Haarmann & Reimer Has Strong Growth Plans for Fragrances

29 January 2001 00:00  [Source: ICB Americas]

Following the completion of a year that saw double-digit growth in its fragrance business, Haarmann & Reimer (H&R) has ambitious plans for its fragrance group. The company, which now ranks number five among the top companies in fragrances, flavors and aroma chemicals sales, aims to move up to the top four within the next three years.

Spearheading that effort for the fragrance division will be Tim Schaffner, who was recently named president of H&R's worldwide fragrance business. Mr. Schaffner, who was appointed to the position last month (CMR, 12/ 18/00, pg. 18), was formerly president and general manager of the North American fragrance division. With his appointment, H&R is moving the global headquarters for its fragrance division from Germany to facilities in Teterboro, N.J., which will include a newly established market research center. The company's aroma chemical and cosmetic ingredient division will retain its global headquarters in Holzminden, Germany, under the management of Horst Finkelmeier. Also, the global expertise centers for fine fragrance and personal care operations will continue to operate from their Paris locations.

H&R's operations are structured into three divisions: flavors, fragrances and aroma chemicals and cosmetic ingredients. The fragrance portion accounted for 37 percent of the company's á775 million ($728.5 million) sales in 1999. Of this total, personal care accounted for the largest share of the business at 38 percent, followed by fine fragrances at 27 percent, household products at 23 percent and oral care products at 12 percent.

Although final figures are not yet in, the company estimates that in 2000, fragrances sales will increase nearly 14 percent. "The increases are largely in fine fragrances and household products. These areas have done extremely well," says Mr. Schaffner.

On a geographic basis, H&R's worldwide 1999-2000 fragrance sales to the Europe, Africa and the Middle East region were 50 percent. North and Central America accounted for 20 percent, South America 18 percent and Asia-Pacific 12 percent.

Since 1998, H&R has invested over á50 million in its fragrance and aroma chemicals businesses. One of the largest of these investments was an expansion at Bushy Park, S.C., to increase production of synthetic menthol. The expansion is scheduled for completion in May. Industry estimates put H&R's worldwide synthetic menthol production at about 2,000 metric tons. Expansions are projected to add about 20 percent of additional capacity.

The investment in Bushy Park follows offshore investment. In 1999, the company completed a new fragrance and flavors plant in Bogota, Colombia, as well as a facility in Thane, India. The company is also building a center of global expertise for household products at the Teterboro site. This center will provide creative perfumery, technical support and related research for detergents, fabric softeners, and hard surface cleaners.

As in 2000, Mr. Schaffner expects both household products and fine fragrances to be growth drivers for the company in 2001. With the cost of launching a fine fragrance estimated at $20 million, the major fragrance houses are placing increased significance on early development and testing. "More and more, the flavor and fragrance suppliers are becoming involved in up-front market research and consumer testing," says Mr. Schaffner. "The customer/supplier lines are now even more tightly developed than before. With our aggressive, global-focused business approach, we are getting on targeted customer suppliers' lists that in the past had not been available."

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