Flavor and fragrance is a $12.9 billion worldwide industry, according to Cincinnati USA Partnership, the economic development arm of Cincinnati USA Regional Chamber.
Cincinnati could be the second largest hub behind the New York/New Jersey region, said Bauer and Bill Sieber, president of Blue Star Flavors in Fairfield. Companies are attracted to the area partly because Cincinnati is home to almost 200 beverage and food processing companies, according to Cincinnati USA Partnership. MANE, Cargill and Frutarom are three of the top 10 flavor companies in the world, according to the chamber and Frutarom.
“... Where there’s food production, there are going to be flavor companies,” Bauer said.
Some flavor companies come up with the formulas for flavors in foods, beverages and fragrances, such as lime extract in a beer, the hint of jasmine in a cup of tea or the vanilla in coffee.
Sensus, of Hamilton, naturally extracts flavors, colors and bioactive ingredients from horticultural products, such as teas, coffees and fruits, and sells the concentrates.
“Any growing industry is always good for a region because of the additional jobs and tax benefits,” Bauer said.
“If the flavor industry is adding jobs out there, it could translate into more facilities being built, more houses being built.
The employees and their families are going to spend money at local businesses.”
French-based MANE is in the middle of an approximately $60 million project to expand its manufacturing facility and build a headquarters and research and development facility in Lebanon, said Maria Collins, Lebanon economic development coordinator. After construction is complete next year, MANE will move its U.S. headquarters from Milford to Lebanon and employ close to 200 people, Collins said.
Sensus recently completed an approximately $2.5 million expansion of more than 40,000 square feet, which doubled production and more than tripled laboratory space, according to the company and its Enterprise Zone agreement with Hamilton.
In the past four months, have been three major acquisitions of local flavor companies: Israel-based Frutarom acquired Flavor Systems International of West Chester Twp. for approximately $35 million in September; Switzerland-based WILD Flavors, which has a Kentucky location, acquired certain assets of Michigan-based A.M. Todd in October, which has operations in Hamilton and West Chester Twp.; and Synergy Flavors of Illinois, part of Irish-based Carbery Group, acquired Sensus in September.
WILD Flavors, Flavor Systems, A.M. Todd, Sensus, MANE and Blue Star Flavors together currently employ approximately 636 people, according to the companies.
“They’re definitely high-tech jobs, manufacturing jobs,” Collins said. “One of the reasons they (MANE) did pick Lebanon was because they needed to expand and I believe they were landlocked at their previous location.”
The burgeoning local hub is thanks in part to the presence of major players in the global industry, such as WILD Flavors’ U.S. headquarters in Erlanger, Ky., Switzerland-based Givaudan in Cincinnati, Minnesota-based Cargill in Cincinnati and MANE, Bauer said.
He said flavor companies supply food and beverage manufacturers, companies like MillerCoors in Trenton, the largest brewery in Ohio; and AdvancePierre Foods in Fairfield, a frozen meat product maker and the largest private company in the Tristate.
Sieber said Ohio’s central U.S. location also plays a part in the Cincinnati cluster and some of it plays off Cincinnati’s German heritage. Most of the flavor science started in Germany, Sieber said.
Demand is growing for flavor ingredients, Sieber said.
“It’s always growing because the world population is growing,” he said.
And each flavor comes in many varieties, Bauer said.
“Just about every food product you can think of has some kind of flavoring in it,” Bauer said.
Givaudan reported sales gains in its flavors division for the first nine months of this year compared to last year. It attributed the gains to new wins and growth in beverage, dairy, savory and snack segments, as well as growth in developing markets, such as China, India and Africa, according to a company earnings press release.
The run of local acquisition activity is not new to the flavor industry, Bauer and Sieber said. The smaller companies specialize in a niche and a larger company buys a small niche company to add to its coffers, they said.
Sensus specializes in natural product extraction and A.M. Todd specializes in mint flavors. According to Frutarom, Flavor Systems was its fifth acquisition this year.
Sieber worked in the flavor industry more than 25 years as a flavor chemist before starting his own company in 2003, Blue Star, that specializes only in flavors for coffee and tea. He comes up with the formulas for new flavors and a joint venture with a New Jersey company manufactures them to sell to coffee and tea companies, generating a few million dollars in sales a year.
The city of Hamilton is focusing efforts to attract more food and beverage companies that the flavors industry could supply. Silverlode Consulting of Cleveland completed this year a targeted industry analysis for Hamilton that identified key industries the city should focus on attracting based on the city’s strengths.
Hamilton has municipally owned utilities and land that’s favorable for the food and beverage industries, said Jason Hamman, Silverlode senior consultant. Food and beverage companies are heavy water users, and Hamilton has high quality water with excess capacity, Hamman said.
There is already a concentration of food and beverage companies in the region, Hamman said.
Manufacturing typically pays higher wages, attracts more companies for supplies and creates more disposable income than other industries for people to eat at restaurants and buy stuff, he said.
“Industries tend to cluster because they can take advantage of shared knowledge,” he said.
Area universities design programs for that industry and the work force over time becomes skilled in what the industry sector looks for.
“Given that, companies tend to look for locations where they can build off that knowledge and talent assets,” he said.
Contact this reporter at (513) 705-2551 or clevingston@coxohio.com.
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