The firm - which specializes in yeast extracts, flavorings and vanilla - plans to transfer production to the new facility in Q3 and Q4 of 2012 and into 2013, said chief executive Rod Sowders, who was speaking to FoodNavigator-USA at the IFT show in Las Vegas.
A step change for our business
Synergy recently expanded its US empire with the acquisitions of Chicago-based beverage flavors expert Sethness-Greenleaf and Ohio-based natural coffee, tea and herb extracts and essences producer Sensus.
The plan is to consolidate Sethness’ Chicago production facility into the new facility at Wauconda in nine to 12 months, although Sensus' more modern manufacturing plant in Hamilton, Ohio, will remain operational, said Sowders.
“We announced plans to develop the new facility in Wauconda some time ago, but as soon as we made the Sethness and Sensus acquisitions, we added extra square footage to the plans to create an expanded 145,000 sq ft facility that will include a demonstration kitchen, flavor and applications development labs and sensory testing labs.
“This is a real step change for our business.”
Cross-selling opportunities
Sethness has given Synergy greater scale and access to new customers, while Sensus has given Synergy access to proprietary extraction methods for horticultural products plus a stronger position in the fast-growing natural flavors market, he said.
Sales teams across both newly-acquired businesses and Synergy’s global operations have now been trained to ensure cross-selling opportunities are maximized, added Sowders.
“In terms of customers, there is some overlap, but not a huge amount. Sensus has a strong presence in the foodservice market, which has not been a target for us in the past. As for Sethness – even though we’re both in the Chicago area - we have fairly exclusive sets of customers and there is surprisingly little overlap.”
You can only batten down the hatches for so long
Weak consumer demand in the US coupled with rising input costs has made life tough, but most customers now recognized that “cutting costs alone won’t get them where they need to be” and that innovative new products – as well as value-engineering – are key to their future, added Sowders.
“Some of our customers did batten down the hatches a bit but we’re definitely starting to see things come back now. The big beverage players are looking at alternative beverages and exploring areas such as dairy, for example.
“There is a lot of interest in more authentic taste profiles, and natural and nutritional trends combined, so natural extracts where you can pull off flavor and retain all the key nutrients at the same time.”
Some customers are paring themselves down to the bone
But customers are also expecting more from their strategic suppliers, he said.
“Some are paring themselves down to the bone. They expect suppliers to have finished products and formulas for them that they can take to market, not just a new flavor.
“A lot of our customers are not making much investment in downstream technology.”
Customers that used to worry about how much information to share with suppliers now realized that collaboration was essential in order to bring more innovative products to market more quickly, he said.
“This is also a key part of why we’re investing in our new facility, so we can work even more closely with our customers.”
Industry consolidation
Consolidation in the flavors industry is likely to continue apace in the next couple of years, with the long tail of manufacturers behind the top 10 players increasingly likely to struggle, he predicted.
“It’s going to be very hard for some of these players to continue to exist with all the requirements we face now on labeling, regulatory, environmental and quality factors.
"You used to get people leaving one flavor company and starting anther one quite a lot. Not anymore.”
Synergy - which also has production, R&D and technical facilities in the UK, Ireland, SE Asia, and South America - is part of Irish firm Carbery Group, an international food ingredients and cheese company.