Firmenich plans post-recession with partnerships,

innovation
By Jess Halliday, 08-Oct-2009

Related topics: Products & Markets

Firmenich’s fine fragrance division suffered the most in a recession struck year in which sales fell 4.3 per cent
overall.

The family-owned company, which does not publish full financial results, announced it saw sales of CHF2641m
(€1740.7m) in local currencies the full year ended June 30. The fall explained by changing consumer spending habits and
manufacturers and retailers destocking a lot of products because of lower demand.

But it has been able to pinpoint the bright spots in its performance – and those appear to be categories that consumers see
as every day essentials. Certainly food and drink qualifies, as do body care, home cleaning and laundry. Fine fragrances, on
the other hand, suffered the most.

Moreover while sales in the US and Europe were hit worst by the recession, emerging markets continued to show growth –
albeit slower. Latin America performed especially well, Firmenich revealed, followed by Eastern Europe and Africa.

So how has Firmenich sought to staunch the effects of the recession on its botton line? By reducing its own spending , but
placing a strong emphasis on investment and partnerships that will give it a strong edge as the Western world emerges
from the shadow of recession – and beyond.

It claims to have a “healthy new product development pipeline”, and innovation has been ongoing in perfumes, despite the
fine fragrance fall out.

In the last year it says it has made no less than 32 patent applications for flavour and fragrance ingredients, delivery
systems and processes that will allow it to “do more with less and better”.

Cleaning up

On the fragrance side, Firmenich has said that body care and home care remained resilient sectors, and the strongest
growth was seen in laundry and hair care.

But while it seems basic cleanliness is regarded as a recession necessity, splashing out on fine fragrances is not and here
the company saw lower ingredient sales.

Tasty sales

Overall, Firmenich said it has seen the first fall in sales for its flavour division in 8 years. However sweet products actually
increased sales, especially those for confectionery and nutrition.

Indeed, this looks to be an area in which Firmenich spies future potential. One of the year’s reported highlights was
purchasing the exclusive rights to a novel sweetness enhancer being developed by Senomyx.

“This will give customers the opportunity to access flavours that reduce the need for sweeteners, without compromising on
taste, and should offer calories a significant reduction in calories in a cross-section of everyday staples including dry
products, instant drinks and desserts,” it said.

Soups and snacks also showed growth, but savoury goods had modest sales declines – as did beverages. Thebeverage story
is attributed to consumers switching from bottled water, which may be flavoured, to tap water.