories.

Indeed, snack and savoury flavour sales spurred growth in the mature markets of Western Europe, said Givaudan, remarking that sales were particularly strong in Germany, the UK and Spain.

The Swiss flavours manufacturer, whose competitors include Symrise and International Flavors & Fragrances (IFF), has been focusing on enhancing sweetness in low-sugar applications through “novel ingredients and building-blocks to bring the taste profile as close as possible to full-sugar.”

Through its five pillar growth strategy - emerging markets, health and wellness, market share gains with targeted customers and segments, research and sustainable sourcing - Givaudan is confident it can double the pace of the 2 to 3% growth predicted for the overall market.

And the supplier added that it intends “to continue to achieve its industry-leading EBITA margin while improving its annual free cash flow to between 14% and 16% of sales by 2015.”

Related topics: Ingredients

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