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Inside Frutarom's Purchase of Raychan

Posted: June 27, 2007

The August issue of Perfumer & Flavorist magazine profiles Frutarom as one of the top-tier flavor and fragrance companies. Here, P&Fnow explores the company’s motivation behind its latest acquisition of Raychan Food Industries and where Frutarom is headed over the next couple of years.

At the beginning of this month, Frutarom announced its acquisition of Raychan Food Industries for $1.05 million. Raychan develops, produces and markets flavor compounds and markets ingredients for the food industry. According to Frutarom, Raychan’s activity is highly synergetic with Frutarom’s activity in Israel and that of the Nesse Company, which was acquired at the beginning of 2006. Frutarom cites four main reasons behind the acquisition of Raychan: 

  1. Raychan’s activity is expected to broaden Frutarom’s product offering in the fields of savory and functional products. (Raychan’s products will be integrated into the product range produced by Frutarom’s Flavor division.) 
  2. Frutarom intends to utilize the cross-selling opportunities inherent in the acquisition and to sell Raychan’s products to Frutarom’s existing customers in markets where Raychan has been less active to date, such as Eastern Europe and Turkey). 
  3. The acquisition strengthens Frutarom’s technological capabilities and its research and development infrastructure, especially in the field of savory flavor compounds. 
  4. Frutarom’s personnel will benefit from the addition of experienced employees. Raychan’s management will be integrated into Frutarom’s management in Israel and contribute its experience.

As is obvious with Frutarom’s aggressive acquisition schedule so far this year, the company is in the midst of implementing a rapid growth strategy. This combines organic growth in core activities along with strategic acquisitions. This could possibly mean more acquisitions for the company this year. In addition, the company aims to continue expanding its international cooperation with universities and research institutions in the development of new products—primarily in natural products and functional food ingredients. The most recent example is Frutarom’s cooperation with Ilex Medical Ltd., through its subsidiary CapsiVit Biotechnology Ltd., to produce a natural extract from the Capsicum annuum L. plant as a bio-available source of carotenoids and particularly capsanthin.

At press time for P&F magazine’s 2007 Industry Ranking’s "After" list (August issue), Frutarom ranked number nine among the top flavor and fragrance companies. According to the company, its target is to be a $600 million company and rank number five in flavors by 2009. (It is estimated to be number one in flavoris in the United Kingdom.) At the rate Frutarom is going, it could very well make that goal.