P&Fnow: What was the motivation for establishing its Mexican subsidiary?
Ludlum: As part of Frutarom's rapid growth strategy, we are constantly working to broaden and expand our business in additional countries and emerging markets, where growth rates are significantly higher than the average rate for Europe and the United States. Mexico is one of the world's largest emerging markets and has over 100 million residents.
Frutarom identified the opportunities in Mexico and decided to broaden and deepen its presence by establishing a subsidiary there. The aim is to develop our flavors business and strengthen our ingredients activity through the greater opportunity that a subsidiary affords us. It allows us to offer our customer base in Central America the wide range of solutions enjoyed by our customers in Europe and the United States. Frutarom already has a subsidiary and sales office in Brazil, which coordinates Frutarom's sales in South America and previously worked through agents in Mexico.
The new company will serve Frutarom's customers in Mexico and Central America and enable us to considerably grow the company's development, sales and logistics systems in the region. The service center to be established in Mexico also will provide Frutarom's customers with development and applications services.
P&Fnow: Frutarom seeks to develop its flavor business in the region. How do the market's needs differ from those in the United States or Europe?
Ludlum: Since flavors and taste vary between regions, countries and cultures, we find it important to be as close as possible to our potential customers. This allows us to offer them development and applications services through our local laboratories and professional personnel, while also getting a better understanding of their needs. A local presence heightens our ability to create tailor-made products for our customers and assist them throughout the development process of their products. In addition, Frutarom Mexico will enable us to improve the service and logistic abilities we offer our customers in Central America. Additionally, we see great significance in shifting our activity from agents, as this enables us to make direct contact with our customers.
P&Fnow: What are the most popular/interesting flavor types/profiles in the region?
Ludlum: Flavors in Mexico are very similar to those in the United States. In most cases Mexican consumers prefer sweet flavors with natural notes. For children, strawberry and grape are flavors that are typically popular. In sodas, popular flavors are pineapple, grapefruit, lemon and peach. Even some of the major players (Coca-Cola and Pepsi) have introduced products with flavors such as hibiscus, horchata, tamarind, lemon (Mexican lime), orange and grapefruit. In the juice market, guava, mango guanabna, orange, apple and grape are major flavors. In confection, there are tamarind, mango, pineapple and banana and some dulce de leche.