Archer Daniels Midland buys Wild Flavours for $3B
Wild Flavors' estimated revenue for this year is about $1.36 billion.
DECATUR, Ill. — Archer Daniels Midland already makes sweeteners, fibers, emulsifiers and an array of other ingredients used in packaged foods and drinks. Now it’s getting in the business of natural flavours.
The agribusiness giant, based in Decatur, Illinois, will acquire the privately held Swiss company Wild Flavours in an all-cash deal that will total $3.13 billion counting debt.
Founded in 1931, Wild Flavors makes natural flavours and “flavour systems” that help give products their distinct tastes.
Natural and artificial flavours are listed as ingredients in a wide variety of packaged foods and drinks around the world. Such flavours help make Coke taste like Coke and Cheetos taste like Cheetos. But companies typically don’t disclose what exactly goes into making those flavours, which are considered trade secrets.
“Many times, they sign a two-way confidentiality agreement,” said Mark Matlock, senior vice-president of food research at Archer Daniels Midland.
According to the US Food and Drug Administration, the term “natural flavour” can be used for oils and other extracts from spices, fruits, vegetables, herbs, meats and other foods.
Kantha Smelke, an independent food scientist who has worked with companies including the maker of 5-Hour energy drinks, said added flavours are intended to lead consumers to recognize certain tastes in foods, even if those tastes were achieved using flavours extracted from different ingredients.
For example, she said an orange juice might use natural flavours that were derived from a tangerine, peach or even spinach to give it a “fresh squeezed” taste.
Although the flavour industry generally doesn’t get much attention, it generates billions of dollars in sales a year. International Flavours & Fragrances, one of the biggest players in the market, for instance, pulled in nearly $3 billion in sales last year. Other major players include Givaudan, Firmenich and Symrise.
Wild Flavors’ estimated revenue for this year is about $1.36 billion. About 60% of its business comes from Europe, ADM said, and 27% comes from North America.
Archer Daniels Midland Co. said its acquisition of Wild Flavours will let it enter one of the “largest and fastest growing consumer trends in both developed and emerging markets.” The company said demand for natural flavours has been growing at a faster rate than demand for artificial flavours.
© 2014 The Canadian Press