NEW YORK — Richard A. Goldstein stepped down as chairman and chief executive officer of International Flavors & Fragrances at the firm’s annual shareholders meeting Tuesday, and the company elected Arthur C. Martinez, lead director of IFF’s board, as interim chairman and ceo.
Martinez, former chairman and ceo of Sears, Roebuck & Co., also serves on the boards of Liz Claiborne Inc., IAC/InterActive Corp. and PepsiCo Inc.
IFF is working with the executive search firm Spencer Stuart to find a permanent successor, a process that is “progressing well,” IFF said in a statement.
“When I joined IFF in 2000, we embarked on a mission to reinvent our company,” Goldstein said during the shareholders meeting. “Today we can take great pride in our many accomplishments over the last several years and how we have reinforced our industry position [as] the dominant player in [the fine fragrance] category.”
During a six-year tenure, Goldstein helped establish an environment of free-flowing ideas and risk-taking, said his top executives, especially in integrating the two sides of the business and launching new products. Some of his biggest customers said Goldstein’s ability to listen reignited IFF’s focus on service and strengthened relationships with its global customer base.
His successor will face challenges that include a shrinking competitive market, changes in the American flavor palette and the continued fragmentation of the fine fragrance market. But that individual will do so armed with unified flavors and fragrances teams, a strengthened marketing platform and strong customer relationships.
For the first quarter of 2006, IFF’s earnings per share were up 5.5 percent to 58 cents compared with 55 cents in the prior year, on sales that dipped 2 percent to $511.4 million.
Goldstein, 64, said his future doesn’t include taking another ceo position. However, he is looking for additional boards to sit on and is in discussions with private equity firms to “see whether or not my skill set lends itself to assisting them,” he said. “I’m trying to sit back and listen, and make my judgments on the basis of having had multiple conversations with several people. I think one risk we take is agreeing to something too quickly, without really knowing what opportunities exist.
“There are other things I still want to do, and can do,” he continued. “We reached a stage within the company where fresh thinking and new leadership would be beneficial. The board and I concluded this was a good time for IFF for a change.”
Much of IFF’s new direction will come from how Goldstein’s successor puts to use a consolidated marketing platform he put in place. Goldstein said the acquisition of flavors powerhouse Bush Boake Allen in 2000 was a major stride for the company, and he cited integrating the flavors and fragrance businesses as one of his biggest accomplishments. The BBA acquisition brought strength to IFF’s flavors business, especially in markets such as India, Australia and New Zealand, and most important “it was a change agent,” Goldstein said. “It was an enabler to unify IFF into one company at a time when we desperately needed to make some changes.”
As a catalyst, the BBA acquisition forced IFF to evaluate its customer base and understand that, with the exception of fine fragrance customers, many of the consumer products companies it worked with used both flavor and fragrance systems. Ultimately, the acquisition of BBA pushed the company to consolidate its consumer knowledge base and build a consumer insight program and joint marketing platform that now serves at IFF’s greatest competitive edge against the other suppliers and global fragrance houses, including Givaudan, Quest and Symrise.
“Dick recognized what was inherently special about IFF and what made it unique in the market,” said Joseph Faranda, chief marketing officer of IFF, whom Goldstein hired last year to integrate marketing and consumer insights across flavors and fragrances. “Rather than trying to change it, he built upon it and invested in those core competencies.”
“Early on, Dick was able to identify the future potential growth and opportunities of both the flavors and fragrance side and allocate the resources to get there,” said Nicolas Mirzayantz, senior vice president of fine fragrances and beauty care. “He ensured the sustainable growth of IFF and understood how the nature of our partnerships with our customers was changing.”
Goldstein cemented the company’s relationships with its customers by creating personal friendships and focusing on the most basic of tasks: customer service.
“After he was named ceo I got a phone call to have breakfast with him,” said Karen Khoury, senior vice president, corporate fragrance worldwide at the Estée Lauder Cos. “Within the first couple of months he made a point to have breakfast, lunch or dinner with each of his customers, one-on-one, and asked us to tell him what IFF did right, and what they could do better. And he genuinely listened. Dick was incredibly responsive to issues and concerns, and built strong working relationships with all of his customers. He reignited the focus on customers at IFF.”