USA – Royal DSM is acquiring US based supplier of dairy-based savory flavorings, First Choice Ingredients, to expand its presence in the food and beverage sector.
According to a statement from DSM, the acquisition of First Choice is being made for an enterprise value of US$453 million.
“This acquisition is an attractive next step for DSM as we continue to build our health, nutrition, and biosciences capabilities,” commented Geraldine Matchett and Dimitri de Vreeze, co-CEOs of Royal DSM.
First Choice Ingredients has three manufacturing facilities in the US which are run by a team of approximately 100 employees.
The company ferments and blends a variety of natural dairy products with cultures and enzymes to create clean label taste solutions integrating sensory and functional benefits.
It is an innovation partner with food producers, flavor houses, and foodservice suppliers in applications such as soups, snacks, salad dressings and sauces, prepared meals, sweet baking, as well as dairy products and plant-based meat and dairy alternatives.
Over the years, the company has created a name for itself and currently enjoys a leading position in the US taste market as a developer of clean label, fermented dairy and dairy-based savory flavorings for taste and functional solutions across a wide range of applications.
According to DSM, the estimated 2021 sales of First Choice Ingredients (FCI) amount to about US$75 million.
With the acquisition, DSM which already has a significant presence in the food and beverage industry will be able to expand its portfolio offering, enabling it to accelerate growth in food and beverage.
First Choice Ingredients is on the other hand expected to enjoy unrestricted access to DSM’s world-leading biotechnology toolbox, fermentation know-how, and global customer relationships which are critical for growth.
A timely acquisition
First Choice acquisition could not be timelier as the food flavor market is projected to grow at a CAGR of 4.8% during the forecast period between 2021 and 226, according to Mordor Intelligence.
DSM is, therefore, better positioned to take advantage of this market given that FCI’s sales growth track record shows a high single-digit CAGR growth for the past 5 years.
Sales and EBITDA of FCI are expected to continue to grow at a high single-digit CAGR supported by the inclusion of its products in DSM’s integrated solutions, geographical expansion, and as well by leveraging DSM’s biotech competencies.
Patrick Niels, President of DSM Food Specialties, commented: “We are very pleased with the addition of First Choice Ingredients and its skilled workforce to our business.”
“It will enable us to extend our integrated solutions offering in food and beverage, and provide our customers with innovative taste solutions for the new and improved end-products today’s discerning consumers continually demand.”
Subject to regulatory approval, the transaction is expected to close in Q4 2021.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE