Firmenich (Switzerland) has agreed to acquire a majority stake in VKL Seasoning Pvt. Ltd (India), an Indian specialist in seasonings and flavors, on 1st May 2019, with a view to expanding its capability and customer reach in India.
MarketsandMarkets™ View Point:
Firmenich is one of the leading players in the flavors and seasonings business. The acquisition of VKL Seasonings would help Firmenich establish a strong foothold in the Indian market and in expanding its raw material palette for clean-label ingredients. Consumers of today are becoming highly label-conscious due to which VKL Seasoning’s unique extracts, natural ingredients, and extracts would be able to cater to the growing demand for clean-label ingredients. VKL Seasoning is also highly focused on innovations through collaborations with local as well as international players operating in the business. Hence, one could look forward to a range of new clean-label ingredients hitting the shelves soon. However, despite the availability of the wide range of products in the clean label category, the high costs associated with clean-label ingredients make its complete adoption uneconomical due to the subsequent increase in the price of end products. Also, these ingredients do not give out the same organoleptic properties as the artificial ingredients due to which most manufacturers remain apprehensive about their use – said Gopika Sandes (Senior Research Associate at MarketsandMarkets™)
Impact of Acquisition:
VKL Seasoning is one among India’s largest seasoning & flavor solution providers serving areas such as bakery, convenience food, quick service restaurants, dairy, confectionery, beverages, gravies & sauces. The company has constantly focused on innovations to gain popularity among consumers. Some of the recent products launched by the company aid in the preparation of desserts and gravies. Besides its stronghold in the Indian market, the company also has its presence in the Middle Eastern countries. Acquisitions would add to Firmenich’s geographical advantage. Since Firmenich has targeted the consumers in the Indian subcontinent, the large customer base of VKL Seasoning, coupled with the in-depth knowledge that the company holds for the local palate, would help the former to understand and deliver the ingredient requirements according to the tastes of the Indian populace – said Mr. Nagesh Manepalli, (Head- Food, Beverage, Animal Nutrition, and Agriculture at MarketsandMarkets™)
The figure given below showcases the current market opportunity in the clean label ingredients market. The various health issues associated with the consumption of artificial food additives and the high number of food safety incidents are driving the market for clean-label ingredients.
FIGURE 1 CLEAN LABEL INGREDIENTS MARKET, 2016 VS. 2022 (USD BILLION)
e - Estimated, p - Projected
Source: Related Research Publications, Government Publications, Company Press Releases, Company Annual Reports, Company Websites, Company Publications, and MarketsandMarkets™ Analysis
Impact on Top Competitors:
Some of the major competitors in the clean label ingredients market include Cargill (US), Archer Daniels Midland (US), Koninklijke DSM N.V. (Netherlands), E.I Dupont de Nemours and Company (US), Kerry Group (Ireland), Ingredion Incorporated (US), Tate & Lyle PLC (UK), Sensient Technologies (US), Corbion N.V. (Netherlands), Groupe Limagrain (France), Chr. Hansen A/S (Denmark), and Brisan (US). With Firmenich’s outspoken commitment to the clean label movement, acquisitions would help the company gain a larger market share in the clean label ingredients market as compared to the other players in the market. This active focus on the clean label movement can also be observed through 8 similar acquisitions that the company has made in the past two years including Flavourome (Africa), Campus (Italy), and Natural Flavors (US). VKL Seasoning is known among its clients for cost-effective natural solutions that it provides. This could pose a challenge to the other players in the industry since clean-label ingredients and end-use products are highly priced.
The acquisition of a majority stake of VKL Seasoning would help aid the growth of Firmenich as one of the leading players in clean label business and widen its footprint in the Indian subcontinent. With the growing demand for natural ingredients, which would carry functional benefits, Firmenich would be able to make effective use of VKL Seasoning’s know-how and cost-effective solutions in launching products that cater to the requirements. The company’s focused efforts in expanding its clean label portfolio with similar acquisitions in the US, Africa, and Italy would help strengthen the company’s offerings within the business.