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July 14, 2003
Volume 81, Number 28
CENEAR 81 28 p. 61
ISSN 0009-2347


A COMPANY IS BORN
Symrise emerges confidently from the merger of Dragoco and Haarmann & Reimer

A. MAUREEN ROUHI, C&EN WASHINGTON

Integration of the flavor and fragrance companies Dragoco and Haarmann & Reimer (H&R) was completed last month, less than a year after the merger was announced. The new company, Symrise, is based in Holzminden, Germany. With sales of $1.3 billion in 2003, Symrise takes the fourth spot in the industry sector's top 10, behind Givaudan, International Flavors & Fragrances, and Firmenich. Previously, H&R and Dragoco were ranked sixth and eighth, respectively. Symrise's ascent moves Quest International and Takasago to fifth and sixth places, respectively.

IN CHARGE Gerberding is determined to expand Symrise's market share.
SYMRISE PHOTO
Dragoco and H&R make complementary contributions to the four divisions of Symrise: fragrances, flavors, cosmetic ingredients, and aroma chemicals. Horst-Otto Gerberding, Symrise's chief executive officer, says both H&R and Dragoco were strong in the personal care sector, including fine fragrances. "Dragoco made substantial investments in the area of fine fragrances, and those are now paying off with a good number of wins."

In the flavor side, the merger puts Symrise among the top three in the savory, beverage, and sweet sectors. In cosmetic ingredients, Symrise combines the strength of Dragoco in plant extracts and of H&R in sun filters. In aroma chemicals, the product ranges are highly complementary: H&R was known for a broad range of commodities and menthol; Dragoco was known for specialties.

Integration proceeded quickly and smoothly: The merger was announced in July 2002; regulatory approval came in September; management assignments were disclosed in October; and the global organization, in December. In February 2003, the new name was in place. By June, Symrise had been registered.

"If you do a merger, you have to do it quickly," Gerberding says. "It's painful for everybody, and it's very important to be back in the market immediately." Nevertheless, 950 employees of the current workforce of 5,800 will lose their jobs. Cuts will affect mainly those in sales and marketing and those at facilities that will be shut down.

Customers welcomed the merger; they are now dealing with the fourth in the top 10, Gerberding says. And from the customers' vantage point, the integration was transparent, he adds. During the process, customers were surveyed twice for feedback on service and quality. "Our customers were very much part of the process," he says.

With integration behind it, Symrise's immediate goal is to be back in the market "very aggressively," Gerberding says. Inclusion in core lists is an immediate issue.

A core list is a customer's list of suppliers who will be briefed about customer requirements. Being on that list is essential. "If you're not on that list, you don't get briefed, and you don't have a chance to participate," Gerberding says. "The challenge is to be on that list; if you're on, to stay on; if you're not on, to get on. And to get on, you have to walk in, present your technology, and bring a point of difference that other suppliers can't bring." Symrise's inclusion in core lists is high on the flavor side and increasing on the fragrance side, he adds.

With Symrise now in fourth place, being first is not a top priority, Gerberding says. "It will be very difficult for Symrise to be first without a big acquisition. Our goal now is to grow faster than the market and to have a good profit margin."

Stealing market share through better products and services is how Symrise will achieve better than market growth, Gerberding says. Obvious targets are the emerging markets of South America, Eastern Europe, and the Asia-Pacific region, he says. Increasing its share of the business from companies with strong brand names is another strategy.

"Our tag line is, 'Creating brands, supporting brands,' " Gerberding says. "Brands are the currency of the market, and strong brands make our customers grow. We will focus on the big brands of the customer and help the customer make those brands grow with concepts, products, and support. That's a new approach."

ON THE R&D SIDE, integration also has been smooth, according to Heinz-Jürgen Bertram, corporate vice president for R&D. "We have been operating as one unit since the beginning of 2003," Bertram says. "The two companies were very complementary in their R&D capabilities: Dragoco was strong in natural extracts, and H&R was strong in synthesis. Dragoco was strong in applications, and H&R was strong in technology. H&R was known as a technically very strong company; Dragoco was known to be very customer oriented. The merger brings the best of both worlds."

The research activities of the original companies are intact, Bertram says. "We did not lose key people, and the levels of innovation and patent activity were maintained even during the merger." He adds that Symrise's owner, Swedish financial investor EQT Northern Europe Private Equity Funds, is committed to R&D, making it "crystal clear" that R&D will be a major strength of the new company.

Symrise will be investing 8% of annual sales in R&D. Research is targeted to solving problems arising from customer inquiries and is focused on translating efforts and expenditures to commercial results as much as possible. The knowledge gained from basic research--analysis, synthesis, and technology--will be used across Symrise's four divisions and will be leveraged for synergies, Bertram says.

Moving forward, R&D will concentrate on developing new ingredients, using catalysis in synthesis, and expanding encapsulation technologies, Bertram says. Research on product applications and work with customers on particular products will be expanding as well, he adds.

H&R dates back to 1874; Dragoco, to 1919. Symrise forges ahead steeped in the tradition of its predecessors but invigorated by possibilities of new beginnings. "We want to be the new rising star in the flavor and fragrance industry," Gerberding says. For the moment, they are.

Colo
COVER STORY
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Process design and improvement tools help chemists and engineers quickly deliver cleaner, safer, and more cost-effective methods

BARE BONES
Simplifying Syntheses Is Always A Key Goal

IN TRANSITION
Innovations Bridge Batch And Continuous Processing

INDULGING THE CHEMICAL SENSES
Broadening, enhancing sensory experiences drive R&D in the flavor and fragrance industry

FLAVOR AND FRAGRANCE INDUSTRY AT-A-GLANCE

BEDROCK
Fine Chemicals Firms Enable Flavor And Fragrance Industry

Q&A
Flavor And Fragrance Industry Faces Wide-Ranging Challenges

A COMPANY IS BORN
Symrise emerges confidently from the merger of Dragoco and Haarmann & Reimer



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Copyright © 2003 American Chemical Society



 
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COVER STORY
FINE CHEMICALS
Process design and improvement tools help chemists and engineers quickly deliver cleaner, safer, and more cost-effective methods

BARE BONES
Simplifying Syntheses Is Always A Key Goal

IN TRANSITION
Innovations Bridge Batch And Continuous Processing

INDULGING THE CHEMICAL SENSES
Broadening, enhancing sensory experiences drive R&D in the flavor and fragrance industry

FLAVOR AND FRAGRANCE INDUSTRY AT-A-GLANCE

BEDROCK
Fine Chemicals Firms Enable Flavor And Fragrance Industry

Q&A
Flavor And Fragrance Industry Faces Wide-Ranging Challenges

A COMPANY IS BORN
Symrise emerges confidently from the merger of Dragoco and Haarmann & Reimer

Related Stories
Chiral Chemistry
[C&EN, May 5, 2003]

Custom Chemicals
[C&EN, Feb. 7, 2003]

Fine Chemicals
[C&EN, July 22, 2002]

Reshaping Flavors And Fragances
[C&EN, May 6, 2002]

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