CEO interview

Gilles Andrier, CEO is interviewed by Givaudan employee Alice. They look back on the achievements made in 2023, the evolving external environment and how exciting innovations are ensuring we continue growing with customers.

Alice: Looking back on 2023, how would you describe the year?

Gilles Andrier: Overall, I would characterise the year as one of excellent performance delivery and encouraging progress on our 2025 ambitions, which validates as well the strategic path we have chosen for our Company. We continued to see external challenges remain with global headwinds persisting economically, an unstable geopolitical environment and more specifically to our industry significant destocking and shrinkflation in the major parts of the world. We’ve remained focused on our strategic priorities, launching a number of exciting innovations and progressing with our ESG ambitions. I am very proud of all of my colleagues at Givaudan who contributed to our achievements in 2023.

Alice: How did we respond to the changing external environment?

Gilles Andrier: The last couple of years have seen a more volatile external environment. In 2023, we saw the impact of a high inflationary environment and increasing interest rates globally impacting consumer behaviour. There were also broader geopolitical impacts creating an uncertain external picture.

We remain confident in our business model and in our strategy. We continue to focus on the opportunities to support the growth of our customers across various segments and markets with high value added innovative solutions which help them differentiate at the consumer-end. We have built up a set of natural hedges whether across geographies, customer and product segments which allow us to continue to meet the challenges that the external environment brings and to deliver sustainable value creation for all our stakeholders. In addition, we took a number of actions to protect our business, including implementing a performance improvement plan completed in 2023.

Alice: What about the competitive landscape in 2023?

Gilles Andrier: For some time now, our industry has been evolving with several larger transactions taking place, and it remains a dynamic and competitive landscape. We continue to be committed to our purpose and execution of our strategy with a business model where we focus on customised, high value-added solutions for our customers which help them differentiate their brands with consumers. Our expanded portfolio and enhanced value proposition built up by the strategic investments and partnerships we have made ensure we are well positioned to continue providing differentiating solutions for our customers.

Alice: What were the key financial highlights and growth areas for the company this past year?

Gilles Andrier: With our 2025 strategy, ‘Committed to Growth, with Purpose’, we’ve set out ambitious financial and non-financial targets.

In 2023 we delivered 4.1% sales growth, against a target of average organic sales growth of 4-5% on a like-for-like basis over the five-year strategy cycle period. This solid growth was achieved across product segments and geographies, with high growth markets growing at 10.0% and the mature markets declining slightly by 0.6% on a like-for-like basis. We demonstrated our strong focus on execution, in supporting the growth of our customers, whilst also leveraging our innovation capabilities to introduce new solutions which further strengthened our market leadership position in our chosen markets.

Our free cash flow was 13.3% in 2023, versus an average free cash flow of at least 12% over the five-year period. We took a number of actions to protect our business including the implementation of a performance improvement plan, pricing actions and reductions of our working capital which contributed to this improved position.

Alice: Could you discuss our efforts towards our non-financial and sustainability goals?

Gilles Andrier: In addition to the financial targets, we also aim to deliver on key non-financial targets around sustainability, diversity and safety, linked to Givaudan’s purpose.

In our nature goal, where we aim to be climate positive by 2050, we have reduced our scope 1 and 2 emissions by – 43% compared with a 2015 baseline. Our target is 100% renewable electricity by 2025, and at the end of last year we had achieved 94% of our target. We also received a number of external recognitions for our progress.

We were ranked number 5 globally in the World Benchmarking Alliance’s (WBA’s) 2023 nature benchmark and number 1 in our sector. The ranking assesses efforts to protect our environment and its biodiversity. We were also awarded a gold EcoVadis medal again this year putting us in the top 4% of businesses out of 75,000 businesses. We’ve been recognised in EcoVadis’ top performing categories for the past nine years.

One of our people goals is to reduce our total recordable injury rate by 50% by 2025 and at the end of 2023 we were at – 46%. The main drivers for this year’s stronger safety performance are our North America region recovery and the overall increasing number of safety contacts, which serve as the foundation of our safety culture.

We joined the Leading Executives Advancing Diversity (LEAD) Network to support our ongoing ambition of increased gender representation at leadership level and to strengthen our commitment to growing diversity and inclusion. I was delighted to give a keynote address at their European conference in October 2023.

In 2023, we also celebrated 10 years of the Givaudan Foundation, a not-for-profit organisaton set up to initiate and support projects and grant donations to help build a more secure future for communities and their environments. Since then, more than 1,900 of our employees have contributed their time and skills, over 100 partners have also worked together with the Foundation leading to 100 projects in 30 countries that have reached 340,000 people.

Alice: In the third year of our 2025 strategic cycle, what were some of the highlights?

Gilles Andrier: Across our growth drivers and enablers, there were a number of highlights of how we are effectively implementing our strategy.

These include the expansion of our Protein Hub at our Zurich Innovation Centre in Kemptthal, Switzerland to support the growth of dairy alternatives. The hub will accelerate new product development, allowing for the co-creation of exciting new food experiences. Following our acquisition of DDW, The Color House, we have established it as a separate business unit: Sense Colour. Moving forward together, we continue to enhance our leadership in natural colours and to strengthen our ability to create the multisensorial food experiences consumers love.

We introduced Rosabloom™, a biodegradable molecule, which addresses our customers’ need for a sustainable floral rosy ingredient with outstanding diffusion and bloom. It follows green chemistry principles and shows outstanding carbon efficiency. We newly renovated our Oral Care Application and Innovation Laboratory in Ashford with state-of-the art equipment, allowing our team to respond to customer briefs with innovative proposals.

Alice: Can you highlight any significant innovations the Company launched this year?

Gilles Andrier: In 2023, innovation remained pivotal in developing inspiring solutions for our customers. Embracing co-creation and collaboration, we continue to introduce innovative products and solutions. Here are two examples from 2023 that showcase our commitment to bringing new, exciting innovations for our customers.

In Fragrance & Beauty, we launched PrimalHyal™ Hydra[+]. It is our new cationic hyaluronic acid (HA), crafted by white biotechnology that is expanding the boundaries of skin hydration. It is a unique cosmetic active that outperforms standard hyaluronic acid hydration benefits by at least a factor of two.

In Taste & Wellbeing, we are responding to consumers’ demand to optimise their wellbeing and their increasing awareness of the crucial role of gut health. We have a unique prebiotic fibre ingredient, Oatwell™, that makes use of the natural goodness of oats to support gut health. This ingredient delivers nutritious and delightful food experiences with scientifically proven benefits.

Alice: And how did we advance on our digital innovation journey?

Gilles Andrier: We’ve seen digital innovation rapidly increase in 2023, especially with the influx of generative AI (artificial intelligence) tools hitting the market. We’ve been making use of AI for many years to enhance the customer experience.

In Fragrance & Beauty, we have a new AI technology, Myrissi, which provides an innovative way of translating scents into colour patterns, marking a key step forward in expanding our customer centred digital solutions. Myrissi’s ability to capture and predict the spontaneous emotional perception of fragrance experienced by consumers helps drive the creative and product development process by determining the best alignment between colours, emotions and scents.

In Taste & Wellbeing, we are undergoing a digital transformation. The power of digital is being used at every touchpoint of flavour and taste. For example, we have a handheld aroma dispensing device that allows consumers to smell an aroma and propose adaptations according to their preferences using a smartphone. We are also deploying innovative digital tools such as our smart labels which provide online and 24/7 customer access to product documentation.

Alice: What actions did we take in 2023 to develop our colleagues?

Gilles Andrier: We’ve always believed in the importance of having an engaged and inclusive workforce to underpin our business objectives. In 2023 we carried out an organisation wide listening exercise with 80% of our people taking part in our employee engagements. It was encouraging to see the results showed a strong pride in Givaudan and solid team relationships. We also saw the areas that we need to improve on. Continuous improvement is fundamental to our work and a crucial part of our organisation’s evolution.

Career development is an area where we continue to focus our efforts. We have a number of internal programmes that offer challenging and inspiring learning environments where employees are encouraged to explore and experience new ways of thinking and working. This often involves a blend of digital tools, self-reflection, coaching, classroom sessions and virtual teamwork, providing a safe environment to use and test what employees learn. We have a long-established Leadership Senses curriculum that supports the building of leadership skills at every stage of a person’s career journey, further helping us nurture and develop talent from within the Company. Since these launched in 2015, 1,806 managers have taken part.

Alice: Can you share any update on the industry-wide investigation?

Gilles Andrier: Following the industry-wide investigation by the European, US, UK and Swiss authorities, Givaudan continues to fully cooperate with the authorities. For all of us at Givaudan, ethics and integrity are vital values in how we do business. We are committed to adhering to high ethical standards in our interactions with all of our stakeholders. These are expressed in our Principles of Conduct which is the cornerstone of our Company culture.

Alice: Finally, as we look to 2023, what are the key priorities?

Gilles Andrier: Our focus remains on implementing our 2025 strategic focus areas, guided by our purpose. We remain confident in our plan and have the right foundations in place to continue growing with our customers. We expect the external market environment to remain unstable so we will have to continue to stay agile and respond accordingly. I am optimistic that our strong strategic delivery capabilities, coupled with the talents and skills of our colleagues will ensure we continue our successful path.