Resta said the merger “will allow us to leverage a shared customer base and pursue innovation opportunities at the intersection of beauty, fragrance and natural products”.
The size of the merger certainly raises eyebrows. “It’s unusual when two giants combine at such a scale, but we know that organic growth is more difficult.”
The deal comes at a time when the beauty industry faces significant sourcing challenges. It is hoped that regenerative sourcing using biotechnology will alleviate these challenges in the long term.
Unusually hot temperatures have damaged roses. Givaudan reported higher prices for raw materials such as pink pepper, Arabian jasmine and Siberian pine due to extreme weather, limited supplies and low crop yields.
Firmenich’s Resta highlights how DSM-Firmenich bypasses these issues using safe synthetic ingredients. These synthetic materials are made entirely in the laboratory, and their chemical formulas are derived from nature. They are considered safe due to chemists’ complete control over quality, concentration levels and formulation stability. An example of a biotech product is Dreamwood, which launched in 2020 and was inspired by sandalwood. It also claims cosmetic benefits. It’s “efficiently engineered, formulated to be stable, always in stock, and less expensive than natural sandalwood,” Resta says.
Developing technologies for such renewable energy sources is part of DSM’s strategy of heavy acquisitions – over the past 24 months we have made a series of major transactions, many of which are in the field of nutrition. In fragrance, an exclusive licensing agreement was signed in March 2021 to source new fragrance ingredients from Amyris, a leading California-based biotech company.
Givaudan is also rapidly acquiring natural extracts, ingredients and oils, including Centroflora Nutra, Naturex and Albert Vieille. In 2021, IFF completed a merger with DuPont Nutrition and Biosciences worth $26.2 billion (€27.3 billion).
Altman said the sheer size of these businesses is not necessarily a guarantee of their success. “When it comes to R&D, bigger doesn’t mean better,” he said. “Success depends on company culture — how quickly they get to market, minimize viable products, and the ability to put ideas behind them.”
DSM-Firmenich has 15 global R&D facilities, 88 production sites, 40 creative centers, 78 application laboratories and 70 premix sites. Analysts say the effectiveness of these integrations will be an important test of the new business.