Specialist
Former VP at International Flavors & Fragrances Inc (IFF)
Agenda
- R&D focus across key competitors, including Givaudan (VTX: GIVN), (NYSE: IFF) and Firmenich
- Local customer vs multinational corporation product development
- Developed vs emerging market product development
- R&D scale benefits vs procurement scale benefits, during shifts from synthetic to natural ingredients
- Pricing and volume outlook
Questions
1.
Givaudan is trading at a premium compared to IFF and Symrise, and Firmenich is a private player. What are your thoughts on the four key players in the flavours and fragrances market?
2.
How do you think IFF typically shows its reaction to quarterly results in its company operations?
3.
What are your thoughts on Symrise’s expansion into new product offerings, such as its competition with Croda in the beauty space? Why do you think Symrise has succeeded here where others haven’t?
4.
What are your thoughts on R&D from a customer perspective? How does R&D affect the ability to win new customers, increase wallet share or gain pricing premium?
5.
How much pricing premium for flavours can be created with R&D?
6.
How much pricing premium or how many new product launches do you think a company could achieve for every R&D dollar spent on natural vs synthetic flavours?
7.
How would you compare the R&D cost of a new natural product launch vs a synthetic one?
8.
How does the R&D cost for a developed market, such as North America, compare with the cost for an emerging market, such as Latin America?
9.
Does R&D need to happen locally, or can it be centralised with people feeding back on local tastes?
10.
Is the discussion about local vs multinational corporations similar to the discussion about developed vs emerging markets, or are there differences in the way you approach these conversations?
11.
If a company only had local R&D, how much of a pricing discount would it be able to offer customers to capture wallet share, compared to a player with high levels of basic and local R&D?
12.
Do you think there is a significant variation in the communication and leveraging of basic R&D processes across all different local R&D teams?
13.
What are your thoughts on the R&D focus of Givaudan vs IFF vs Firmenich, in terms of flavours vs fragrances, naturals vs synthetic and developed vs emerging markets?
14.
How would you compare R&D vs distribution and supply chain for Givaudan, IFF, Firmenich and Symrisein?
15.
How do you rank the four major players on their ability to acquire businesses and run them in a decentralised manner to maintain low lead times?
16.
What is the rough growth rate for each of local players vs multinational corporations?
17.
Givaudan and Firmenich have historically focused on R&D. How difficult do you think it has been for them to focus on local player growth to acquire businesses to focus on distribution and not implement globalised R&D standards?
18.
Naturex was acquired by Givaudan. How long do you think integration will take? How well do you think it is going?
19.
What are your thoughts on Givaudan’s breakdown of R&D spend between naturals and synthetics?
20.
It seems like a greater proportion of revenue is being spent on synthetic R&D rather than naturals R&D, and as consumer preference shifts towards natural, companies are losing the scale benefits of R&D on the synthetic side. Would you agree?
21.
What are your thoughts on the levels of vertical integration across the four key players? Who do you think is most at risk of variations in raw material inflation?
22.
Do you have any indication of the percentage of vertical integration across the major players? Perhaps of ingredient supply as a percentage of total ingredients?
23.
Frutarom was recently acquired by IFF. How do you think that is going, and what might be the key integration issues?
24.
What proportion of Frutarom’s smaller- to mid-size customers do you think it will have lost during the integration process?
25.
When a company loses around USD 800m-900m in revenue, as Frutarom has, is that typically concentrated in particular areas, or would you expect it to be distributed evenly across its geographic base?
26.
How does a 10% drop in turnover typically feed through to EBIT declines?
27.
What is your outlook for IFF, Firmenich, Givaudan and Symrise over the next 3-5 years?
