Treatt hits the acquisition trail

A LONG-established East Anglian flavour and fragrance company has launched itself into the organics and fair trade market with the first acquisition in its 120-year history.

A LONG-established East Anglian flavour and fragrance company has launched itself into the organics and fair trade market with the first acquisition in its 120-year history.

Bury St Edmunds-based Treatt plc has bought a 50% share in Earthoil, a leading organic and fair trade essential oils and vegetable oils supplier, for £2.55million.

From 2012, it also has the option to buy the remaining 50% of the company.

The firm, based at Lichfield in Staffordshire, supplies the likes of The Body Shop, Neal's Yard Remedies and Aveda.

The move brings Treatt, one of the world's leading independent ingredients suppliers to the flavour and fragrance industries, into exciting new territory, explained its chairman, Edward Dawnay.

“This is an exciting new development for the Group, taking us into the organic and fair trade markets and in particular, the cosmetics sectors, which we do not currently supply,” said Mr Dawnay.

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“There is a large and increasing demand for organic ingredients from both the food and health and beauty sectors and we believe Earthoil offers an excellent strategic fit with Treatt's existing businesses in the UK, US and China.

“Earthoil has built up an excellent reputation within the market and we believe there are significant opportunities working together to create a global market leader in the supply of organic and fair trade essential and vegetable oil products.”

Earthoil, established in 2001, grows, manufacturers, sources and trades in high quality, organically certified essential oils and vegetable oils, and grows its own products in plantations in southern Africa.

It has a network of well-established relationships with organic farming groups throughout the world, and buys products at fair and sustainable prices.

Among its offerings are tea tree, peppermint, lemon, apricot kernel, sweet almond, rosehip and papaya seed oils and cocoa butter. It has operating facilities in the UK and Kenya, with a manufacturing base just outside Nairobi, which offers favourable trading terms, including certain tax exemptions.

At the moment, most of its products are used in the cosmetics industry.

Both Earthoil companies were around break-even for the financial year ending in December 2006 and its gross assets at that time were valued at £1.1million.

Treatt expects the acquisition to be earnings neutral in the current financial year and moving upwards next year.

Treatt's directors believe there is growing demand for organic and fair trades products and that they offer “substantial” growth opportunities in the cosmetics industry, as well as in the flavour and fragrance sectors.

“By investing in Earthoil at this stage in its development, Treatt will immediately take a strategic position in the supply of organic essential oils to its existing customer base in the flavour and fragrance industries,” the company said.

“Earthoil's expertise in the manufacture and supply of vegetable oils will provide a new and much sought-after complementary addition to Treatt's existing and extensive product range.”

Treatt plans to work with Earthoil to develop Treatt's own range of essential oil, natural isolate and natural distillate products for the organic and health and beauty markets.

At the same time, with its financial backing and extensive global network of agents, Treatt aims to help Earthoil to grow.

The existing team at Earthoil, sales and marketing director Campbell Walter, director of global operations Wayne Barratt and finance director Tony Silvester, will remain and will continue to operate and manage the company. When the acquisition is completed, they will be joined on the board by three directors representing Treatt.