Firmenich Grows 9.4% Year-on-Year in China in FY2022
- Chaileedo Press
- Aug 8, 2022
- 3 min read
Updated: Aug 25, 2022
Abstract: Leading global flavors and fragrances company Firmenich reported revenues of $4.9 billion for the fiscal year 2022, with China up 9.4% year on year.
Firmenich, a leading global flavors and fragrances company, announced its results for the year ended June 30, 2022. revenues for fiscal 2022 amounted to $4.9 billion, an increase of 11.1% year-on-year.
Despite higher global prices for raw materials, logistics and energy, the Group reported record revenues and adjusted EBITDA, which increased by 10.9% to $942 million, according to Firmenich.
Commenting on this, Patrick Firmenich, Chairman of Firmenich, said that Firmenich's strong performance in FY2022 was the result of the Group's long-term commitment to strengthening customer service and innovation. It reflected its product strengths in the aroma and flavor segments.
CHAILEEDO found from the earnings report that the fragrance and flavors ingredients business revenue grew by 11.3%, mainly thanks to the industry-leading growth rate and market share growth of the Fine Fragrances business, with a 32.5% increase in performance. Its strong growth even partially offset cost inflation due to rising costs of raw materials, logistics and other expenses. In addition, strong customer demand for fragrance ingredient products also contributed to the segment's better performance with a growth of 18%. The Consumer Fragrance business, however, achieved only low single-digit growth against a backdrop of overall industry weakness.
Geographically, strong growth was also achieved across all regions. In particular, China is the second largest market in the world for Firmenich, with revenues of $317 million, up 9.4% year-on-year. During the 2021 fiscal year, Firmenich is also deepening its ties with Chinese companies.
In January 2022, Firmenich entered into a strategic partnership with HARMAY, a leading new retail brand in China. The partnership with HARMAY aims to further develop the premium fragrance category in China, leveraging their respective capabilities to support new fragrance brands, concepts, experiences, and new business models, according to Firmenich. In May of the same year, Firmenich announced a strategic partnership agreement with Scent Realm, a pioneer in digital scent technology. Paul Andersson, President of Firmenich China, said the partnership will strengthen Firmenich's leadership in digital innovation in the fragrance and flavor industry and develop engaging new experiences for consumers in China.
From 2013 to 2019, the top 10 global flavor and fragrance companies accounted for about 75% of total global sales, showing a very high market concentration, especially the four giants of Givaudan, Firmenich, an International Flavors and Fragrances(IFF) and Symrise. The four giants' combined market share has remained above 50% in recent years. And, according to IAL Consultants, the global flavor and fragrance market size could reach $30 billion in 2020, with a CAGR of 5.1% in 2020. The Asian market accounted for the highest market share of flavors and fragrances and is already a 10 billion market. The overall global demand for flavors and fragrances and the global economic development trend are highly consistent, that is, the growth of the center of gravity to Asia and Africa and other developing countries to focus on the region.
It is worth noting that on May 31, DSM and Firmenich, two global raw material giants, announced an agreement to merge their businesses and jointly establish a new company DSM -Firmenich, which is expected to be completed in the first half of 2023. After the merger of the two companies, the world's number one flavor giant may change. The combination of DSM and Firmenich's businesses creates four business segments: Fragrance & Beauty, Food & Beverage, Health & Nutrition & Care, and Animal Nutrition & Health. By 2026, the combination is expected to achieve EBITDA of approximately $356.3 million per year. Patrick Firmenich, Chairman of Firmenich, said:“Our shared purpose and common values, combined with our highly complementary capabilities gives me confidence we can accelerate our growth further through innovation and new creations.”
China is the second largest market for Firmenich worldwide. In the context of the rapid growth of the fragrance industry in China, technology-leading and fast-growing fragrance companies like Firmenich may grow stronger through mergers and acquisitions to optimize the allocation of resources and improve the overall market competitiveness of the industry. DSM-Firmenich will be a global company where anyone who has a desire to make a positive impact in the world should aspire to work," said Firmenich. The merger will bring together two purpose-led, growing companies with shared values and an engaging culture that puts people first.
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