Shared values: the cornerstones of Symrise’s success26 April 2013
For Symrise, a leading global provider of flavourings as well as functional and cosmetic active ingredients, the keys to continued success are worldwide growth, efficient and sustainable business principles, and clearly defined product and customer structures. Ingredients Insight reports.
At Symrise, sustainability is based on a shared-value approach, meaning success can only be shared by being commercially successful and creating value. In doing so, the company either improves social and economic conditions or maintains them at a high standard for the long term, which is what sustainability is all about. This applies to all stakeholders and their environments – from raw material suppliers and employees to customers and investors.
To achieve this, profitability is an absolute requirement – no company can be successful if its stakeholders don't also benefit.Symrise has long recognised that this model is the best fit for its business and applies it to vanilla farming in Madagascar, as well as to all of its other sites and locations.
This approach works, as evidenced by the company's worldwide growth. Notably, it expanded its position in 2012, achieving an excellent balance between the developed and emerging markets, through its two major divisions, and within the product segments and customer groups. This principle is important as it reduces the exposure to single risks.
Symrise generated nearly half of its sales in emerging markets, which show great growth potential for the entire industry and where the company has strong local roots. This strategy of developing local expertise has served the company well. In Russia, for example, Symrise is the only international company in the industry to have set up a production plant. It has also strengthened its operations in Brazil - where the company has maintained a presence for more than 60 years – by opening a new centre of excellence in São Paulo. At the same time, sales are also on the increase in developed markets such as the US.
The customer structure looks balanced, too, with sales now split equally among global, regional and local customers. When Symrise began life ten years ago, global customers accounted for an average of 11% of sales, whereas the current distribution reduces dependency on any one group.
At the same time, Symrise places great emphasis on increased efficiency. It sells roughly 30,000 products to thousands of customers worldwide, and about 10,000 raw materials are required to make them. Managing complexity, for Symrise and its partners, is therefore key; to that end, the company started a universal programme at its sites that aims to improve efficiency along the entire value creation chain, starting with purchasing, and continuing through central research and development, all the way to sales.
This has resulted in solid improvements. One figure in particular reflects this increased efficiency: sales per employee have increased from €257,000 in 2006 to €306,000 in 2012. The end result is commercial success for all parties as well as sustainable business practices.
Benefits for all
Sustainability functions best when all the stakeholders benefit, including the environment, people living in the region, customers, employees and shareholders. By linking sustainability to its business activities, all of the partners are strongly motivated to act.
A good example is Symrise's approach to the procurement of vanilla in Madagascar, for which it won a German Sustainability Award in December 2012. The accolade confirmed that the company's initiative is improving the social and economic situation for local producers, while guaranteeing long-term access to this valuable raw material.
Price, quality and availability are growing challenges when it comes to raw materials. In response, Symrise has implemented backwards integration for four of its most important categories of raw materials, which ensures the company's access to these materials and that sustainability is a driving factor.
With vanilla and citrus fruits, Symrise has implemented holistic concepts in Madagascar and Latin America, respectively. It also purchases vegetables such as onions, which are used in nearly every savoury flavour, through regional growers with whom it has long-term agreements. With synthetic menthol, which Symrise has been manufacturing since 1973, the company added a new production plant and doubled its production capacities to meet growing demand.
Thirty years ago more than half of products were synthetic, including some nature-identical materials such as menthol, which is manufactured according to its natural structure. Today, these represent a sensible replacement for raw materials that cannot easily be cultivated in a sustainable manner. However, 60-70% of products are now made with natural raw materials and this trend is increasing.
In addition to a large quantity of successful products, Symrise also has a unique position in the industry. Due in part to the wealth of expertise carried over from its predecessor companies, it offers more materials that provide a specific smell or taste, and is also involved in segments such as care and nutrition. This means that the company serves a much broader market, one that is constantly growing, in addition to its core market. Global megatrends such as healthy nutrition, wellness and care support this move.
Another key factor is Symrise's experience in process and application technology, which gives it a distinct advantage, as numerous awards and patents demonstrate.
In 2012, Symrise made significant progress in the development of nutrient complexes for healthy foods and in producing highly purified plant extracts with proven efficacy. In addition, it looks for opportunities that fit the company and align with its sustainability goals.
To nurture these technologies, Symrise uses a mix of internal and external expertise, including skills developed in its minority holdings in the area of biotechnology and medical nutrition. It also works in close collaboration with Swedish companies Probi and Indevex; both sides benefit from this pooling of expertise.
Other success factors include synergies between Symrise's two main divisions: scent and care, and flavour and nutrition. There are a lot of analogies related to research and development, process technologies and customer communication.
In market and consumer research, experts are in constant dialogue about the newly developing trends. The same applies to quality management and compliance with industry-specific regulations and laws.
Other synergies that exist within the divisions include the combination of fragrances with new cosmetic substances within scent and care, or balancing out flavour deficits with functional product solutions within flavour and nutrition.
This year, Symrise is celebrating its ten-year anniversary and is well-positioned for the future. The company continues to work to increase its value, operate successfully in its chosen markets, and develop multiple innovations as part of a clearly differentiated portfolio in the areas of balanced nutrition and personal care – all based on sustainable processes and products. In view of demographic changes, a growing global population and the increasing scarcity of resources, sustainability is increasingly important for the business.