Firmenich International S.A.

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Firmenich International S.A.

Route de La Plaine 45
CH-1283 La Plaine, Geneva
Switzerland
Telephone: (+41) 22-780-22-11
Fax: (+41) 22-754-14-73
Web site: http://www.firmenich.com

Private Company
Incorporated: 1895
Employees: 4,500
Sales: CHF 1.9 billion ($1.28 billion) (2002)
NAIC: 325188 All Other Inorganic Chemical Manufacturing; 311930 Flavoring Syrup and Concentrate Manufacturing; 325620 Toilet Preparation Manufacturing

Family-owned Firmenich International S.A. is the world's largest privately held manufacturer of fragrances and flavorings for the perfume, food, cosmetics, cleaning products, and related industries. In terms of the total market, Firmenich claims third place, behind the American company International Flavors and Fragrances and fellow Swiss company Givaudan (formerly part of Roche). Firmenich develops and supplies more than 45,000 different fragrances, aromas, and speciality chemicals components, including a list of some 800 patented chemicals. Headquartered in Geneva, Switzerland, Firmenich operates sales and manufacturing sites in 50 countries worldwide, including major sites in New York City and New Jersey, as well as locations in Europe, South America, and Asia. India and China also represent two important production sectors. Firmenich's client list includes the world's largest food, beauty, household care, and fabrics companies, although its behind-the-scenes work for the world's leading perfume names remains a major part of the group's activity. Indeed, the company has created a number of the most prominent contemporary perfumes, including CK One and Jean-Paul Gaulthier. In 2003, Firmenich was hired by retailing giant Walgreens to create its C'est Moi perfume. Research and development has played a key role in Firmenich's steady success—an early R&D director, Leopold Ruzicka, was awarded the Nobel Prize in 1939—and the company continues to spend approximately 10 percent of its revenues on R&D operations. These efforts have helped the company more than triple its sales since the early 1990s. By 2003, the group posted about CHF 2 billion ($1.3 billion) in sales. The company is led by Partick Firmenich, who took over as CEO in 2002.

Synthesizing Success at the End of the 19th Century

In the closing years of the 19th century, Young chemist Philippe Chuit set up a small workshop in Geneva's Servette neighborhood in order to develop and synthesize chemicals for the growing perfume industry. Backed by businessman Martin Naef, who provided the capital for launching the business in 1895, the partnership began producing its first product, Vanillin, using a new synthesis technique developed by Chuit. In 1897, Chuit & Naef bought land for the construction of a new site at La Queue d'Arve, and the following year the business moved to its new quarters, known as La Jonction. In that year, the company, which had already grown to 20 employees, rein-corporated as a limited partnership, Chuit, Naef & Cie.

The original partners were joined by Chuit's brother-in-law, Fred Firmenich, in 1900. Firmenich soon took over the group's sales and distribution operations, while Chuit remained the guiding force behind the company's growing list of products, which included the launches of Violettone and Dianthine in 1902, Iralia in 1903, and Cyclosia in 1908. Two years later, Chuit sold out his share of the company to Firmenich, who became majority partner in the business. Yet Chuit remained active within the company for another two decades.

Chuit remained the head of the group's research and development efforts into the early 1920s. In 1921, however, Chuit convinced friend Leopld Ruzicka to join the company as its R&D director. Ruzicka, a native of Hungary and a naturalized Swiss citizen, later earned the Nobel Prize for Chemistry in 1939, in part for his work at Firmenich. Ruzicka's work led to the development of the first synthetic musk.

During the 1920s, Firmenich launched a number of new products, including Nerol and Nerolidol in 1922 and the evocatively named Exaltolide in 1925. The company also began working with the designer market, developing perfumes components and entire recipes for its customers.

Chuit retired in 1931, followed by Naef in 1933. In the latter year, the company came under the full control of the Firmenich family, taking on the name Firmenich & Cie. Fred Firmenich took over as the group's top manager, while Ruzicka remained at the head of the group's research and development program and led Firmenich into the development of the first synthesized raspberry ketone in 1938. The success of that effort brought Firmenich into a new product group for the first time, that of food flavorings.

By 1945, the group had begun developing citrus and strawberry flavorings as well, and the company created a new, dedicated Flavors division for its growing operations in that sector. By 1946, the group had successfully developed the first strawberry flavoring and the Tetraromes series of citrus flavors. The development of these and other food flavoring agents were to revolutionized the food industry, creating the basis for the food technology sector. In particular, the development of synthetic flavorings enabled the growing industrial food sector to replace more expensive natural ingredients with lower-cost synthetic alternatives and also to restore food flavors lost during the increasingly intensive food production process.

Firmenich expanded in the early 1950s through its acquisition of rival Usines de l'Allondon in 1952. That purchase brought the company a new manufacturing complex, known as the La Plaine site, which became the group's primary production plant in 1962. The company's research and development efforts, meanwhile, resulted in the synthesis of a major new chemical, Hedione, in 1959. Launched commercially in 1971, the chemical, a volatile molecule extracted from jasmine flowers, quickly became one of the most widely used base ingredients for the international perfume industry.

The company's work in the flavorings sector had by then also resulted in the launch of Furaneol, described by the company as a "sweet, cotton-candy like molecule key to red fruit, tropical fruit, and roasted flavors." In the fragrance sector, Firmenich achieved a new breakthrough in the mid-1970s with the launch of its synthetic rose ketones, including Dorinia and Damascenia in 1975 and two damascones in 1978. The company had changed its name to Firmenich SA in 1972, and Fred-Henri Firmenich took over as CEO the following year. In 1976, Firmenich added a new production facility, a compounding plant, in Geneva's Meyrin-Satigny.

International Leader in the 21st Century

Firmenich released a new rose ketone, damascenone, in 1982, as well as citrus-scented Citronova. Continued research efforts were to result in a number major new products, such as Polysantol in 1985 and Firanova in 1988. The company also began branching out into a number of new fragrance categories, adding, for example, the first 100 percent synthetic amber product, Ambrox, in 1989.

In the meantime, the company's major clients—particularly the perfume and food industries—had began a steady consolidation which was to lead to creation of a smaller of number of large-scale, multinational companies. In order to match this development, Firmenich itself turned toward international expansion in the mid-1980s, starting with its 1986 acquisition of Chem Fleur, located in Newark, New Jersey, which formed the basis of the group's operations in the crucial United States market.

Firmenich's international growth became even more vital to its interests in the early 1990s, after Fred-Henri Firmenich stepped up to the chairman's seat of the group. Brother Pierre-Yves Firmenich had taken over as group CEO in 1989, seconded by Jean-Pierre Linder, who took charge of the group's fragrance development. The following year, the company reorganized under a new holding company, setting the stage for a new era of growth. In 1990, also, the company opened a new, 7,000-square-foot office in New York city, complete with laboratory, which became the center of much of the group's fragrance development in the 1990s.

The team of Pierre-Yves Firmenich and Jean-Pierre Linder took the relatively small Firmenich, which had sales of approximately CHF 400 million at the beginning of the 1990s, and transformed it into one of the world's top three fragrance and flavors specialists—and the number one privately held company in the sector. Part of the group's success was due to the expansion of its international network, which enabled it to create flavors and fragrances for specific cultural markets. In this way, the company opened subsidiaries in a number of key foreign markets, including China, India, and Malaysia in 1994, Thailand in 1995, and Vietnam in 1996.

Much of the company's international growth was spurred on by its flavorings division, which alone accounted for nearly 15 new manufacturing plants into the 2000s. In the meantime, the group saw enormous success on the fragrance front as well, especially with the launch of such company-developed perfume successes as CK One in 1995 and designer perfumes for Jean-Gaultier, Hugo Boss, and Tommy Hilfinger, among many others.

Company Perspectives:

Do businesses have a soul? This question was raised by Alain Etchegoyen, a renowned French professor of philosophy and business consultant. At Firmenich we are convinced that businesses do have a soul. Apart from its people and resources, our soul is the spirit which has enabled us to remain true to ourselves and to progress during more than a century to bring the Company to its leading position with a business representing two billion Swiss Francs. Our soul consists of intangible factors, a philosophy and some basic principles that we call Fundamentals and that guide all of our actions. Sharing this belief makes all the difference in the way we conduct our business, and we intend to use all our energy to safeguard this difference. It is the key to our future.

Acquisitions played a key part in the group's growth as well. In 1995, the company entered South Africa with the purchase of Darryl Gunther (Proprietary) Ltd. In 1997, the company purchased two new factories, one in Poland and the other in Japan, and the following year acquired or built facilities in France, the United Kingdom, Mexico, the United States (Florida), and China. Other new operations at the turn of the 21st century included a research and development laboratory that specialized in body care products in Germany and a manufacturing facility in India in 1999, followed by the opening of a new chemical plant in Port Newark, New Jersey.

A major development for the group's Flavors division came in 2001, when the company began development on a new, Geneva-based Food & Flavors Expertise Center. Completed at the end of 2002, the new facility offered more than 8,600 square meters of operating space and included state-of-the-art ventilation and odor-removal systems—crucial for the development of new flavor products.

By then, Firmenich had reached another milestone when the next generation of the family, represented by Patrick Firmenich, son of Fred-Henri, took over as company CEO in May 2002. With both a law degree and an MBA, Firmenich joined the company at the beginning of the 1990s and had largely taken over for Linder in the middle and later years of the decade. The younger Firmenich quickly led the group on its next expansion drive, joining the battle to acquire Bayer's flavor and fragrances division, Haarman & Reimer, with bidding expected to top $1.5 billion. At this point, Firmenich sales had topped CHF 2 billion ($1.3 billion).

In the meantime, Firmenich continued to seek out new growth opportunities. In 2002, the company acquired Norway's Bjorge Biomarin A/S, founded in 1988 and a specialist in the production of natural seafood extracts. At the beginning of 2003, Firmenich expanded again, forming Innovaroma, a joint-venture partnership with Agan Aroma, a unit of Makhteshim Agan Industries Group. Simultaneous with its latest acquisitions campaign, Firmenich continued to score major new customers, leading to triumphs such as the October 2003 launch of a new fragrance, C'est Moi, developed by Firmenich to be sold as the house brand of the retailing giant Walgreens. As Firmenich entered its second century as a company, its future never seemed more promising.

Key Dates:

1895:: Philippe Chuit and Martin Naef found a fragrance chemicals company in Geneva and launch of their first product, Vanillin.
1898:: The company incorporates as a limited partnership, Chuit, Naef & Cie.
1900:: Fred Firmenich, brother-in-law of Chuit, joins the partnership.
1910:: Chuit sells his share of the business to Firmenich.
1921:: Leopold Ruzicka, future Nobel Prize winner, joins as chief of research and development and leads the company toward synthesizing the first food flavorings.
1934:: After Chuit and Naef retire, the company takes on name of Firmenich & Cie.
1945:: A dedicated Flavors division is created.
1952:: Swiss rival Usines de l'Allondon is acquired.
1959:: Hedione, which becomes a major base ingredient for perfume industry, is developed.
1972:: The company changes its name to Firmenich SA.
1986:: The New Jersey-based firm of Chem-Fleur is acquired.
1989:: Pierre-Yves Firmenich becomes CEO and leads the company on a growth drive, tripling revenues by 2000.
1994:: The company steps up international expansion, opening subsidiaries in China, India, Malaysia, and elsewhere.
1995:: The company enters South Africa with the acquisition of Darrly Gunther.
1997:: Factories in Poland and Japan are purchased.
2001:: Construction of a new Food & Flavors Expertise Centre in Geneva begins.
2002:: Patrick Firmenich becomes CEO.
2003:: Innovaroma joint-venture is launched.

Principal Subsidiaries

Firmenich and Companhia Ltda. (Brazil); Firmenich Asia Pte Ltd. (Singapore); Firmenich de Mexico S.A. de CV; Firmenich et Cie. (France); Firmenich GmbH (Germany); Firmenich Inc. (U.S.A.); Firmenich S.A. (Argentina); Firmenich S.A. (Colombia); Firmenich UK Ltd.