A natural necessity? IFF-DuPont merger to create ‘consumer giant’ of beauty ingredients

17-Dec-2019 - Last updated on 17-Dec-2019 at 12:30 GMT

IFF chairman and CEO says the DuPont N&B merger creates an 'early-mover advantage' in the field of naturals and health and wellness (Getty Images)

The merger between International Flavors & Fragrances and DuPont Nutrition and Biosciences creates a monopoly in fragrances that will shake-up global supplies for beauty and personal care, says Euromonitor International.

Announced on December 15, the €40.7bn ($45.4bn) mega-merger remains subject to regulatory approvals and approval from IFF shareholders but should be finalised by the end of Q1 2021.

Speaking to investors on a call yesterday afternoon, Andreas Fibig, chairman and CEO of International Flavors & Fragrances, said the deal held “highly compelling value” for business, the teams and shareholders.

The merger, Fibig said, created an “early-mover advantage” in the field of naturals and health and wellness, producing the “only industry player able to lead and accelerate these trends”.

“…This is not about scale, this is about first-mover advantage,” he told analysts.

A global fragrance monopoly

While the merger had important implications for food and nutrition, there were also strong implications for beauty and personal care.

Ewa Kania, senior analyst in beauty and personal care at Euromonitor International, said this merger created an entity that would hold a majority share in the global ingredients supplier market.

“IFF and DuPont will become the new consumer giant in the ingredients supply chain of beauty and personal care,” Kania told CosmeticsDesign-Europe.

The merger, she said, would create “a monopoly” for the supply of fragrances, flavours and pharma capsules – a move that would “shake up the ingredients supply chain globally”.

According to executives at IFF and DuPont in yesterday’s call, procurement and raw material supply would be a “key focal point” of the integration process moving forward.

A naturals plateau? M&A may be the answer…

Kania said the merger could indicate a shift in business strategies within the world of naturals.

The deal “could suggest that the levels of growth in natural ingredients is plateauing and big companies are turning to acquisitions instead of growing their own businesses”, she said.

IFF and DuPont would not be the first to turn to M&A to drive up presence in naturals.

Last month, Givaudan Active Beauty acquired Italian botanical major Indena in a move to strengthen its botanical capabilities and in September BASF acquired Dutch aroma biotech specialist Isobionics to shift business reach into natural aromas for the first time. Firmenich also acquired a minority stake in French natural ingredients specialist Robertet, stating it would consider taking a controlling stake if invited to do so.

In the US, French manufacturer ANJAC Health & Beauty also recently acquired Cosmetix West to advance further into clean beauty and focus more on naturalness.