Croda is entering the high competition fragrance market with the acquisition of Iberchem for 820 million euros ($973 million or £732 million). Iberchem has been majority owned by investment company Eurazeo since 2017.
Iberchem was founded in 1985 and is headquartered in Murcia, Spain. As at August 2020, it had approximately 850 employees, 14 manufacturing facilities, 10 R&D centres and a commercial presence in 120 countries.
Niche brands and emerging markets
Over the last three years, Iberchem has significantly reinforced its position as a leading global producer of fragrances and flavours focusing on local and regional brands in high-growth international markets, especially in Asia, Latin America, the Middle East and Africa.
Iberchem focuses on delivering tailor-made products at speed, mainly in particular in customer niches such as ‘own-brand’, regional and independent consumer brands, a customer profile that is aligned to Croda’s own.
“Thanks to its strategic positioning, the company combined a best-in-class organic growth of +15% per year sales over the last 10 years and targeted M&A, notably in China and Malaysia,” says Eurazeo in a statement.
In 2019, the fragrances and flavours producer generated EUR 174 million revenue and EUR 34 million EBITDA. “Iberchem has continued to trade well, despite recent challenging market conditions due to COVID-19, with 2020 revenue forecast to be EUR 187 million and EBITDA of EUR 40m,” comments Croda.
Approximately 80% of Iberchem sales are fragrances for Personal Care and Home Care products. A further 20% of sales are generated by its Scentium flavours business, principally for food, pharmaceutical and oral care applications.
High growth market
Thanks to Iberchem acquisition, Croda gets access to the global fragrances and flavours market with significant exposure to emerging markets. According to Euromonitor, the global fragrance market is expected to reach an estimated US$58.8 billion by 2024 with a compound annual growth rate of 5.6% over 2020-24 due to supportive market fundamentals, including a growing global middle class and increasing demand for beauty, health and hygiene products. This growth is being driven by emerging markets, where Iberchem has a significant exposure.
Croda says Iberchem will operate as an independent entity but with extensive support from the group, "replicating the successful model adopted following the acquisition of Sederma in the late 1990’s."
The acquisition is expected to close by the end of 2020.