With its latest acquisition of U.S.-based Hagelin Flavor Technologies,
Frutarom plans to further capitalize on
salt, sugar and calorie-reduction technology offered to customers in the United
States, the United Kingdom and developing markets.
“For us it’s another great opportunity
to grow our market share in the United
States,” Ori Yehudai, Frutarom’s CEO,
Hagelin, which was established in 1967, develops flavor technologies used for the reduction of salt, sugar and calories. It also
supplies off-flavor-blocking and flavor enhancement technologies,
and features a no-heat spray dry flavor delivery system. Although
Hagelin is a much smaller company than Frutarom, Yehudai says
Hagelin’s technologies in the functional beverage, carbonated
beverage and juice-based product space, in particular, will add
to Futarom’s current portfolio.
“As far as the technologies are concerned, it’s a very impor-
tant part for us,” says Yehudai. “Hagelin spent a lot of effort
in R&D over the last couple of years in developing the area of
salt reduction, sugar reduction and calorie reduction, with good
success in penetrating into some of the large food companies
in the United States. Frutarom also has a lot of products in
this area, including a sweetness enhancer that we are selling to
the major beverage companies, including in the United States.
Together, it helps our product portfolio—especially flavor ingre-
dients, flavor compositions and flavor metrics that we bring to
Frutarom will also now have access to Hagelin’s customer
base, which includes international and local food and beverage
manufacturers in the United States, United Kingdom, and in
developing markets such as Central and South America and
Africa. Hagelin has three research and development, produc-
tion and marketing sites. Two are located in the United States,
in New Jersey and Georgia, and one in the United Kingdom.
Hagelin’s business grew 43% in 2012 from a combination of
rapid and profitable organic growth and acquisitions. Frutarom,
which has three production sites in the United States, as well
as production sites in the United Kingdom, will integrate
operations. Hagelin’s executive team will join Frutarom’s U.S.
“We are right now evaluating the synergies between the
technologies, not only for the U.S. market, but also for the global
market,” says Yehudai. “Because part of the advantage for us
is the gross-selling effect, meaning acquire new technologies,
combine them with the unique technology that we have and
offer [customers] globally something that smaller companies
like Hagelin didn’t have. So this is part of the advantage in doing
relatively smaller acquisitions with interesting technology that
we can leverage in other parts of the world.”
Frutarom considers the $52.4 million acquisition of Hagelin
its second biggest acquisition of 2013, second to Russian fla-
voring company Protein Technology Ingredients Group (PTI),
which was acquired in November 2013 and had sales of around
$111 million in 2012.
As a result of the PTI acquisition, “We became the market
leader in the Russian market with local production mainly in
the flavoring area,” says Yehudai.
Frutarom completed four acquisitions in 2013, which
Yehudai says is an important part of the company’s strategy.
According to the executive, Frutarom had a run rate (the annualized revenue of a company if you were to extrapolate the
current revenue over a year) of about $770 million in the last
12 months ending September 2013.
“Futarom’s strategy for the last 15–20 years [has been] to
grow much faster than the market growth through a strong combination of internal growth and acquisitions,” Yehudai adds.
In addition to the latest acquisition and PTI, Frutarom in
2013 acquired JannDeRee in South Africa and Guatemalan
flavor company Aroma SA, both of which represent fast-growing
emerging markets for Frutarom, including Central America
“We’re looking for a great 2014 supported by the acquisitions,” Yehudai says. “We have a lot of integration opportunities
for us [of which] to take the best advantage.”
“Hagelin spent a lot of effort in R&D over the
last couple of years in developing the area of
salt reduction, sugar reduction, and calorie
reduction with good success …”
—Ori Yehudai, Frutarom
Frutarom Expands Global Reach and adds Salt, Sugar Reduction Technology