Frutarom Industries Ltd., a flavoring and specialty natural ingredients company from Israel, is considered as one of the world’s largest companies of its kind. It is well known for its significant production across 150 countries worldwide and offers more than 70,000 products to over 30,000 people. Most of these products fall into the categories of health food, functional food, additives, pharmaceutical, and cosmetics.
Last week, it had made news by announcing its first acquisition of 2018. Frutarom, a company that has grown through a string of acquisitions, purchased 100 percent of the shares of Israeli Biotech Research (IBR) for about $21 million. This deal, financed through bank debt, is the company’s 29th acquisition in the past five years. Many of these acquisitions fall under the health foods industry since there has been a growing desire of customers for natural and healthier food products.
The Israeli Biotech Research
Founded in 1995, IBR is known for producing innovative natural active ingredients for dietary and cosmetics use, specifically for cellular and skin anti-aging, skin whitening and prevention of pigmentation, as well as skin protection from pollution and UV rays. IBR is very famous for its products that have already won several international awards for scientific innovation in the cosmetics industry.
IBR has laboratories for research and development and a production facility in Yavne, Israel. It also employs more than 30 people who have significant experience in various industries and have advanced academic degrees. IBR has wide customer bases in the United States, Asia, and Europe which include some of the leading cosmetics companies in the world. For the past four years, IBR has shown an average annual growth rate of 20%. In 2017, IBR has exhibited a growth rate of 40% and has acquired a sales turnover amounting to an estimate of $7.4 million.
Frutarom’s future in the market
With its purchase of IBR, Frutarom expects a continued implementation of its strategy to make itself the world’s leading supplier of unique natural products. IBR will join the company’s activities such as research on algal growth and on the extraction of natural ingredients for cosmetic and personal care products.
In 2015, the world’s natural active ingredient market was valued at $2.63 billion. Analysts at Frutarom estimate that its value will reach more than $4.45 in 2026. Ori Yehudai, Chief Executive of Frutarom, says that the company still has plans to acquire more in the future as this will help it reach the $2 billion annual sales target by 2020 (In the third quarter of last year, Frutarom has a reported record sales of about $234.5 million).
Many believe that Frutarom will be successful as there is a rapid increase in the rise in the standard of living and lifestyle, as well as changes in the consumption and personal hygiene habits of people. And as alluded to earlier, the demand for natural and environment-friendly products is increasing.