Swiss fragrance and flavour maker, Givaudan, has revealed its intention to continue increasing prices in order to offset the escalating costs of raw materials. This decision follows a notable 4.6% rise in like-for-like sales during the first quarter of the year. As with its competitors, Givaudan is grappling with the challenges presented by higher input costs but is steadfast in its resolve to mitigate these expenses through price adjustments.

While Givaudan and other industry players have limited exposure to the Russian and Ukrainian markets, they still face the impact of elevated raw material and energy expenses. Consequently, the company is working closely with its clients to implement price hikes and fully compensate for the surge in input costs.

The taste and wellbeing division of Givaudan experienced a commendable 6.4% growth in sales, whereas the fragrance and beauty unit witnessed a more modest increase of 2.7% due to a tougher comparison base. Givaudan reported robust demand for fine fragrances employed in perfumes, as well as flavors used in beverages, dairy products, and snacks. However, sales of fragrances for consumer goods such as toothpaste or soap declined following a significant surge during the COVID-19 pandemic.

Despite the hurdles, Givaudan remains confident in its medium-term objectives. The company aims to achieve underlying sales growth of 4-5% and a minimum average free cash flow of 12% over a five-year cycle. Group sales for the first quarter amounted to 1.78 billion Swiss francs ($1.91 billion), representing a 6.4% increase in Swiss francs.

Givaudan’s competitors in the industry are also taking proactive measures to counter the rise in costs. Germany’s Symrise plans to pursue acquisitions and anticipates a 5-7% sales growth this year on a like-for-like basis. Meanwhile, U.S.-based IFF has introduced price adjustments across all of its divisions.

All in all, Givaudan’s commitment to raising prices in response to mounting input costs underscores its determination to maintain profitability and secure long-term success in the fragrance and flavor sector. The company’s medium-term targets underscore its emphasis on sustainable growth and financial stability.

Useful links:
1. Givaudan Official Website
2. Symrise Official Website