Dive Brief:
- International Flavors & Fragrances plans to cut jobs as part of a comprehensive restructuring to optimize costs and streamline its business to better serve customers, the company announced at its Investor Day presentation on Wednesday. IFF is targeting annual savings of $100 million from the reduction.
- By the end of 2023, the company will consolidate its four current business divisions — Nourish, Scent, Health & Beauty and Pharma — into three — Food & Beverage, Household & Personal Care, and Health. It also plans to sell more non-core businesses, setting to announce three divestitures in the first quarter of 2023 that will bring the company $1.2 billion to put toward its debts.
- After IFF’s $26.2 billion mega-merger with the former DuPont Nutrition & Biosciences in 2021 and CEO Frank Clyburn’s hiring at the beginning of this year, the time is ripe for IFF to make strategic changes to help move the company forward.
Dive Insight:
For much of the last two years, IFF has been working through integration to best combine the capabilities and business units of the legacy IFF and the former DuPont unit.
The company divested some non-core businesses — including a business making microbial controls chemicals primarily for industrial applications and a fruit-processing business — for about $1 billion. And it brought on Clyburn, a former Merck executive with deep experience in integration, revenue building and streamlining operations, to take the helm after former CEO Andreas Fibig retired last fall.
In the Investor Day presentation, Clyburn laid out his vision of an IFF that is well integrated, a premier partner to its customers, has sustainability at its core and is focused on growth through capitalizing on opportunities.
“Our refreshed strategic framework and new operating model will increase customer centricity and better align with end-market needs,” Clyburn said in a statement. “This next phase is designed to ensure we are innovative, efficient and disciplined as we strengthen our competitive position and achieve long-term financial success. To do so effectively, we are enhancing our productivity to reduce our cost base, reinvesting in our highest-value businesses, embedding ESG+ in all we do, and enhancing our culture to maximize value creation for our customers, employees and shareholders.”
Few details were shared in written materials on the job cuts, but the company said the reductions would help its efficiency improve. However, it’s just one piece of the larger strategy IFF outlined to reduce its internal costs by $350 million to $400 million between 2023 and 2025. The company also plans to optimize internal processes, streamline its supply chain and improve procurement and demand management.
But headcount reductions aren’t just coming to IFF’s employees. The company also plans to downsize its board, to 10 members from the current 14, by May. The company also plans to revamp the kinds of people on its board, adding more senior executives with experience relevant to the IFF’s profile and portfolio.
Clyburn also outlined a new way to approach its businesses. The company will take a look at each business and how it is performing. The better performing businesses in more attractive markets will see more investment to fuel growth. Businesses that are not performing well will either see minimal investment or IFF will look to divest them.
In the recent past, bold new restructuring initiatives from food companies have made a difference. In 2020 Kraft Heinz shifted the way it looks at its CPG products, grouping them together in “platforms” instead of individual markets. The new look has helped turn the company’s fortunes around, helping it rebound from a catastrophic $12.6 billion quarterly loss in 2019. Although CPG food is a different business than that of a a B2B ingredients provider, a fresh look at IFF’s portfolio also could help the company emerge from tough times successfully.
