Expanding Into Vanilla: Synergy & Vanlab

Are more acquisitions coming?

Recently, Synergy Flavors (Wauconda, IL) announced its acquisition of Vanlab Corp. (Rochester, NY). Synergy Flavors is a member of the Irish-based Carbery Group and creates flavors for food and beverage manufacturers worldwide, while Vanlab Corp. is a flavoring manufacturer with specific expertise in vanilla. In the United States, Synergy’s strengths have historically been in confection, beverages (particularly dry powdered beverage flavors, and now alcoholic flavors) and bakery. P&Fnow spoke with Roderick Sowders, Synergy Flavors' president and CEO, concerning the strategy behind the acquisition and the company’s and industry’s future.

P&Fnow: What is the main reason behind the acquisition of Vanlab Corp.?

Sowders: One main reason is Vanlab’s extensive range of vanilla products, which is backed by nearly 100 years experience in the market. The second reason the company looked so interesting to us is industry diversity. Vanlab has a strong reputation and a lot of expertise in the dairy and bakery segments, which were, in the United States, segments Synergy was focused on growing. In addition, acquiring Vanlab allowed us to compete within new markets, thereby expanding our capabilities and reach into those markets.

Since Carbery first started acquiring companies, and certainly as the group moves forward, we focus a lot on our customer service quality. Vanlab has a tremendous reputation for customer service that fits very nicely with Synergy and the whole Carbery Group.

P&Fnow: Are there any technologies that Vanlab brought to the table that Synergy didn’t have?

Sowders: From an overview standpoint, Vanlab has invested significantly in its business, particularly over the last three to five years. We now have access to Vanlab’s state-of-the-art vanilla production capabilities and although we did have vanilla capability in the United Kingdom, it was not to the degree that Vanlab had. In addition, Vanlab has some proprietary processes it has developed in the last few years that are terrific for us.

P&Fnow: Are there any more acquisitions planned for Synergy in the near future?

Sowders: We certainly intend to continue to grow through acquisition as well focus on organic growth. We are making substantial investments here in Wauconda, including expansion into the facility next to us, to accommodate some of the growth. We continue to have dialog with companies that have an interest in selling and a further acquisition this year is possible; however, our near-term focus is on merging Vanlab’s business with ours.

P&Fnow: There has been a lot of consolidation within the flavor industry—what do you think the future of the industry looks like?

Sowders: I think the industry in the near future will look a lot like the last five to 10 years. There’s no doubt that there’s going to be further consolidation, much of which is driven by our customers' consolidation. This, in turn, creates a need for suppliers to control costs and grow in product range and geographic scope. 

I think the other thing that’s important, even without the pressure from our customers and from their customers in turn, is that there many smaller flavor companies without any real plans for family or management succession. These companies are going to continue to seek exit strategies to try to capture the wealth they’ve built and find a company like Synergy who will be able to continue to be a steward for their business. There are a lot of those companies out there.

P&Fnow: Where do you see Synergy in five to 10 years?

Sowders: We don’t really have a desire to be a top five flavor company. With that said, we do have strong aspirations to grow our share in our current key market segments and maybe some selected new ones. With acquisitions and organic growth we have fortunately doubled in size every two to three years since Carbery first acquired the UK division of Synergy Flavors. This trend will continue if we are successful and continue to execute the strategy we are working on.

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