Established in 1880, Chicago-based Sethness-Greenleaf has particular strengths in beverage flavors, emulsions and citrus and neutral clouding agents, plus strong positions in dairy, bakery and confectionery markets, Synergy Flavors chief executive Rod Sowders told FoodNavigator-USA.
While the bulk of its sales are in North, Central and South America, it also has a presence in Europe, the Middle East, Africa and Asia, said Sowders. “Sethness is a long-established and highly respected company with a complementary set of customers and a well-invested facility. We’ve talked to them over the years, so when they became available, we came to a deal.
"When you put Sethness and Sensus together, it has almost doubled the size of our US business."
Sethness offered Synergy scale and access to new customers, while Ohio-based Sensus provided access to proprietary extraction methods for horticultural products plus a stronger position in the fast-growing natural flavors market, he said.
Terms of the deals have not been disclosed.
Sethness operation will ultimately be consolidated into new Wauconda site
The plan is to operate Sethness’ Chicagofacility “as is for the next two years”, but then consolidate the operation into Synergy’s new state-of-the-art 125,000 sq ft facility due to open next year in Wauconda (less than a mile away from Synergy’s current facility), he revealed.
However, it would be largely “business as usual” at Sensus, which has a facility in Hamilton, Ohio, where it produces coffee and tea concentrates/essences and vegetable and herb concentrates/essences.
“We’ve retained the services of founder Dr Daniel Wampler and we’re retaining the facility, which is pretty new, although we will obviously integrate the financials and IT systems over time.”
He added: “But this is primarily a technology acquisition. Sensus has some really innovative technology that we believe also has broader applications.It's also a young company [founded in 1999] that is still growing very fast – strong double-digit growth – but we believe its best years lie ahead.”
Surprisingly little overlap
Sales teams across both newly-acquired businesses and Synergy’s global operations would be trained to ensure cross-selling opportunities were maximized, said Sowders.
“In terms of customers, there is some overlap, but not a huge amount. Sensus has a strong presence in the foodservice market, which has not been a target for us in the past. As for Sethness – even though we’re both in the Chicago area - we have fairly exclusive sets of customers and there is surprisingly little overlap.”
Back on the acquisition trail
While integrating Sethness and Sensus would keep bosses busy for some time in the US, Synergy remained on the acquisition trail, stressed Sowders.
“We’ve got a lot to be going on with in the US after these two deals, but we’ll continue to evaluate acquisitions and partnerships in Europe, Asia and possibly Brazil. The business has grown dramatically in the past four to five years and there are some good quality companies out there. There is a lot more consolidation to come in the flavors industry.”
Innovation back on agenda at many food manufacturers
Weak consumer demand in the US coupled with rising input costs were not making life easy for food manufacturers at the moment, but most now recognized that “cutting costs alone won’t get them where they need to be” and that innovative new products – as well as value-engineering – were key to their future success, added Sowders.
“There is still a lot of cost engineering going on, but we are also working on a large number of new projects at the moment. There is a lot of new product development activity.”
Fat, salt, sugar reduction
Specializing in yeast extracts, flavorings and vanilla, Synergy Flavors also has a range of solutions to help customers reformulate products to reduce fat, salt and sugar without sacrificing taste and mouthfeel.
The firm - which has production, R&D and technical facilities in the UK, Ireland, SE Asia, and South America as well as Illinois - has also worked closely with Irish parent Carbery Group to tackle bitterness, chalkiness in protein-based beverages and mask bitterness in natural or nutraceutical ingredients.
Sethness Greenleaf's former owner Patrick Kearney will be leaving the company to pursue other interests, but the senior management team has been retained, said Sowders.
In a statement, Kearney said: “When I decided it was time for me to pursue other interests, I wanted to find a buyer for this business that would continue to support the company’s growth in the future, and allow it to remain in the Chicago area. I am confident I have found the best fit for the company and our employees in Synergy.”