IFF-International Flavors& Fragrances Inc

[feynmanresearch]

International Flavors& Fragrances is a flavoring and fragrance producing company, founded by Joseph Polak & Leopold Schwarz in 1889. In 1958, Polak& Schwarz merged with van Ameringen- Haebler to form International Flavors& Fragrances. A decade later, IFF created breakthroughs in fermentation process technology and the development of key natural compounds. Patents were granted for unique meat, savory, and process flavor technologies.  Continuing its string of innovative efforts, the company collaborated with Yale University psychophysiology department in 1982, to study how fragrances can effect human emotions. Throughout the years, IFF conducted even more groundbreaking research. For those who are more interested in the history of company, you can go to the company’s website, and browse its history section to view more detailed information on various discoveries.

 

To be more specific, IFF is responsible for the flavor of products like potato chips, corn chips, crackers, breakfast cereals,ice cream, cookies, toothpaste, mouthwash etc. They also design the smell for luxury perfumes& colognes like Estee Lauder, Calvin Klein, Lancome and so forth. Breakdown of sales is 47% from flavors division and the rest from fragrances. Although it’s headquartered in New York, only 22% of companies sales stem from North America, while the rest is spread throughout the globe, with 34% in Europe, Africa and Middle East, 28% in Greater Asia and 16% in Latin America.

 

IFF has a huge moat, since they have secret formulas and also network effects and high switching costs. Additionally, barriers to entry are mountain high, considering the fact that they operate in an oligopolistic industry with 4 players controlling more than 50% of the market( Givaudan, Firmenich, IFF and Symrise). The company is  not undervalued currently, however it would make a great buy in a recession/ market correction, or a buy and hold for more conservative investors.