Firmenich Drafts a Battle Plan

Firmenich is reviving its winning formula of team building among its perfumers to position itself among the top global fragrance suppliers.

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Patrick Firmenich.

Photo By Pasha Antonov

Faced by bearish competition from a dramatically consolidating industry, Firmenich is reenergizing its winning formula from the mid-Nineties by reemphasizing team building among its perfumers as a way of maintaining its position among the top tier of global fragrance suppliers. The company is also banking on making strides in emerging markets and stepping up investments in research, and is contemplating acquisitions.

"By 2015, it's estimated that the middle classes of China, India, Russia and Brazil will be larger than the middle classes of the U.S., Europe and Japan," said Patrick Firmenich, chief executive officer of the Geneva-based fragrance and flavor supplier. "These countries are going to offer a tremendous opportunity for growth."

So the firm has invested heavily in China, where it has a fully owned subsidiary and, during the past three years, opened a center for fragrance creation and consumer and market understanding. The company also opened a manufacturing facility there.

In Latin America, where Firmenich claims to be the market leader, plans include expanding its presence in Brazil.

"There are emerging companies in those countries, and people are more interested in growing local brands to become international," said Michel Bongi, corporate vice president of Firmenich's fragrance division, who pointed out the success of Latin American beauty players, such as Brazil's Natura.

However, the company is not putting all its eggs in one geographic basket. Bongi noted the bulk of Firmenich's net sales are still generated in the developed world, and a strong focus is on expanding business there. Firmenich will unveil a new fine fragrance development center in Paris in 2007, for instance, and is "taking advantage of new distribution channels and developing strong partnerships with brands in specialty retail distribution" in the U.S., where it's clocking good gains.

"We are growing at double-digits in local currency. Of course, the dollar being stronger helps," said Firmenich. "There is potential for growth in the U.S." He added that fragrance consumption there is lower than in Europe, which generates most of the firm's business.

"We keep reinventing and reevaluating ourselves," said Jerry Vittoria, who was named president of Fragrances North America earlier this year. "As part of this reinvention, we've put creativity at the center of all that we do. We're coming from a good record of growth in the personal and home care divisions, which we're most known for and have had the fastest organic growth over the past 10 to 15 years." He later added, "It's not just about winning, but winning the right projects that have longevity."

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