SUPPLIERS SHARPEN FOCUS
Byline: Pete Born
NEW YORK — The approach of the millennium has hardened the resolve of the market leaders in the hotly contested fragrance supply business as the major houses look to strengthen their hand.
Looking into the next century, the major suppliers, jockeying for advantage in an overheated jam-packed field, intend to become more discriminating in deciding what fragrance projects to pursue. Moreover, they are exerting massive research and development muscle to explore new avenues of perfumery.
An example is International Flavors & Fragrances Inc., the perennial leader among fragrance suppliers, which is spending $100 million on R&D this year.
Eugene Grisanti, IFF chairman, chief executive officer and president, envisions doubling its 1996 sales of $1.4 billion within six years.
“We can increase our market share if we can identify the profiles that will be the major ones and concentrating our creative forces.”
Another avenue that IFF is exploring is the marketing of fragrances that provide benefits, such as feel-good scents. “There are mood fragrances with the potential of a big market that is only beginning to be tapped,” Grisanti said.
There are not only fragrances that make you feel good, but also those that can be used in connection with workouts at the gym, such as scents used during a massage. “The world is becoming more physically minded,” Grisanti said.
With the explosion of market testing in recent years, Grisanti is realistic in knowing that, no matter how well constructed a formula or how distinctive a submission, “it’s not going to get picked if it doesn’t win the market test.”
One way of taking the guess work out of the process is to have more accurate market information. Grisanti said IFF has been compiling a database detailing high-scoring attributes for ingredients. If a marketer wants a fragrance to be worn at basketball games, for instance, the database can indicate the best ingredients to use.
IFF started building database two years ago, Grisanti said, noting that it will probably take another year or two to complete.
Picking winners, not only among submissions but clients, has been a concern at Givaudan Roure Corp. “Over the last five years, we’ve fired well over 300 clients,” said Geoffrey Webster, president of the North American division.
By honing his client down to 80, Webster was able to pick up a 25 percent increase in production capacity. Givaudan still calls on companies that are so small they do less than $500,000 a year in sales, but they appear to have potential, Webster noted. The deleted 320 clients accounted for less than 3 percent of Givaudan’s revenue, he added.
With the recent acquisition of a Cincinnati flavor supplier, Givaudan contends that it’s total worldwide volume in flavor’s and fragrances has edged ahead of IFF.
In terms of global development, the company has been pushing growth in Asia-Pacific. The company’s largest region now is Europe, followed by the U.S., Asia and Latin America. At the current rate of growth, Webster said, “Asia-Pacific should approach the U.S.”
The company also is focusing on Latin America, where it is building a creative center in Sao Paulo, Brazil. It is due to be in operation within 18 months.
The company does not make projections, but sources indicate that Givaudan envisions doubling its business in all four regions within 10 years.
Another house that has been hot for the last three years, consistently racking up high-profile wins from Calvin Klein’s ground-breaking CK One to Estee Lauder’s Pleasures, is the family-owned Firmenich. Although IFF and Givaudan see themselves as the industry’s volume kings, Firmenich views itself as the pacesetter, at least in fine fragrance competition.
Speaking of his outlook, Patrick Firmenich, vice president of fine fragrance development worldwide, said his goal is to preserve his company’s edge.”I want to hold onto it and reinforce my lead by the turn of the century.”
“We have to invest more carefully in the best resources to provide the best level of service to our customers,” Firmenich said, noting that careful recruitment and constant training will be features of his strategy. He sees increased efficiency as the key in a market that will be characterized over the next few years by a shrinking number of new fragrance projects.”
Firmenich will continue advocating teamwork in perfumery in going after profiles. “We have a terrific team of people,” he said. “We want to nurture them so they grow.”
Firmenich said this involves providing “more experience, more responsibility, more autonomy and more accountability.”
“I want to make every individual a strategist, a creative mind,” he said.
Takasago International Corp. (USA) a been quietly building a U.S. base with a functional fragrance business while its European counterpart focused more on the alcoholic market. Now the American company has turned its attention to the more glamorous end of the market. Six months ago, Anthony Griffiths, Takasago president, recruited Vincent Kuczinski as head of fine fragrance and the nucleus of a new creative group.
Moreover, the Japanese-based Takasago has been devoting research effort to what he also sees as perfumery’s new frontier — aromacology. There are possibilities, such as anti-acne or anti-bacteria products or mood-altering scents. “A lot of this used to be folklore,” Griffiths said. “What we are trying to do is pinpoint it and get to the science.”
Dragoco, whose German parent is based in Holzminden, has been pursuing a well-defined strategy in the U.S., having won the contracts for Coty’s Nokomis, Alfred Sung’s Forever, Jones New York and Revlon’s latest, Fire & Ice Cool. “The corporate mission statement is to be the most valued partner to the client, not necessarily the biggest,” said Victoria Alin, vice president of fragrance creative projects. “We like to be very focused in terms of clients, clients like the Benckisers and the Cotys. We have very specific objectives.”
Another supply house that has taken aim with a rifle, rather than a shotgun, is Fragrance Resources, which beefed up its compounding business with one large burst five years ago when Dick Carraher and other top Givaudan executives joined the ingredient supply company following the fallout from the merger of Givaudan into Roure. Since then, the company established itself as a perfumery player with its collaboration with Coty on the directional Vanilla Fields, then won Christian Dior’s Dolce Vita.
Since then, the firm has hired David Apel, formerly of Givaudan Roure. He will relocate from Paris to New York to work with Karen Elliot, president of fine fragrance, as vice president of fine fragrance. The Clifton, N.J., company plans to open a Manhattan office. This company has pursued a strategy of calling on a limited number of clients, but making a maximum effort to win the profiles. Steve Coffey, president of the fragrance division, pointed out that Fragrance Resources waded into the fray with only two salespeople but eight perfumers.
Mane USA also has been gearing up for the coming of the millennium with an expansion of facilities in Paris, New York and Wayne, N.J., as well as a new plant in Mexico.
As the supplier of Calvin Klein’s Escape and Ralph Lauren’s Polo Sport Woman, Mane has focused mostly on alcoholic fragrances. Richard J. Panzarasa, senior vice president and general manager of the fragrance division of Mane USA, said the company wants to play on a larger field. “We would like to broaden our base,” he said, “by expanding our position in toiletries and select household products.”
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