Betting on growing interest in healthier food, Dutch bioscience and foods company DSM and Swiss flavour and fragrance maker Firmenich are aiming for a €500 million annual sales boost from their planned merger.
The two businesses are combining to enhance the taste, smell and texture of products such as plant-based burgers and fortified drinks to help food and beverage manufacturers like Coca-Cola win over consumers.
The merged company faces stiff competition from International Flavors & Fragrances which last year acquired DuPont's nutrition and biosciences business for $26 billion.
That business generated $11.7 billion in sales last year, close to the combined $12.3 billion achieved by DSM and Firmenich.
'Construction Pit Of The Merger'
Food and beverage activities are 'the construction pit of the merger,' DSM co-CEO Geraldine Matchette told journalists on Tuesday.
Combined, that activity brings in around €2.7 billion annually, with the goal of reaching €3 billion annually, in the next two years, added co-CEO Dmitri de Vreeze.
That would bring the activity closer to the size of its animal nutrition division, which makes food supplements for chickens, fish and cows, and a perfumes and beauty activity.
Executives said they are working on products like flavoured, probiotic milk drinks meant to boost immunity and plant-based burgers that let out an aroma when heated, and, when bitten into, release flavour.
"You need also to mimic the texture of the meat as best as possible," said chief integration officer Emmanuel Butstraen.
Sugar reduction is a key area of growth as consumers seek healthier lifestyles, executives said, citing "Coke Zero" as a product carrying its ingredients.
In addition to stevia, dried monk fruit is another natural sweetener, and the company has secured supplies in China - one of its biggest markets, which also include the United States and India.
Bolt-on acquisitions may come at a later stage, but likely in divisions less caught up in the merger process than food and beverages, according to Matchette, who flagged interest in the gut health of both humans and animals.
Announced on 31 May, the merger is expected to finalise in the first half of next year, marking DSM's pivot from petrochemicals and bulk chemicals two decades ago to its current focus on health-related products, which include vitamin supplements – it sold its resins and coatings business last year and a protective materials unit earlier this year.