three years, we boosted the growth engine between the
U.S. market, which is very, very important, and emerging
markets. That’s why the part of the emerging markets from
our total sales grew from around 25% in 2010 to 36% in
2012. Our portion of the U.S. also grew substantially in the
flavor business, so these are the main focus of growth.
P&F: Do you plan on any other major investments in
flavor or fragrance right now as far as acquisitions are
Yehudai: We are involved with a very strong partner in the
position of acquisitions. We have the same focus: growing
the U.S. market and growing the emerging markets.
P&F: You mentioned the fast-growing health ingredient
business. Do you have any projections out there about how
you expect this business to grow from 2013–2015?
Yehudai: The part of natural ingredients is growing faster.
We put a lot of investment into R&D and innovation
between internal innovation and external innovation,
including universities and collaborations with startups
in developing specific unique solutions based on natural
products for the food industry and the nutraceutical,
pharmaceutical and cosmetic industries. We really built
a vast portfolio of innovation that grows into the direction
that the food industry is asking for meaning more clean
label, natural ingredients, extracts and other ingredients
that we produce … [as well as] less sugar, less salt,
special solutions that we develop and sell to major food
companies around the world including the United States.
[We’re also] growing solutions that include not only
flavor but also functional food ingredients such as natural
omega- 3 and many other natural ingredients.
P&F: How have you dealt with the impact of raw material
Yehudai: I would have to say this impacted us quite
negatively, and we suffered from some margin erosion
between the last five or six years. Most of these years raw
materials increased dramatically, by the way, more natural
products than synthetic ingredients. As I mentioned, since
two-thirds of our raw materials are naturals, it might affect
us more than it affected the others. We hope that through
a combination of improved purchasing and strengthening
our purchase organization of raw materials some price
increases will stabilize. [We] improved purchasing,
improved efficiency in our operation and increased prices.
We had to increase prices, of course.
P&F: Do you expect this trend to continue?
Yehudai: My personal feeling is that the prices of raw
materials have stabilized. Since they are now at such a
high level, and this economy is not really booming, my
expectation is that prices will stabilize, and I hope to see
more prices going down than going up.
P&F: Looking out over the next couple of years from 2013–
2015, what do you think is going to be driving sales?
Yehudai: I think it’s a combination of growing our market
share in the emerging markets that are growing faster
than the developed market, mainly Europe. So [we plan to]
increase the proportion of both the U.S. and the emerging
markets, continue to focus on taste and health solutions to
our customers—many based on natural ingredients—and
give full solutions that include taste and health. This will be
the main focus of ours, of course, [and] acquisitions. We
have a very strong pipeline. We did 32 acquisitions over the
last 15 years. We had, last year, sales of close to $620 million.
We expect to have $1 billion of sales within the next three
to four years. This will be done through a combination of
internal growth above [the] market where we are operating
and additional acquisitions. I believe the main acquisition
[options] will come between the United States and emerging