Symrise is recognized worldwide as a leading provider of fragrances and flavors and of basic ingredients and active agents for the perfume, cosmetics, pharmaceutical, food and beverages industries. We understand the needs of consumers in various places around the world. Based on this knowledge and combining it with creativity and ground-breaking technologies, we develop solutions that offer our customers real added value. We strive to ensure sustained value creation and allow our employees and shareholders to participate in the company’s success.
In 2013, Symrise looked back on ten very successful years of corporate development: Together with our customers, we increased sales and earnings every year. Recognizing important trends at an early stage and quickly incorporating these into new products allowed Symrise to grow faster than the market. Finally, our success is closely tied to our values, which are reflected throughout the company.
Common Values, Common Goals
The motto for our corporate report, “Sharing Values,” highlights the fact that people at Symrise have common values: We want to be the most successful company in our industry over the long term, while enhancing our market position and maintaining our independence. We are aware that economic success, sustainability and social acceptance are inextricably linked. Our economic goals are closely tied to the responsibility we live by and feel every day for employees, the environment and society. The Symrise set of values forms the foundation of how we think and act and also determines our corporate culture. “Because we care” is the guiding principle of Symrise’s commitment to a holistic understanding of its entrepreneurial activity.
In order to expand our market position, sales should grow faster over the long term than the average market volume. This means that Symrise will be increasing its market share and expanding its lead over competitors. At the same time, Symrise has set itself the goal of being among the industry’s most profitable companies. By taking into account the requirements of various stakeholders at all stages of the value creation process, we are creating values for all: “Sharing Values.” Symrise is continually refining its integration of economic, environmental and social goals and strategies.
On the Way to an Integrated Corporate Strategy
Symrise’s corporate strategy is based on the three pillars of growth, efficiency and portfolio. It incorporates aspects of sustainability at all levels in order to enhance the company’s value over the long term and minimize risks. In this way, we are making sustainability an integral part of our business model and turning it into a clear competitive advantage. The goal is a completely integrated corporate strategy.
Strategic Approach: Growth
The global AFF market (Aroma Molecules, Flavors & Fragrances) relevant for Symrise has a volume of € 17.4 billion and is achieving average long-term growth of around 2 to 3 % per year. Symrise’s market share is currently about 11 %. We want to expand this market share via above-average annual growth of 5 to 7 % (CAGR). By 2020, we aim to have increased our sales by more than € 1.0 billion compared to 2012. To accomplish this, we are focusing on three levers:
Growth Based on a Balanced Customer Portfolio
Symrise’s customer portfolio consists of equal parts international customers, regional customers and locally operating customers. This balanced customer structure allows Symrise to operate in every global growth region while reducing its dependency on individual customers, markets or regions. In our core competencies – such as citrus, vanilla and mint – Symrise is one of a handful of providers able to maintain constant product quality at all volumes for its customers throughout the world. To ensure product quality and supply security, backward integration plays a major role with our key raw materials as do long-term contracts with our suppliers. Our goal is to cover roughly 40 % of our raw material needs with backward integration by 2020. By doing so, we also reduce the impact of volatile raw materials prices on the performance of the business. Another success factor for Symrise is in the development of smart processes and structures aimed at efficiently serving the needs of our customers in all areas. Together with its customer companies, Symrise is serving the growing demand for sustainably produced and health-promoting products. By 2020, we want to source all of our strategically important raw materials from sustainable sources. With our intensive research and development activities, Symrise is in the position to separate itself from the competition and is a valued partner for leading companies in our customer industries. Our close cooperation with important customers in product development also enhances customer loyalty.
Emerging Markets Remain a Key Focus
Symrise’s early focus on the rapidly expanding and highly populated emerging markets contributed significantly to the company’s above-average growth these past years. We want to continue this trend. Within the framework of our long-term strategy through 2020, we are striving to expand our share of Group sales originating from emerging markets up to approximately two-thirds. The rising standard of living in broad segments of the population in these regions is creating new consumer needs. As a result, consumer expenses are increasing much faster than the global average in Latin American, Asian, Arab, Eastern European and African countries and this trend is expected to continue in the medium to long term. True to the motto “all business is local,” we believe a good understanding of the local conditions, markets and consumers is a major key to the successful further expansion of our business. Thus Symrise is represented in key emerging markets with its own operating facilities. With our investments in these markets, we are creating jobs with working conditions in accordance with the International Labour Organization (ILO) and often considerably better than the local norms. By regionally sourcing our raw materials and intermediate products, we also indirectly support additional jobs for the local population. Symrise’s high standards for product quality and sustainable production apply to our local sourcing as they do throughout our operations. Furthermore, Symrise is committed to local social issues at its locations.
Innovation and Technology Drive Expansion
Market and consumer research, research and development, creation, marketing and sales are closely intertwined at Symrise. Based on the results of our market and consumer research, Symrise has established a highly efficient research and development process for new products and applications aimed at optimally satisfying customer needs. The resulting new business units and innovative application areas, which show greater growth potential than the general market for fragrances and flavors, give Symrise a unique profile on the market and offer additional growth opportunities. Symrise is constantly making use of potential from three megatrends: health and well-being, beauty and care, and sustainability. For example, we are committed to skin protection and healthy nutrition and offer our customers innovative products with additional health benefits. At the same time, our research and development activities are focused on reducing the fat, sugar and salt content of foods without compromising flavor. With regional research and development centers, such as those in São Paulo (Brazil) or Shanghai (China), Symrise is in a position to adapt to local preferences in a targeted manner when designing products. Furthermore, we receive valuable impulses for innovative products and processes from our various partnerships with research institutes and universities. These partnerships allow Symrise to develop chemical processes by successively applying “green chemistry” in order to minimize energy consumption and environmental impacts. Using “white biotechnology,” we are also increasingly able to optimize production processes and make them more environmentally friendly. Finally, we make use of renewable raw materials wherever possible.
These three strategic levers, which Symrise uses to drive the organic growth of the company, are supplemented by selective acquisitions or strategic partnerships as long as these strengthen our business model.
Strategic Approach: Efficiency
The second approach of our corporate strategy is the continuous efficiency improvement of our operational processes and the focus on products with a high level of value creation. Symrise has developed from its medium-sized roots into a corporation with global reach. Though much has changed, cost-consciousness remains a firm part of our corporate DNA. We are constantly seeking to find even better methods for supplying our products in a cost-effective and environmentally friendly manner at a consistently high level of quality. We strive to further optimize our cost structures along the entire value creation chain. Our goal is to achieve a sustainable EBITDA margin between 19 and 22 % every year. Accordingly, we aim to generate an EBITDA of more than € 500 million by 2020. At the same time, we want to continually increase the economic and ecological efficiency of our company’s business activities. The most important tool for this is Total Productive Maintenance (TPM). Since 2007, we have implemented well over 2,000 improvements as part of this standardized process. Our goal is to achieve measurable efficiency gains each year. At the same time, TPM enables us to ensure that changes in production processes have a positive effect on our sustainability performance. In addition, we use balanced scorecards to optimize the core areas of quality, service, costs, safety and employees. Together with our customers, we have established an integrated supply chain management system in the form of the Symchronize™ initiative, which comprises the entire value creation chain from raw materials procurement to the customer’s end product. Likewise, our comprehensive approach to environmental management includes – together with ambitious, long-term goals to reduce energy consumption, CO2 emissions, and water consumption as well as waste and waste water emissions – a systematic process for continuous improvement. Overall, we want to reduce our environmental footprint by one-third by the year 2020, while successful productivity improvements increase the company’s investment strength and open up distribution options for employees, shareholders and other stakeholders.
Strategic Approach: Portfolio
The enhancement of our product portfolio comprises the third pillar of our corporate strategy. We tap new markets and segments, and constantly seek to expand our expertise in the areas of nutrition and care. Symrise is active in dynamic markets – new ideas, new challenges and opportunities are simply business as usual. We want to further separate ourselves from the competition by anticipating consumers’ changing needs and preferences as soon as possible and fulfilling them quickly, efficiently, creatively and ecologically. At Symrise, innovation doesn’t begin with the research and development of a product, but earlier – with the market research that leads to insight and knowledge. Symrise initiated a paradigm shift in the industry: We no longer start by talking about molecules or technologies, but rather focus on the consumers. Our customers need a strong and creative partner for innovation. And innovation doesn’t stop with the manufacture of our products. The close networking of our established business units with new units at the technical level, as well as via the same consumer clusters and customers, offers us substantial synergy potential, of which we systematically take advantage. The Life Essentials business unit has been created in the Scent & Care business division. This is where Active Ingredients – the highly effective substances for cosmetic care that slow the aging of the skin, soothe irritated skin or have an anti-bacterial effect – are located, for instance. In the Consumer Health application area, Symrise develops natural, functional ingredients that promote heart and digestive function, for example. In the Flavor & Nutrition business division, about one third of our research and development budget for 2013 was in the area of healthier nutrition. In all application areas, the proportion of products contributing to health and well-being amounted to 26 % of our sales in the 2013 fiscal year. By focusing our product portfolio on the areas of health and well-being, Symrise sets itself apart from the competition, produces tangible benefits for end consumers and paves the way for long-term growth potential.