Answer

IFF (Scent) recovery drivers, 2H evolution by business, and R&D plan support for 2027

1) Drivers of Scent’s recovery (what management points to)

Management frames Scent’s recovery around (i) fixing the R&D pipeline and go-to-market capability, (ii) regaining market share, and (iii) navigating—then cycling through—external volatility in the Fine Fragrance end market.

A. R&D capability rebuild + stronger pipeline

Management describes that two and a half years ago the R&D pipeline “was not what it should have been,” but now the business has a “very strong R&D capability,” a “great R&D team,” “great perfumers,” and a “great pipeline of molecules as well as delivery systems.” ¹
The explicit connection to recovery is that this R&D improvement is part of “strengthening our strengths and addressing our gaps,” and management is “optimistic about the future of Scent.” ¹

B. Market share and commercial execution

Management links Scent’s recovery to a “long-standing initiative…to get the balance there right, invest in R&D, grow your market share back.” ²
In the quarter, Scent’s performance is said to be driven by “volume growth and productivity gains,” with Scent profitability improving as EBITDA rose 5% to $134 million. ³

C. Fine Fragrance: managing Middle East volatility and comps; improvement expected into Q4

In Fine Fragrance, management reports that although Middle East uncertainty continued, the team “did a very good job at managing the challenges,” finishing “up slightly positive” even though growth was expected to be “down in Fine Fragrance mid-single digits.” ⁴
For the recovery cadence, management says they are “factoring in a softer Q3” due to conditions and a “20% comparable” (i.e., Q3 prior year Fine Fragrance grew ~20%), with “recovery…as we get to Q4 overall.” ⁴

D. Fragrance Ingredients: recovery helps Scent near-term, but normalization is expected

In Scent, sales were up 8% in Q2, “driven by double-digit growth in Fragrance Ingredients” alongside “high single-digit increase in Consumer Fragrance.” ³
Management also explains that Q2 Fragrance Ingredients growth benefited from favorable year-over-year dynamics and portfolio/sales actions: Q2 growth was compared against a prior year period that was “down 10% or more,” and the team “strategically leveraged the synthetics portfolio” to capture sales amid “macroeconomic…supply chain disruptions and higher Brent crude prices.” ⁴
As conditions settle, management expects Fragrance Ingredients to “normalize…included in our forecast for the second half of the year,” specifically shifting growth “towards the higher value-added ingredients versus the traditional synthetics.” ⁴

2) How Fine Fragrance and Consumer Fragrance are expected to evolve in the second half

The excerpts provide a relatively clear quantitative “shape” for the 2H by business type, plus qualitative drivers.

A. Fine Fragrance (2H trajectory: softer Q3, stronger Q4)

Management expects Fine Fragrance to be “a little bit softer in Q3” but “a stronger Q4,” translating to “on a second half basis…in the mid-single-digit range” (growth rates characterized without a precise single number). ⁵
The reasoning includes both external volatility and tough comps: Q3 last year grew “20%,” so the team expects softness in Q3 while still trending “in the right direction,” followed by recovery in Q4. ⁴

Bottom line for 2H: Fine Fragrance recovery is paced—pressure in Q3 (volatility + tough comp), improvement into Q4, yielding mid-single-digit second-half growth. ⁵⁴

B. Consumer Fragrance (2H trajectory: low single-digit, normalization after a strong Q2)

Management indicates Consumer Fragrance growth is “in that low single-digit range,” noting Q2 was “a really good Q2 at a high single-digit number,” but it is expected to “normalize…to…a low single-digit number” on a go-forward basis. ⁵
Management attributes near-term performance support to rebuilding R&D and go-to-market execution with customers, and efforts to “drive market share gains.” ⁵

Bottom line for 2H: Consumer Fragrance starts from a strong Q2, but management expects normalization to low single-digit growth for the rest of 2H, supported by rebuilt R&D/go-to-market and market-share initiatives. ⁵

C. Related context: Fragrance Ingredients normalization (important because it affects “Scent” overall)

Even though the question asks specifically about Fine Fragrance and Consumer Fragrance, management also flags Fragrance Ingredients normalization, which influences Scent recovery dynamics.

Fragrance Ingredients is expected to “normalize” going forward, and management says it will be “slightly under pressure in terms of year-over-year performance” to calibrate with expected conditions. ⁵
The team emphasizes this normalization is part of a shift to “higher-value natural products” underway, which “will take a little bit more time,” and they do not expect it to be complete within the 2H of this year. ⁵

3) Plan for R&D to support 2027 (what is planned vs. what is already in place)

The excerpts combine (i) a description of the current state of the R&D “pipeline,” (ii) a longer-run evolution toward a stronger competitive position, and (iii) an emphasis on continuing reinvestment in innovation as a core strategy.

A. Current R&D momentum: molecules + delivery systems; stronger pipeline than 2.5 years ago

Management says the R&D pipeline has improved materially—“2.5 years ago” it wasn’t right, while now there is a “very strong R&D capability,” “great perfumers,” and a “great pipeline of molecules as well as delivery systems.” ¹
This is presented as part of the recovery foundation that will feed competitiveness beyond the immediate quarters. ¹

B. “Higher-value” product evolution likely to strengthen the competitive position into the next year(s)

For Fragrance Ingredients specifically, management states the shift toward “higher-value natural products” is “underway,” will “take a little bit more time,” and they believe that “as we go into next year and the year after, we believe we’ll have a really strong competitive position.” ⁵
Although this quote is on Fragrance Ingredients, it is relevant to Scent’s overall R&D/innovation agenda and the 2027 support narrative because it explicitly ties product evolution to the out-years rather than completing within the current 2H. ⁵

C. Continued reinvestment in innovation is central to the strategy (including R&D share)

Management emphasizes that R&D/investment is crucial to sustaining growth and margin. On the corporate strategy side for Remainco (which includes Scent), they note “percentage of sales in terms of R&D…on…slide” is “8% to 9%,” and that it is “really important that we critically continue to reinvest in this business” because the “circle” is: invest → better growth → expands margin → reinvest. ⁶
While this excerpt is not limited to 2027 only, it establishes that the R&D plan is designed to be persistent, not one-time, to support the longer-term earnings trajectory. ⁶

D. Practical evidence of R&D/go-to-market rebuilding tied to market share gains

Management’s 2H framing for Consumer Fragrance explicitly includes rebuilding “the R&D capability [and] go-to-market approach with customers,” and “trying to drive market share gains.” ⁵
That matters for 2027 because it positions R&D not only as product innovation but as a capability that supports customer adoption and share recovery over multiple years. ⁵

Integrated answer (concise synthesis)

Drivers of Scent recovery: rebuilding R&D capability and pipeline (molecules + delivery systems), reclaiming market share via improved go-to-market execution, and managing Fine Fragrance volatility from the Middle East with an expected recovery pattern into Q4; plus near-term uplift from Fragrance Ingredients that will partially normalize as synthetics leverage fades and higher-value ingredients ramp. ²⁵¹⁴³
Second-half evolution:
- Fine Fragrance: softer Q3, stronger Q4; mid-single-digit growth over 2H, shaped by Middle East uncertainty and a tough prior-year Q3 comp (~20% growth). ⁵⁴
- Consumer Fragrance: high single-digit Q2 growth normalizes to low single-digit for the remainder of 2H, with support from the rebuilt R&D capability and go-to-market approach aimed at market share gains. ⁵
R&D plan to support 2027: management highlights a materially stronger R&D pipeline today than 2.5 years ago, ongoing work toward higher-value ingredient evolution (expected to drive stronger competitive position in the next-year and year-after timeframe), and a stated intent to continue reinvesting in R&D at roughly 8%–9% of sales to sustain the innovation-growth-margin reinvestment loop. ⁵¹⁶

References

International Flavors & Fragrances Inc. (IFF) earnings transcript 2026 - Q2

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IFF's Scent Recovery Gains Momentum as R&D Lays 2027 Roadmap and 2H 2026 Outlook

IFF outlines a Scent recovery anchored in disciplined reinvestment in R&D, a strengthened pipeline, and careful navigation of Middle East volatility, with 2H 2026 expected growth in Fine Fragrance and a normalization to low single digits in Consumer Fragrance. The multi-year R&D plan targets 2027 by advancing molecules, delivery systems, and leading‑edge perfumers to sustain competitive advantage.

Sources used

Research questionWhat are the drivers of Scent's recovery, how will Fine Fragrance and Consumer Fragrance evolve in the second half, and what is the plan for R&D to support 2027?

Answer outline

Drivers of Scent’s recovery (what management attributes the turnaround to)
- Rebalancing and targeted reinvestment in Scent capabilities
- R&D pipeline and leadership reset (the “capability” driver)
- Fine Fragrance vs. Middle East volatility (a major near-term driver of the recovery path)
- Consumer Fragrance execution: rebuilding R&D and go-to-market to win share
- Fragrance Ingredients: strong Q2 performance, then normalization and mix shift
How Fine Fragrance and Consumer Fragrance will evolve in 2H 2026 (management’s directional growth view)
- Fine Fragrance (soft Q3, stronger Q4; trajectory into 2H mid-single digits)
- Consumer Fragrance (low single-digit normalization; Q2 was strong but should normalize)
- What “rebuild” work is expected to contribute
Plan for R&D to support 2027 (what management says is in place and what it is designed to achieve)
- R&D capability improvement is already visible in pipeline and development capacity
- R&D is explicitly linked to business evolution: Fine/Consumer through leadership of “gaps” and strengths
- Management’s “competitive position” expectation (time horizon extending beyond 2026)
- Product development and delivery systems as the tangible R&D output
Bottom line summary (directly answering your three parts)

Keep Reading

IFF's Scent Recovery Gains Momentum as R&D Lays 2027 Roadmap and 2H 2026 Outlook

Sources used

Research questionWhat are the drivers of Scent's recovery, how will Fine Fragrance and Consumer Fragrance evolve in the second half, and what is the plan for R&D to support 2027?

Answer outline

Drivers of Scent’s recovery (what management attributes the turnaround to)
- Rebalancing and targeted reinvestment in Scent capabilities
- R&D pipeline and leadership reset (the “capability” driver)
- Fine Fragrance vs. Middle East volatility (a major near-term driver of the recovery path)
- Consumer Fragrance execution: rebuilding R&D and go-to-market to win share
- Fragrance Ingredients: strong Q2 performance, then normalization and mix shift
How Fine Fragrance and Consumer Fragrance will evolve in 2H 2026 (management’s directional growth view)
- Fine Fragrance (soft Q3, stronger Q4; trajectory into 2H mid-single digits)
- Consumer Fragrance (low single-digit normalization; Q2 was strong but should normalize)
- What “rebuild” work is expected to contribute
Plan for R&D to support 2027 (what management says is in place and what it is designed to achieve)
- R&D capability improvement is already visible in pipeline and development capacity
- R&D is explicitly linked to business evolution: Fine/Consumer through leadership of “gaps” and strengths
- Management’s “competitive position” expectation (time horizon extending beyond 2026)
- Product development and delivery systems as the tangible R&D output
Bottom line summary (directly answering your three parts)

IFF Scent Sees Recovery Driven by R&D and Market Share, With 2H Fragrance Outlook

Sources used

Research question

Answer

IFF (Scent) recovery drivers, 2H evolution by business, and R&D plan support for 2027

1) Drivers of Scent’s recovery (what management points to)

A. R&D capability rebuild + stronger pipeline

B. Market share and commercial execution

C. Fine Fragrance: managing Middle East volatility and comps; improvement expected into Q4

D. Fragrance Ingredients: recovery helps Scent near-term, but normalization is expected

2) How Fine Fragrance and Consumer Fragrance are expected to evolve in the second half

A. Fine Fragrance (2H trajectory: softer Q3, stronger Q4)

B. Consumer Fragrance (2H trajectory: low single-digit, normalization after a strong Q2)

C. Related context: Fragrance Ingredients normalization (important because it affects “Scent” overall)

3) Plan for R&D to support 2027 (what is planned vs. what is already in place)

A. Current R&D momentum: molecules + delivery systems; stronger pipeline than 2.5 years ago

B. “Higher-value” product evolution likely to strengthen the competitive position into the next year(s)

C. Continued reinvestment in innovation is central to the strategy (including R&D share)

D. Practical evidence of R&D/go-to-market rebuilding tied to market share gains

Integrated answer (concise synthesis)

References

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IFF's Scent Recovery Gains Momentum as R&D Lays 2027 Roadmap and 2H 2026 Outlook

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