Symrise GmbH and Company KG

Muehlenfeldstr 1
Holzminden, D-37603
Germany
Telephone: (+49 05531) 90 0
Fax: (+49 05531) 90 1649
Web site: http://www.symrise.com

Public Company
Incorporated: 2003
Employees: 4,945
Sales: EUR 1.23 billion ($1.64 billion) (2006)
Stock Exchanges: Frankfurt
Ticker Symbol: SY1
NAIC: 311930 Flavoring Syrup and Concentrate Manufacturing

19TH-CENTURY GERMAN FLAVORS PIONEER

REBUILDING AFTER WORLD WAR II

MERGING WITH A NEIGHBOR IN 2003

RESTRUCTURING SYMRISE FOR THE NEW CENTURY

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

FURTHER READING

Symrise GmbH and Company KG is one of the world’s top five producers of fragrances and flavors. Created in 2003 by the merger of Dragoco and Haarmann & Reimer, Symrise generates sales of nearly EUR 1.3 billion ($1.6 billion). The company, which employs nearly 5,000, also operates on a global level, with production facilities and other subsidiaries in 25 countries. Symrise operates in all major fragrance and flavors categories. Its Flavors and Nutrition operations include the beverage, sweet, savory, and sensory segments. Among the company’s flagship flavors products is Optaflow, described by the company as “a nature-identical component that makes the mouth water.” In addition to developing new products, the company’s Research Division also develops analytical tools, technologies, and other services. These include its LC Taste, described as a mechanical method for “objective sensory analysis.” Symrise’s Scent & Care Division develops fragrances and aromas for the personal care and home care sectors, as well as for the perfume industry. In 2006, Symrise completed an enterprise-wide restructuring, creating a new Sensory Ingredients Division to combine its former Aroma Chemicals and Cosmetics Ingredients divisions into a single unit. At the end of that year, Symrise went public, listing more than 50 percent of its shares on the Frankfurt Stock Exchange in one of that year’s largest public offerings. Symrise is led by CEO Gerold Linzbach.

19TH-CENTURY GERMAN FLAVORS PIONEER

Although created only in 2003, Symrise combined more than 150 years of experience working in the flavors and fragrances sector. Indeed, through Haarmann & Reimer, Symrise could claim to be the pioneer in the development of the worldwide market for artificial flavors. This claim stemmed from the work of William Haarmann and Ferdinand Tiemann, two chemists working at a university in Holzminden, Germany. In 1873, Haar-mann and Tiemann discovered a method for synthesizing vanillin from conferin, a naturally occurring component of pine bark. By 1874, the pair had succeeded in isolating the vanillin molecule, and just one year later had launched small-scale production of what was to become one of the most important flavoring components in the next century.

The two chemists set up a company, Haarmann’s Vanillinfabrik, in Holzminden. Haarmann took the lead of the company, while Tiemann, who preferred to focus on his academic work, served as a silent partner. By 1876, the company had been joined by one of Haarmann’s former students, Karl Ludwig Reimer. Working with Haarmann, Reimer helped develop an industrial production process that allowed the company to derive vanillin from eugenol, a component of clove oil. The greater availability of clove oil made the production of vanillin commercially viable for the first time. The company also began producing synthetic fragrances, leading to a change in name, to Haarmann & Reimer (H&R). Reimer’s tenure remained brief, however, after an illness forced him to withdraw from the company in 1881. Reimer died two years later. Before his death, however, Reimer, working with Tiemann, succeeded in patenting a new method for the production of salicylaldehyde.

H&R continued in its quest to produce a less expensive, and more profitable, form of vanillin. Success in this came in 1891, when the company developed a new variant, Isoeugenol. This was the first vanillin molecule that could be produced at a truly profitable level. Other important H&R products launched during the period included Ionon, a synthetic violet flavoring, based on a process developed by Tiemann. By the end of the nineteenth century, the company had also expanded into the production of natural plant extracts. At the same time, the company had built up an impressive list of more than 30 patents.

Tiemann died in 1899; Haarmann remained at the head of the company into the 1930s, until his death in 1931. Control of the company then passed to Haarmann’s sons, who guided it through the difficult depression era. By 1935, the company once again entered an expansion phase, buying Pirna-based Heinrich Haensel GmbH. That company, also founded in the late 19th century, specialized in deriving flavoring and fragrance components from natural oils, becoming a leader in the German market. The Haensel company had also long enjoyed significant success on the international market, and its acquisition enabled H&R to build its own presence in the fast-growing export market.

REBUILDING AFTER WORLD WAR II

H&R’s expansion was soon cut off, however, as Germany ignited what was to become the most devastating war the world had ever known. As a major industrial region, Holzminden became a target for Allied bombing raids, and by the end of the war, much of H&R’s facilities had been destroyed. The company, led by Rudolf Groger, began rebuilding its operations from 1946. By 1953, the company decided to turn to a larger partner, and in that year agreed to be acquired by German chemicals giant Bayer.

Backed by Bayer’s financial clout, H&R maintained its independent operations. Through the 1950s, the company relaunched its international expansion. Over the next decade, the company made a series of acquisitions, adding production facilities and subsidiaries in the United States, the United Kingdom, South Africa, Mexico, Brazil, as well as in France and Spain.

H&R achieved a new major milestone in 1973, when it succeeded in developing an industrial production process for the L-menthol molecule. This component formed the basis of a new division developing and producing mint flavorings, one of the largest categories in the international flavorings market. H&R claimed a position among the global leaders in the industry.

COMPANY PERSPECTIVES

Symrise has looked into the future and we have absolute clarity of vision of where we want to be—and where our customers need to be in order to anticipate, surprise and delight the consumer. We know our strengths, and play to them. Symrise is a leader in technology, with an enviable reputation for R&D, a remarkable track record for innovation and a new product pipeline that’s constantly bringing inspired concepts into market reality.

In the same way as we combine science and sensation in our search for the extraordinary, we maximize synergies in business and capabilities to deliver outstanding customer service standards. The driving force behind Symrise is the “Power of And,” our company-wide commitment to always make the extra effort, always look for what we can add. That’s why our promise to Symrise customers is to always inspire more.

Over the next two decades, H&R continued to develop its operations, maintaining its independence within the Bayer organization. At the start of the 1990s, the company joined in on the first consolidation wave among the flavors and fragrances industry. In 1990, the company took over Créations Aromatiques, which specialized in fragrances. Two years later, the company acquired the perfume division from rival PFW. By the middle of the decade, the company had added Flora-synth, which operated in both the synthetic flavors and fragrances sectors.

The end of the 1990s was marked by a massive investment effort. In 1997, the company spent more than EUR 25 million to build new production facilities in Germany, as well as at its Monterrey, Mexico, operations. This effort was directed in particular at expanding the company’s capacity for the production of active substances for the cosmetics industry. This market segment represented an especially fast-growing area of the cosmetics industry. Meantime, H&R’s own image was blemished somewhat after being charged with fixing the price of citric acid since the beginning of the 1990s. As a result, the company was fined more than $50 million, and faced a series of lawsuits from the customers it had defrauded.

MERGING WITH A NEIGHBOR IN 2003

H&R’s capital investment program continued strongly through the end of the decade. The company built several new plants in 1998, including one in Bogotá, Colombia, and another in São Paulo, Brazil, at a combined cost of nearly EUR 27 million. The following year, the company spent EUR 45 million building a new factory in Nördlingen, in Bavaria, and a crystallization factory in Holzminden. The company had also extended its reach into China, and in that year took full control of H&R Cosfra Ltd., a joint venture formed in Shanghai. By then, the company’s sales neared EUR 800 million per year.

Bayer launched a restructuring drive into the early 2000s and as part of that effort began looking for a buyer for its flavors and fragrances unit. In 2002, the Sweden-based equity group EQT agreed to pay EUR 1.7 billion to acquire H&R. In a companion deal made at the same time, EQT acquired a minority stake in fellow Holzminden flavors and fragrances specialist Dragoco. EQT then merged H&R into Dragoco, and the newly enlarged company took on the name of Sym-rise, becoming the fourth largest player in the global flavors and fragrances market. The name was reportedly based on a combination of the words “symbiosis” and “rise,” pointing to the new company’s ambitions to rise to the rank of number two in the world.

Family-owned Dragoco had been founded in Holzminden in 1919 by Carl-Wilhelm Gerberding and his cousin August Bellmer. Originally working out of Gerberding’s parents’ workshop, the new company established its first factory in Holzminden in 1926. Because of the difficulty of pronouncing the Gerberding name in a number of the company’s targeted foreign markets, Gerberding, a connoisseur of Asian culture, decided to name the company Dragoco, short for “Dragon Company.” Initially focused on the fragrance market, Dragoco added its first flavors component in 1930.

KEY DATES

1873:

William Haarmann and Ferdinand Tiemann become the first to develop a method of synthesizing vanillin from coneferin.

1876:

Karl Reimer joins company, which becomes Haarmann & Reimer (H&R).

1919:

Cousins Carl-Wilhelm Gerberding and August Bellmer found Dragoco in Holzminden.

1935:

H&R acquires Heinrich Haensel GmbH, adding international and export operations.

1953:

Bayer acquires H&R, which operates as independent subsidiary and launches international expansion.

1955:

Dragoco establishes first foreign subsidiary in Italy, then enters the United States the following year.

1973:

H&R develops production method for L-menthol.

1987:

Horst-Otto Gerberding, grandson of founder, akes over as head of company and leads globalization drive.

2002:

EQT of Sweden acquires H&R from Bayer and minority stake in Dragoco, then merges the companies in 2003, creating Symrise.

2005:

Following restructuring, Symrise launches acquisition drive, acquiring Flavours Direct in the United Kingdom, Kaden Biochemicals in Germany, and Aromatics Holding in France.

2007:

Company acquires Steng, based in the United Kingdom.

Like H&R and others in the Holzminden region, Dragoco was heavily damaged during the war; Gerberding himself suffered injuries during a bombing raid that also destroyed the family’s home. The company’s rebuilding effort, aided by the German currency reforms that gave rise to the Deutschmark, began in earnest in 1949. For this, the company initially narrowed its focus on rebuilding its position in the aroma chemicals sector. By 1951, however, Dragoco had once again launched production of flavor chemicals.

Dragoco turned its attention to international expansion. The company opened its first foreign unit in Milan, Italy, in 1955. This was followed by the creation of the group’s U.S. subsidiary in 1956. In 1957, Carl-Wilhelm Gerberding, struggling with failing health, retired, placing son Karl-Heinz as head of the company. Carl-Wilhelm’s subsequent travels played a major role in helping the company build its international presence. By the early 1960s, Dragoco had established a fragrance subsidiary in France, placing the company in the heart of the international perfume industry. The company’s European presence also included Austria since 1959, the United Kingdom since 1964, and Switzerland from 1972. Through the 1970s, the company added a host of other subsidiaries, including operations in Brazil in 1972, in Hong Kong in 1975, followed by Japan, the Philippines, and Singapore.

Dragoco remained controlled by the Gerberding family. The arrival of Horst-Otto Gerberding as head of the company in the late 1980s provided the starting point for a new era of investment and industrial expansion by the company. Through the 1990s, Dragoco continued to expand its global presence, particularly focusing on the South American market, as well as enhancing its presence in Asia. In 1993, for example, the company added a subsidiary in Shenzhen, China. The company also converted its structure to that of a joint-stock company in 1993. Later in the decade, the company entered South Africa, then India.

RESTRUCTURING SYMRISE FOR THE NEW CENTURY

Horst-Otto Gerberding, who maintained a 22 percent stake in Symrise, took over as company CEO and oversaw the merger of the two companies’ operations. The process proved relatively smooth, in part because of the highly complementary nature of the two businesses, which helped reduce redundant operations to a minimum.

The merger process was largely completed by 2005, freeing Symrise to join in on a new phase of consolidation sweeping the flavors and fragrance market. In June 2005, Symrise made its first acquisition, of Corby, England’s Flavours Direct, strengthening its position in the savory sector in both the United Kingdom and Ireland. That purchase was followed by the addition of Kaden Biochemicals, in Hamburg, Germany, in 2006. The acquisition added Kaden’s expertise in plant-based high purity active ingredients, used for the fast-growing “functional foods” and “neutraceuticals” sectors. By the end of the year, the company had added France’s Aromatics Holding, which specialized in vanilla flavorings. In March 2007, Symrise located its next acquisition, buying Steng, a natural flavorings producer based in England. Led by CEO Gerold Linzbach, Sym-rise continued to adjust its corporate structure to the emerging new trends in the global flavorings and fragrances market. As part of that effort, the company created a new Sensory Ingredients Division in 2006, combining its aroma chemicals and cosmetics divisions. The restructuring came as part of Symrise’s goal of breaking into the industry’s top two by 2009. As one of the oldest, and youngest, companies within the international flavors and fragrances industry, Symrise appeared to have a strong taste for the future.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Drinkstar GmbH; P.T. Symrise (Indonesia); Symrise (France); Symrise Aromas e Fragrancias Ltda. (Brazil); Symrise Inc. (U.S.A.); Symrise K.K. (Japan); Symrise Limited (Korea); Symrise Ltd. (P.R.China); Symrise Ltd. (U.K.); Symrise Ltda. (Colombia); Symrise Private Limited (India); Symrise Pty. Ltd. (Australia); Symrise S.A. (Chile); Symrise S.R.L. (Argentina); Symrise S.r.l. (Italy); Symrise SAE (Egypt); Symrise Vertriebs GmbH (Austria).

PRINCIPAL COMPETITORS

MacAndrews and Forbes Holdings Inc.; CSM N.V.; McCormick and Company Inc.; Sensient Holding Inc.; Flavor Burst Inc.; Melchers Flavors of America Inc.; Pointing Color Inc.; Golden State Foods Corp.; FMC Corp.; International Flavors and Fragrances Inc.; Hercules Inc.; Millennium Chemicals Inc.; Rudolf Wild GmbH and Company KG; Noveon International Inc.; Calpis Company Ltd.

FURTHER READING

D’Amico, Esther, “Symrise to Acquire Flavours Direct, New CEO Takes Helm,” Chemical Week, March 23, 2005, p. 23.

De Guzman, Doris, “Sweet Taste of Flavors,” ICIS Chemical Business Americas, June 11, 2007.

________, “Symrise: An F&F Giant Wakens,” ICIS Chemical Business Americas, February 19, 2007.

“Dragoco: On the Move,” European Cosmetic Markets, March 2000, p. 111.

“Fragrance Merger Takes Form,” Cosmetics Design-Europe.com, February 27, 2003.

Kruse, Annemarie, “Rising to the Occasion,” European Cosmetics Markets, February 2006, p. 77.

Ouellette, Jennifer, “Dragoco Expansion Follows Long History of Investment,” Chemical Market Reporter, May 22, 2000,p. 32.

Rouhi, A. Maureen, “Symrise Emerges Confidently from the Merger of Dragoco and Haarmann & Reimer,” Chemical Engineering & News, July 14, 2003.

“Symrise Acquires Kaden Biochemicals,” Food Trade Review, June 2006, p. 376. “Symrise Acquires Steng,” Food Trade Review, April 2007,p. 215.

“Symrise Continues Seamless Transition of Company,” Household & Personal Products Industry, November 2003,p. 126.

“Symrise Forms Brain Trust to Develop Actives,” Cosmetics International, April 20, 2007, p. 4.

“Symrise Invests in the Expansion of Its Nordlingen Production Site,” Food Trade Review, December 2005, p. 815.

“Symrise Unites with Cutech,” Cosmetics International, June 8, 2007, p. 2.