The Clinton Herald, Clinton, Iowa

National News

July 7, 2014

Deal adds natural flavors to ADM portfolio

DECATUR, Ill. — Agribusiness giant Archer Daniels Midland already makes sweeteners, vegetable oils and an array of other ingredients used in packaged foods and drinks. Now it's getting in the natural flavors business.

The company, based in Decatur, Illinois, said Monday it will acquire the privately held Swiss company Wild Flavors in an all-cash deal that will total $3.13 billion counting debt, or 2.3 billion euros. Founded in 1931, Wild Flavors makes natural flavors and "flavor systems" for food and beverage companies.

Natural and artificial flavors are listed as ingredients in a wide variety of packaged foods and drinks around the world. Such flavors help make Coke taste like Coke and Cheetos taste like Cheetos. But companies typically don't disclose what exactly goes into making those flavors, which are considered trade secrets.

"Many times, they sign a two-way confidentiality agreement," said Mark Matlock, senior vice president of food research at Archer Daniels Midland. Wild Flavors, for instance, does 27 percent of its business in North America, but Matlock declined to disclose which products the company helps make.

According to the U.S. Food and Drug Administration, the term "natural flavor" can be used for oils and other extracts from spices, fruits, vegetables, herbs, meats and other foods. So for an orange flavor, that would mean the flavor was extracted from an orange, rather than created with synthetic ingredients, Matlock said.

The flavor industry generally doesn't get much attention, even though it generates billions of dollars in sales a year. International Flavors & Fragrances, one of the biggest players in the market, for instance, pulled in nearly $3 billion in sales last year. Other major players include Givaudan, Firmenich and Symrise.

Archer Daniels Midland Co. said its acquisition of Wild Flavors will let it enter one of the "largest and fastest growing consumer trends in both developed and emerging markets." Matlock noted that demand for natural flavors has been growing at a faster rate than demand for artificial flavors. ADM also processes corn, soybeans and other crops to make everything from animal feed to ethanol.

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