THE NATURE OF OUR BUSINESS – STABLE GROWTH - Symrise

MARKET SHARE F&F INDUSTRY
(total € 13 –14 billion)
in %
45
Other
Source: Company data and own estimates
These manufacturers are showing growing preference for globally
operative suppliers whose worldwide presence and innovativeness
forms an important basis for their acceptance by the group of core
manufacturers (who place them on so-called core lists). For us,
being on a core list is the prerequisite for consideration as a possible
manufacturer by our customers when new products are put
out to tender. Core listing is thus crucial to increasing our sales.
Customers check the lists every three or four years on average.
One of the most important reasons for inclusion or retention on
a core list is the manufacturer’s innovative capacity. In recent
years, and particularly in 2008, both divisions of Symrise secured
new core listings. This improves our chances of expanding in the
future.
Once a company achieves annual sales revenues of approximately
€ 1 billion, additional size is a less of a success factor. But generating
revenue of more than € 1 billion is important for us, because
as an F&F company we have to possess a global network and infrastructure
to follow our multinational customers and to maintain
business relationships with them in all world regions. Due to different
taste preferences, business is generated in the individual
countries or regions. As the graphic shows, only the world’s four
biggest players exceed this critical revenue level.
Annual Report 2008 Symrise AG 63
10
Symrise
20
Givaudan
12
IFF
13
Firmenich
The F&F market is characterized by high entry barriers worldwide.
On the one hand, these entry barriers are the result of increasing
customer demand for higher quality and more differentiated products
with shorter lifecycles. On the other, they stem from intensive
cooperation on product development between F&F companies
and their customers. Moreover, the business model is very complex.
We develop and manufacture more than 30,000 products
from approximately 10,000 raw materials; and most of our products
are manufactured exclusively for one client. This makes
it more difficult for new competitors to gain a foothold in the
market with copies of existing products. The demanding regulatory
environment also makes market penetration difficult and
expensive.
Customers and Industries
Symrise’s customers include multinational groups of companies as
well as important regional and local manufacturers of food, beverages,
perfumes, cosmetics, body care products, and cleaning and
washing products. We earn the bulk of our revenue with regional
and local customers.
Among the most important customers of the Scent & Care division
are Procter & Gamble, Johnson & Johnson and L’Oreal, as well as
other leading global manufacturers. Scent & Care generated 31% of
its sales with the top 10 customers in 2008.
The most important customers for our Flavor & Nutrition division
are the leading global manufacturers of food and beverage brands.
In 2008, the division generated 26% of its sales with its top 10 customers.
Last year, a global food and beverage manufacturer rated
Flavor & Nutrition the best supplier in terms of know-how, quality
and delivery capacity for the second year in a row.
Group-wide, no single customer accounted for more than 5% of our
total revenue in 2008.
Corporate Strategy and Aims
Our strategy focuses on sustainable and profit-oriented growth.
Our aim is constantly to grow faster than the market. We estimate
that the F&F market is achieving growth of 2% to 3% a year on a
long-term average. Additionally, we are aiming for a leading position
in terms of profitability. Symrise has set itself the goal of accommodating
the changing needs and wishes of consumers better
than its competitors, through innovation and creativity. Particularly
with solutions offering added benefits (“AND” products), we are
striving to be an indispensable partner for our customers.
Group Management
Report