Givaudan sees elevated demand for flavors across CPG categories amid ongoing pandemic

By Mary Ellen Shoup

- Last updated on GMT

©GettyImages / ake1150sb
©GettyImages / ake1150sb

Related tags Givaudan Flavors coronavirus

Global flavor company Givaudan registered a 3.6% sales increase in its flavors division where it experienced a shift demand from foodservice and alcoholic beverages to retail CPG products including juice-based beverages, culinary solutions, nutritional bars, and snacks linked to COVID-19 consumer shopping habits.

For the six months ended June 30, 2020, Givaudan reported US$1.56bn in flavor sales, up from US$1.46bn for the same period last year.

From a segment perspective dairy, sweet goods, savory products, and snacks were the main contributors to the flavors division growth, the company reported in its Q2 2020 financial results.

The key focus areas – 'health and wellbeing' and 'naturals' – of the company’s 2020 strategy, grew by double-digits and single-digits in sales respectively.

Throughout the pandemic, Givaudan had kept the majority of its manufacturing sites open running at full capacity with minimal disruption to the company’s supply chain from sourcing materials to delivery of products to costumers, said Givaudan CEO Gilles Andrier during its Q2 2020 earnings call yesterday.

“The division has proven to be very resilient despite the impact on the sales to foodservice and the reduction in out-of-home dining. The strong demand of these products more than compensated the less resilient part of Givaudan, namely fine fragrances and foodservices, 17% of our Group sales which experienced a very strong decline from March to June,”​ said Andrier.

According to Andrier, consumers revisiting shelf-stable categories such as canned soups and savory sauces has contributed the bulk of the growth in sales of its flavors division in North America.

“Some of those categories, which actually had been suffering for the last whatever, three to four years, came back, almost ​[entirely] thanks to the situation in the US,”​ he said.

Despite a downturn in sales in its foodservice division as restaurant transactions remain depressed (-14% in the week ending July 12, 2020, according to according to NPD’s CREST Performance Alerts data), Andrier does anticipate a recovery to the foodservice industry, which will positively impact the business which serves many clients in the hard-hit sector.

“I'm quite confident that the foodservice will come back. At what speed? I don't know. But certainly will come back strongly as stores and shops and restaurants open,”​ he said.

However, "to go back to the pre-COVID-19 levels in terms of 2019 is certainly going to take a little time,"​ predicted Andrier.