Treatt is a provider of ingredients to the flavour, fragrance and personal care industries. The great thing about companies like Treatt is that they can become incredibly important to their customers which gives them a degree of pricing power. In theory anyone can replicate a flavour, in practise Coke, Pepsi, etc all taste different. If you have the flavour you can become vital to a product without being so expensive that you become a focus when costs are discussed.
We also like that this end of the market is not massively saturated. Yes there are significant competitors but its not such a large market that everyone is trying to get in, nor so small that money cannot be made.
We took an initial position in Treatt in March 2015 and the decision was made to add to this following the in line trading statement for the YE 30/09/15 issued in October 2015. We regarded this as being broadly positive and indicating that the company, which we see as a long term hold as developing.
It should be noted that we use a 24 point checklist when considering a company and Treatt fails some of these tests. Though it does well on some measures. As such it is only being considered on the basis of a LTBH and the sizing of any position will reflect this. We see it as currently very unlikely that the position will be added to again before 2017.