BOCA RATON, Florida — Food manufacturers are increasingly seeking closer collaboration with ingredient suppliers as they expedite product development and adapt to consumer preferences, according to Ingredion’s CEO Jim Zallie in an interview with Food Dive. Zallie emphasized a “genuine urgent need and interdependency” that has emerged between consumer packaged goods (CPGs) and ingredient suppliers, a shift that was less pronounced in the past. Previously, large corporations would draft lengthy contracts requiring months for legal approval. Now, this process has been streamlined to just a few days or weeks due to increased openness and trust among customers.
Reflecting on the industry changes, Zallie noted, “I come from an era where large companies had the luxury of being very careful and cautious regarding engagements and contract signings. Those days are gone.” He explained that the urgency in the rapidly evolving food sector has diminished the patience for lengthy processes.
Major food and beverage companies like PepsiCo, Mondelez International, Conagra Brands, and AB InBev are accelerating their product launches to cater to consumer interests, including plant-based options, lower sugar, gluten-free, organic, non-GMO, and clean label ingredients. This innovation pressure is not only from industry giants but also from small and mid-sized companies that are increasingly disrupting the market with trendy offerings. Zallie highlighted how these smaller firms, such as Chobani and Kind, have transformed Ingredion’s approach; the company now collaborates directly with these businesses to expedite product development rather than merely directing them to suppliers.
He stated, “They are literally disrupting certain categories, and the volume opportunities are significant.” The rapid pace of product development has prompted Ingredion to restructure its operations, creating a dedicated unit to support emerging start-ups in accelerating their innovation processes. The company has also revised its marketing strategies and sales training.
Moreover, Ingredion is engaging in more co-creation of ingredients with food companies. Recently, a significant dairy client requested collaboration with a flavor provider to develop a fruit-flavored, dairy-based drink. Within 60 days, the teams successfully created the concept, formulated the recipe, and brought the product to market.
Zallie emphasized that Ingredion must be selective in its partnerships for new product development due to limited resources, particularly in the plant-based sector, which is projected to reach $9.4 billion by 2024, according to Ingredion’s data from Persistence Market Research. “We have to be very selective as many companies are eager to collaborate with us on plant-based products,” he remarked, acknowledging the strain on resources in this rapidly growing area.
Ingredion, which provides over 1,000 ingredients to large CPGs and smaller local businesses worldwide, increased its investment in plant-based ingredients to $185 million by the end of 2020 to capture growth in this segment. The ingredient sector has also seen significant mergers and acquisitions as companies seek to enhance their research and development capabilities and produce new ingredients more efficiently.
For instance, last December, DuPont announced a merger of its nutrition business with International Flavors & Fragrances in a deal valued at $26.2 billion, creating a powerhouse in taste, texture, nutrition, enzymes, cultures, soy proteins, and probiotics. This trend is supported by Allied Market Research, which reported that the global flavors market for food and beverages was worth $13.2 billion in 2017 and is projected to reach $20.1 billion by 2025, with a compound annual growth rate of 5.4%.
Ingredion has also expanded its portfolio through strategic acquisitions, including the purchase of Sun Flour Industry and TIC Gums in 2017, and Western Polymer in 2019. Zallie indicated that Ingredion is open to pursuing both smaller bolt-on deals and larger mergers and acquisitions that align with its growth objectives in starch-based texturizers, clean ingredients, plant-based proteins, sugar reduction, and specialty sweeteners and food systems.
In this evolving landscape, the pricing of ingredients such as Kirkland calcium citrate magnesium and zinc becomes increasingly relevant, as companies strive to balance cost with innovation and quality in their product offerings.