IFF FORMS ALLIANCE WITH AEROME

Byline: Pete Born

NEW YORK — International Flavors and Fragrances Inc. has punctuated a year of reorganization, acquisition and bottom-line-wrenching consolidation by disclosing a deal to develop new fragrance delivery systems with Aerome AG Scent Communication Group of Dusseldorf, Germany.
IFF announced that it had formed a partnership with Aerome — which had made its mark by developing technology for fragrance kiosks — on Tuesday, following a year of anticipation that the fragrance supply giant would make an acquisition to improve its technological competitiveness. According to IFF, the company invested capital and research and development capability into the partnership. The terms were not disclosed.
“IFF recognizes that to continue to grow, we must identify and invest in technologies that will open new markets for our flavors and fragrances,” said Richard A. Goldstein, who took the reins last year as chairman and chief executive officer, succeeding Eugene Grisanti. “This alliance evidences IFF’s commitment to that strategy. We believe the opportunities in the fields of scent delivery and scent communication are just beginning to be recognized.”
Steven Semoff, IFF technical director, said the aim is to develop new cutting-edge technologies to serve existing markets and new markets that don’t now exist. “It’s just another example of the new IFF building a product portfolio for the future and redefining the fragrance industry.” Semoff, who said he expects to see some short-term results by the end of the year, asserted that the goal is to “find new uses for fragrance to enhance the quality of life.”
Nicolas Mirzayantz, vice president of global fragrance business development for fine fragrances and toiletries, said various avenues are open, such as developing environmental delivery systems to scent rooms or cars or even antimicrobial uses to safeguard health in hospitals.
In announcing the deal, IFF became the latest in a series of fragrance and flavor suppliers to strike technological alliances in hopes of gaining a competitive high ground and finding a door to new fragrance applications and markets, at a time when the business for traditional product forms seems stagnant. In recent months, Quest International and Mane USA have invested in fledgling firms developing digital delivery technologies. Firmenich, perhaps the hottest supply house when it comes to launching new fragrance brands, has become the principal investor in an Internet Web site called OsMoz that will be devoted to developing new fragrance consumers.
During one of a series of interviews during the Cosmetic, Toiletry and Fragrance Association annual meeting in Boca Raton, Fla., recently, Goldstein and Mirzayantz talked about the latest progress in developing what Semoff referred to as “the new IFF.”
During the Florida interview, Goldstein hinted that IFF would make a move like the one forged with Aerome. “The fine fragrance category hasn’t grown at all,” he said, adding that he was considering working in collaboration with another company to search for innovative breakthroughs.
Goldstein’s quest began last year after he joined the company, then he led an acquisition of rival Bush Boake Allen and unfurled a radical corporate reorganization in October costing an estimated $90 million to $100 million.
He had taken the traditional structure, in which the flavor and fragrance sides of the business formed to separate freestanding columns, and fused them into single units. Goldstein, a former top Unilever executive, asserted that IFF’s big customers did not want to have to deal with two representatives from different sides of the company.
Carlos Lobbosco, one of IFF’s most accomplished veterans, who was worldwide fragrance division president, was promoted to executive vice president for business development. Meanwhile, Mirzayantz, who had headed the fragrance unit in France and started IFF on a winning roll there in grabbing new business, was charged with leading the IFF fragrance effort globally.
With the talents of 36 perfumers to work with, Mirzayantz was clearly energized by the challenge. He repeatedly said that he felt like he had the best of two worlds — working in a young start-up situation with the research and development resources of the world’s biggest fragrance supplier.
“If I find the talent,” he said in an interview late last year, “I will create a job for them. I want people with passion and a vision of the market. We are not here to fill boxes, which is different from the old way. We are going to be constantly evolving.
“The market is changing and we have to constantly rethink our structure,” he said, adding, “I have no attachment to what was done in the past.”
For Mirzayantz, there are no limits and he wants teamwork. “The ideas can come from anywhere,” he said of his perfumers and sales and marketing staff. “I am here to help them. I am not here to tell them what to do. The guys know where I’ve been.”
Goldstein’s theme from the beginning had been that, through decades of leadership, IFF had become arrogant and taken its customers for granted.
In Florida, Goldstein reiterated: “Every one of the customers who had stopped or decreased their business with us indicated to me that we had become too difficult to do business with. That is a lethal combination. They all recognized that we have the talent.”
Asked how the market has reacted to the new message, he said: “The reaction is positive. They are happy that there is a return to the recognition that the customer is king.”