There is yet another industry booming as of late: that of ingredients. A revolution is already well under way when it comes to what we consume and how that in turn relates to our health, the planet and community. With the global population set to reach 9.8 billion people by 2050, the industry is grappling with a huge shift in perspective around consumption. The stakes are high and competition is fierce, but this also presents unprecedented opportunities for companies.
For ingredients companies this has culminated in an explosion of activity as they react and anticipate the rapidly changing requirements of their customers. Whether it’s plant-based proteins, organic or functional foods, or even personal care products, consumer businesses need to move quickly and their reliance on ingredients to feed their innovation pipeline is now paramount to success.
A snapshot of how ingredients businesses are evolving:
DSM has divested their materials business to become a Health Nutrition and Bioscience business. The company recently launched a newly integrated operating model which would unify its food specialties, hydrocolloids, and some of its nutritional products into one business unit. This was both to simplify its structure and create a ‘one stop shop’ for its customer base. In parallel, the business has also acquired a number of businesses recently, including the plant-based protein company Vestkorn Milling and First Choice Ingredients.
Having sold most of their traditional consumer business, Kerry Group has focused and leveraged its core strengths to focus on Taste and Nutrition as their main business. The recent launch of their ‘Beyond the Horizon’ project will focus on feeding 2 billion people in a sustainable way by 2030. In line with this, Kerry also announced they will spend over 120 million USD to improve their Supply Chain and Manufacturing operations. Following the acquisition of Bio K and Niacet, they have sharpened their focus on the North America and continued to develop in the AP space. By mid-2020, Kerry already had 13 plants across the world dedicated to plant-based allergen-free ingredient solutions.
ADM continue to invest in their Nutrition business, a key part of which has involved alternative proteins. ADM have been partnering with innovation driven brands such as Future Meat Technologies, Nature’s Fynd and Air Protein to look at new protein sources including cell-based, fungi and fermentation-based products. Throughout 2021 the business further strengthened its position in the Nutrition/BioTech space through the acquisitions of Deerland Probiotics and Enzyme and Pedigree Ovens and the Serbian-based Sojaproteins.
Olam International created Olam Food Ingredients in 2020, which essentially spilt its existing business into two distinct remits: Ingredients and Trading. OFI focuses on five major platforms, cocoa, dairy, coffee, nuts and spices. The company’s proposed IPO and demerger will further focus the direction of OFI to become a ‘global leader in natural and sustainable ingredients’. As part of this journey, OFI have hired a number of senior leaders from multinational Food & Beverage Consumer companies. Over the last four years, the business has significantly expanded into the white label space organically and inorganically through M&A activity such as the acquisition of Olde Thomas and they have also focused on driving cross category solutions to customers and supply chain traceability.
Tate & Lyle repositioned themselves last year by selling their long-standing sugar business and pivoting to focus on specialty ingredients with a focus on health and well-being. This has included selling a 50% stake of its primary products business to KPS Capital Partners to create NewCo, a business that will focus on creating plant based solutions for customers. The business is investing heavily in R&D, making ‘supporting healthy leaving’ the heart of what they do.
All of the above businesses and in fact across the industry, organisations are moving further downstream and becoming more consumer-centric, creating higher value and health-centred products, diversifying their route to market strategy across multiple channels and focusing on traceability and sustainability across the Supply Chain.
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