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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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And the Firmenich chief apparently is a believer in patience. "We take a long-term view to try and minimize the degree of competition internally," Vittoria added. "We're not just going for a quick fix and giving something half finished. It takes time to build a great product."

Firmenich stated in its annual report that it is the volume leader in fragrance­ — when all categories are added together — with total perfumery sales for the year ended June 30, 2006, up by 8.7 percent in local currencies and 13.5 percent overall in Swiss francs to 2.31 billion Swiss francs, or $1.85 billion at current exchange rates. Of that, $1.2 billion was generated by fragrance sales. Firmenich generates 65 percent of its revenue from fragrances and 35 percent from flavors.

Moreover, the path to dominance is slipperier than ever. International Flavors and Fragrances has won an impressive share of fragrance briefs during the past 18 months and grabbed the headlines to match, while chalking up 2005 fragrance sales of $1.14 billion. According to a ranking earlier this year that appeared in WWD Beauty Report International, Symrise was fourth with 609 million euros, or $758 million, in sales volume, according to industry sources. Quest came in fifth with sales of 301 million pounds, or $548 million. Givaudan was listed as third in that survey with 1.13 billion Swiss francs, or $910 million.

But on Nov. 22, Givaudan shook the industry by announcing a $2.3 billion acquisition of Quest International. The combined fragrance sales would weigh in at an estimated 1.76 billion Swiss francs, or $1.43 billion. In a single stroke, Givaudan-Quest became the new number one.

All the talk about being number one was irrelevant to at least one competitor, who scoffed that the volume means nothing compared with being seen as the leader in creativity and innovation.

During an interview conducted before the Givaudan acquisition, Vittoria agreed, "Being number one is not our strategic objective. It's very nice to be number one," he added, "but somebody else will buy another house and they'll be number one. We want to be the most preferred fragrance house for our customers. Healthy competition is always good for the industry and makes you work harder. It's the global reality of the business."

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