On the Other Side of the Crisis: The Ingredient Supplier's View

"What a difference a year makes," said Steve Somers, owenr and president of ingredient supplier Vigon International, in a spring 2010 newsletter. Hew was speaking, of course, about 2009, which during a recent visit to the company's East Stroudsburg campus he dubs "the year of inventory reduction." Somers notes that the breadth of the economic crisis in 2008 and 2009 was such that no industry was spared—even historically steady businesses such as flavors and fragrances.

As the economy collapsed and customers cut back on inventory, Vigon and its competitors suffered declining sales. The change was sudden, rather than gradual, compounding the company’s challenges.a Somers says the company solicited employee suggestions and held monthly staff meetings during that time in order to reassure its employees, who were reasonably concerned as the overall economy suffered. Today, as Somers explains, the industry has not only stabilized, but amidst recent signs of recovery, his organization experienced a very busy first quarter as pipelines filled. This spike in activity continued into the second quarter, but Somers is left to wonder, “Will the other shoe drop?”

Certainly, based on recent lessons, it is clear that the market is more dynamic than in past decades. For Vigon, 2008 was up, 2009 was flat and now 2010 is shaping up to be up significantly. What 2011 might bring is difficult to say. Meanwhile, the F&F industry has grown smaller, consolidating the customer base for ingredients and generally driving profits down—a scenario also facing the companies Vigon serves. And so, even as better times return to the company and the industry, Somers stresses that key lessons have been learned, and change must be the order of the day.

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