HUNT VALLEY MD. – McCormick & Co.’s acquisition of FONA International, LLC, Geneva, Ill., will enhance the company’s Flavor Solutions business unit, which provides flavors and flavor technologies to consumer packaged goods manufacturers and foodservice companies. McCormick & Co. acquired FONA on Dec. 30 for $710 million.
“FONA’s portfolio was concentrated in flavor encapsulation, modulation and liquid flavor products,” said Lawrence E. Kurzius, chairman, president and chief executive officer, during a Dec. 30 conference call with financial analysts. “Notably, the addition of FONA advances our global flavors platform and increases scale in these products, which are the most value-added and technically insulated within the flavors category.”
Flavor technologies McCormick is acquiring include True Taste, which is a patent-pending encapsulation technology that delivers dry flavor that closely represents the sensory experience of liquid flavors, and Optify, which is a portfolio of taste modification flavors.
Mr. Kurzius said the acquisition will strengthen McCormick’s position in the markets for beverage and confectionery applications as well as over-the-counter medications, including flavors for chews, liquids, drops and tablets.
“By expanding our breadth and depth in developing flavors while also combining our infrastructures to provide greater scale and increase our manufacturing capacity and technical bench strength, we are providing our collective customers with a more comprehensive product offering, bolstering our competitive position and creating more opportunities for growth,” he said.
FONA’s sales in 2020 were $114 million and Mr. Kurzius said the company “has had a very long stretch of mid- to high single-digit, occasionally into double-digit growth.”
The acquisition is expected to be accretive to gross margins for both McCormick and the Flavor Solutions business unit in fiscal 2021 and it is expected to be accretive to Flavor Solutions operating margins by fiscal 2022, said Michael R. Smith, chief financial officer.
FONA International has manufacturing and innovation facilities in Illinois. The company currently employs approximately 220.
“We’re buying this asset for growth,” Mr. Kurzius said. “It is our plan and desire to retain the employees of FONA. There’s, in addition to the customer relationships that they have, they’ve got tremendous technical expertise that we have a very high respect for and operate together as a team in a way that’s really positive.
“We see FONA as the cornerstone for accelerating our flavor growth in North America.”