Issue Iss2 2010
It has a long history of innovation and Frutarom looks set to lead the market once again with investment into organic, health-promoting ingredients
As a company with over 75 years history and experience, Frutarom Savory Solutions leads the flavour and fragrances market with its vast range of over 20,000 different products. Ranked amongst the ten leading companies in its field, the company runs a tight operation that includes heavy investment into research and development (R&D), environmental policies and the safety of both its products and work environment.
Two Dutch entrepreneurs, Yehuda Araten and Maurice Gerzon, founded the company in 1933 as Frutarom Palestine Ltd and located the first factory in West Galilee, Israel. In the 1990s Frutarom began to expand internationally through the acquisition of subsidiaries first in the US and UK and then in more diverse markets such as Belarus, China, Kazakhstan, Mexico, Romania, Russia, Turkey and Ukraine. After being spun off from parent company ICC Industries in 2003, Frutarom has gone on to become one of the most prominent industry names with customers in 120 countries and annual revenues of over $470 million.
The company is split into two divisions of operation: the flavours division and the fine ingredients division. Flavours and fragrances are the company’s primary pursuit and represent two thirds of its sales, with products including aroma chemicals, essential oils, natural extracts and distillates. These are manufactured from high quality botanical materials farmed by Frutarom’s suppliers around the world then passed through rigorous chemical and physical tests to meet the company’s ISO9001 standards. These are then used in many different products from tea and coffee to bread and liquorice.
The fine ingredients division specialises in high quality natural ingredients and healthy foods that include the company’s ‘Functionals’ and ‘Clean Labels’ brands. Functionals are a range of herbal extracts, Omega-3, antioxidants and other health beneficial ingredients that are intended to help the body against diseases and illnesses. Clean Label is the company’s line of natural, organic flavours encompassing fruits, spices and nuts which are then used in health foods and dietary supplements. These products undergo scientific scrutiny during the production process to ensure their effectiveness.
Frutarom’s popular products have made the company a continuing success, and it is its range of natural and organic products that has driven the company’s recent profits. Revenues for the first quarter of 2010 increased by 15.3 per cent equating to a total net profit of $11.1 million, double that of the same period in 2009. In a press release on the company’s website, president and CEO of Frutarom Ori Yehudai commented on this performance: “As expected, we witness fine results that emerged from the steps we have taken to strengthen and improve our competitiveness and to increase our operating efficiency.”
He adds: “We will decisively continue to act to implement our rapid growth strategy which combines organic growth and strategic acquisitions and the two together will allow us to again double our sales turnover in the next four years, to approximately $1 billion.”
The company’s recent history of acquisitions has been at the heart of its rapid expansion from local spice merchant to world leader. Companies acquired include: seasoning vendor Baltimore Spice Israel in 1999; Emil Flachsmann AG, a Swiss flavours and fragrances business in 2003; US AM Todd Botanical Therepeutics in 2005, a flavour extracts company that helped reinforce Frutarom’s position in the North American market; Belmay, a British flavouring company with subsidiaries in Singapore and Scandinavia, and Blessing BioTech, a manufacturer of starter cultures used in meat and dairy goods, both in 2007.
To present an ethical cohesion throughout the company’s practices, Frutarom has a dedicated environmental policy that sees the company maintain its plants and sites at regulated environmental standards. It also has an ongoing programme of reducing emissions and waste that it invests millions of dollars in per year, collaborating with authorities and environmental officials to meet goals reflecting changing expectations of industry and customers. 75Supporting this is the company’s employee education plan, Responsible Care, which aims to minimise the risk of accidents in its factories’ operations.
As part of this environmental commitment Frutarom organised its first annual environmental conference in Tel Aviv, Israel, in 2008. The company invited a range of guest speakers from throughout the industry and from government to share their knowledge of environmental best practices with the employees of Frutarom, including Henry King of Unilever and Dr Yossi Inbar from the Israeli Ministry of Environmental Protection.
Already established as one of the leading global companies in the industry, Frutarom is not ready to settle just yet. With the natural and organics sector of its business expanding more quickly than ever, the company is looking to invest in and market this further in the coming years. With expectations of a doubled turnover within the next four years and the continued R&D of its products range, backed up with more acquisitions and local partnerships, Frutarom looks confident as it heads into the future.