Frutarom Ltd., one of the world’s top 10 flavor and fine ingredient companies, is opening FoodNxt, a fully-equipped innovation lab for food-tech startups that will focus on developing all-natural ingredients for the global food and beverage industry.
Working in partnership with the Israel Innovation Authority, the lab will be located in the north of Israel and be led by Gali Artzi, Ph.D., Frutarom’s innovation director. Startups in food, nutraceutical, and functional ingredients are invited to participate in the collaboration, and will be granted up to 85 percent of their approved R&D expenses for the purpose of reaching a proof of concept. Additionally, select participating startups will receive guidance in formulating their products to meet regulations, creating business plans, developing and testing concepts, and making connections in the food and health ingredients markets.
“The innovation labs program launched recently by the Israel Innovation Authority enables seasoned and experienced corporations such as Frutarom to provide startups with the required platform to grow and establish their businesses with the right global market focus,” said Anya Eldan, VP Start-Up division at the Israel Innovation Authority. “Moreover, such a program enables the promotion of innovative ideas and technologies as part of a growing food related ecosystem in Israel.”
A Flavorful History and Uncertain Future?
Established in 1933, Israel-based Frutarom operates under two main divisions – Flavors and Fine Ingredients, and creates, produces, and markets their products at more than a dozen locations worldwide. The company is committed to a sustainability strategy, supporting farmers in multiple locations, and controlling its supply chain throughout to maintain full transparency and ensure product safety.
Capitalizing on the growth of the global market for flavorings and specialty ingredients market – more than 80 food-tech startups are based in Israel, with rapid double-digit growth rate expected by 2020 – Frutarom began expanding its presence in the space in 2006 with the acquisition of the savory flavors business of Nesse Group. Since that time, Frutarom has grown to become a leader in the flavors industry through a string of multiple strategic acquisitions between 2006 and today.
Other notable flavor and ingredient acquisitions by the company include Polish savory flavor developer, producer, and marketer AMCO for $20.7 million in November 2015; the acquisition of New Zealand-based fruit ingredients company, Taura Natural Ingredients Holdings Ltd. for $70 million in June 2015; the acquisition of a 50 percent stake in algae-based biotech startup Algalo for $2.56 million in January 2016; the acquisition of New Jersey-based natural ingredient producer, Grow Co. for $20 million in January 2016; and in 2017 it closed on 12 strategic acquisitions, including its US$6.7 million acquisition of South Africa-based Unique Flavors Ltd. in February 2017.
Frutarom sales were up 18.8 percent in 2017 to a record US$1.36 billion, with sales from their flavor operations up 21.1 percent, and from their ingredients division up 14.2 percent. In April 2018, the company was said to be a target for acquisition by the U.S. firm International Flavors & Fragrances (IFF) and another unnamed company. Frutarom said it had not reached any agreements about a possible deal, which is said would be valued at between US$6 and $6.5 billion.
~ By Michelle Pelletier Marshall, managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and an occasional contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.