Swiss fragrance and flavor company Firmenich is set to acquire a majority stake in VKL Seasoning Pvt. Ltd, an India-based specialist in seasonings and flavors, from True North, an Indian private equity company. With this venture, Firmenich is hoping to broaden its capabilities and customer reach in the subcontinent, a noted growth market for the group, while expanding its raw material palette for clean label ingredients.
Founded in Kerala, India, the “spice capital of the world”, in 1996, VKL Seasoning is a prominent brand for many Indian consumers. VKL is the flagship company of Kanji Morarji Group and an established specialist in integrated ingredient solutions, having previously helped craft industry-winning food products for top FMCG, QSR and snack brands in India.
VKL Seasoning will be retaining its brand identity and will continue to operate as a stand-alone business within the Firmenich Group. Financial and regulatory terms of the deal have not been disclosed by either parties.
“India is a critical market for Firmenich and we are committed to investing in our business here both for short and long-term growth,” says Patrick Firmenich, Chairman of the Board, Firmenich. “VKL and Firmenich are extremely complementary to one another and together will offer one of the broadest and most innovative portfolios available to food and beverage companies in India.”
Firmenich’s outspoken commitment to the clean label movement is aligned with growth in NDP across the industry, which sees artificial ingredients and synthetic chemicals increasingly sidelined. Innova Market Insights reports 13 percent CAGR in food and beverage launches with a clean label claim (Global, 2013-2017). Products with this type of positioning accounted for 29 percent of global new food & beverage launches in 2017 and the clean label trend remains a running theme throughout 2019.
“In a world of increasingly label-conscious consumers, VKL’s unique blends of spices, extracts and other natural ingredients will enrich our portfolio of authentic taste profiles to delight Indian consumers,” says Gilbert Ghostine, CEO of Firmenich. “We are excited to partner with VKL, a leader in the savory and food service space, who bring a demonstrated track record of innovation with both local and international players.”
Over the last two years, the expanding group has already completed eight major acquisitions, including Flavourome in Africa, Campus in Italy and Natural Flavors in the US. The company reports its average growth per year at 7 percent since 1989 and FY18 growth up by 9.6 percent. Annual Group turnover is listed as CHF 3.7 billion (US$3.6 billion), with 10 percent investment in R&D initiatives.
Commenting on the most recent deal, Haresh Chawla, Partner at True North, says, “VKL Seasonings and True North share the same values, focused on professional management practices, high-quality talent and innovative creative systems. VKL’s impressive customer base coupled with in-depth knowledge of the local palate, has led to significant growth in the industry. We are confident that the company will reach new heights with Firmenich.”
True North prides itself with having built “deep knowledge and skills” in the Indian markets and has launched six separate investment funds with a combined corpus of over US$2.8 billion including co-investments. Over the last 19 years, the company has invested in more than 40 Indian businesses.
“This joint venture underpins Firmenich’s ongoing commitment to India, one of our fastest growing markets,” says Satish Rao, Chairman & Managing Director, Firmenich India. “VKL expands our presence in India, while advancing our vision to be the taste and nutrition innovation partner of choice.”
