As consumers and food manufacturers seek innovative flavors, textures, and healthier alternatives, companies specializing in food additives and ingredients are becoming increasingly vital. It’s no surprise that the DuPont division is one of the fastest-growing segments within a company that recently became independent following a three-way split earlier this year. According to Bloomberg, the bioscience division has experienced significant growth in areas such as probiotics and plant-based substitutes. These ingredients are in high demand, as the success of brands like Impossible Foods and Beyond Meat is prompting established consumer packaged goods (CPG) giants, such as Nestlé, Hormel, and Tyson Foods, to explore this market.
With more food companies entering the sector, ingredient manufacturers are on the lookout for additives that are not only healthier for consumers but also serve as viable substitutes for traditional meat products. The potential for merging the DuPont unit with another company’s resources could provide the combined entity with a broader range of tools and expertise to develop these ingredients more efficiently and cost-effectively. This concept can also extend to other sectors in the food industry, where companies are striving to create alternatives for ingredients that consumers are increasingly avoiding, such as sugar. Researchers are also investigating ways to replace artificial flavors and colors with more natural options, as well as ingredients vulnerable to price volatility or considered environmentally taxing.
The ingredient and food additive market has seen a surge in mergers and acquisitions (M&A) activity in recent years. For instance, last year, International Flavors & Fragrances acquired Frutarom Industries for $7.1 billion, enabling IFF to expand its portfolio in natural colors, enzymes, antioxidants, and health ingredients, while also gaining access to smaller and mid-sized clients, including private-label products that accounted for 70% of Frutarom’s sales. Additionally, Givaudan, based in Geneva, made a move last year to acquire a stake in the French plant-based ingredient company Naturex. Meanwhile, Illinois-based Ingredion has been actively purchasing companies such as Sun Flour Industry, a rice starch and flour producer in Thailand, and TIC Gums, a manufacturer of texturizers and gums like acacia and guar.
According to Allied Market Research, the global flavors market for food and beverages was valued at $12.4 billion in 2016 and is projected to reach $18.1 billion by 2023, reflecting a compound annual growth rate of 5.5% from 2017 to 2023. As demand for their products accelerates, food additive and flavor companies are increasingly looking for strategic M&A opportunities to capitalize on this growth—something that DuPont and any potential buyers of its rapidly growing unit are undoubtedly considering. However, the $20 billion price tag could pose a challenge, potentially limiting the pool of interested buyers despite the advantages that a merger could present.
In this evolving landscape, innovations like calcium citrate 600 are becoming more relevant, as they represent an example of the types of health-focused ingredients that these companies aim to develop. As the industry continues to evolve, the integration of such ingredients into product offerings will be crucial for meeting consumer demand and staying competitive.