Sensient Technologies Corp.
Milwaukee/Hoffman Estates, Illinois
2016 total sales: $1,383 million
Leffingwell estimates based on F&F sales: $653.8 millionn, o
Estimated market share: 2.6%
Paul Manning, CEO
Sensient Follows Millennials, Trends and Tech to Success
Consumers trends are changing, technology is improving and mergers and acquisitions are happening on a regular basis. This has all made 2017 a particularly interesting year for the flavor and fragrance industry.
One company that is finding success in this new F&F landscape is Sensient Technologies Corporation. We sat down with president and CEO Paul Manning to discuss how Sensient is meeting consumers head-on and what challenges they still see in the industry.
Perfumer & Flavorist: What has Sensient Technologies achieved this year to maintain/raise your position on the leaderboard?
Paul Manning: This year marks a turning point for many of the changes and improvements we have been driving over the last three years. This year Sensient will complete our restructuring activities and as a result we now have a much simpler and more cost effective organization. We have also culled our lower profit and undifferentiated product lines. All of this means that we can apply our resources and attention to innovative products and technologies that create value and a point of difference for our customers. This is the part of the business that I am passionate about and I am very optimistic about our future.
P&F: M&A activity is showing the acquisition of smaller companies, typically ones that provide specific capabilities, as a means of expansion. In your opinion, what does this say about the current F&F landscape?
PM: In today’s market, the segments and customers you focus on can have a dramatic impact on your ability to deliver growth. As a result, I think some companies are using M&A as means to access new customers and segments and to otherwise augment their organic growth.
At Sensient, we recognized a number of years ago that much of the growth and innovation was going to come from smaller regional companies that were not household names. We added resources to identify and pursue these opportunities and this bet is now paying off for us. For our part, acquisitions can still make sense if they add unique technologies, but our focus will likely be on organic growth opportunities.
P&F: How do you see shifting consumer trends among millennials and younger generations impacting the future of F&F? (i.e. customization in fragrances, niche/artisanal fragrance, convenience in foods/beverages, etc.)
PM: Millennials are extremely adventurous with new food flavors so this means we will continue to see an emphasis on exotic flavors and niche flavors. At the same time, food has a meaning to these consumers that is broader than mere fuel or nourishment.
Younger consumers have more of an emotional connection to their food and they want to feel good about the food they consume. So clean labels are important, as is ethical and sustainable sourcing.
Finally, these consumers are trend-inspired purchasers that are influenced by social media. They want to share their experiences with their friends and their community. All of these factors carry important implications for the F&F industry.
P&F: The F&F industry’s impact on consumers’ daily lives is humble, palpable and more transparent than ever. How is Sensient Technologies adjusting to a more communicative and transparent F&F chain?
PM: We are fortunate to have a number of offerings that are very much on trend with the dynamic you are describing. The Sensient natural ingredients business sells garlic, onion, capsicum and other herbs that deliver flavor, but they represent familiar ingredients that consumers use in their own kitchens.
The same is true for many of our natural extracts. With all of these raw materials, we stress ethical and sustainable sourcing. We continue to innovate in these product lines and others so that we solve our customers’ formulation challenges while still delivering an impactful consumer experience using ingredients consumers want to see in their products today.
P&F: The biotechnology industry has been growing in popularity within the industry. How do you see this industry working parallel with F&F?
PM: Biotechnology offers great potential for the industry as we search for more sustainable and environmentally friendly sources for unique materials used in flavors, fragrances and colorants. So there are synergies between this industry and the F&F industry.
At the same time, biotechnology requires a different business model that relies on large and uncertain investments. As a result, I think you will see biotechnology firms continue to partner with established industry players so that they can effectively leverage their technology investments across established customer relationships.