The ratings on New York City-based International Flavors&Fragrances Inc. (IFF) reflect the company's important and defendable position as an ingredient supplier to consumer products companies worldwide. Geographic diversity is a key rating consideration, because 72% of revenues are generated outside North America, somewhat insulating the firm from regional economic weakness. Although competition is intense for the development of new flavors and fragrances and the application of these technologies, IFF has achieved a leadership position in the industry through its research and development (R&D) investment of about 8%-9% of revenue. R&D expertise is a significant barrier to entry in the flavors and fragrances industry, because products are largely custom made for customers, and IFF retains ownership of internally developed
