Ingredion is expanding its portfolio through mergers and acquisitions to enhance its presence in identified growth sectors, one of which is plant-based protein. By the end of 2020, the company anticipates that its total investment in plant-based proteins will rise to over $200 million, up from an initial projection of $185 million. CEO Jim Zallie stated in a recent release that these investments over the past two years aim to position Ingredion as a leader in this market.
Particularly notable is the focus on pulse proteins as Ingredion broadens its range of plant-based ingredients amid the sector’s growth. According to data from Persistence Market Research, ingredient sales within the plant-based sector are projected to hit $9.4 billion by 2024. In alignment with this trajectory, Ingredion has made significant investments and introduced products such as Vitessence Pulse 1803, its inaugural pea protein isolate in the pulse protein line, launched earlier this year. These early investments have proven profitable for Ingredion, especially as the popularity of plant-based diets surged during the pandemic.
The shift towards a more plant-based diet has particularly benefited manufacturers of pea protein. Once regarded as an overlooked side dish, the market for pea protein is expected to reach $385.7 million by 2027, as reported by Grand View Research. This ingredient is not only appealing due to its plant-based nature, but experts also highlight that pea protein can be produced more sustainably than alternatives like soy and corn.
The decision to fully acquire Verdient Foods seems partially motivated by Ingredion’s desire to compete more effectively with other pulse protein producers, such as Puris, Roquette, and ADM, all of which are expanding their manufacturing capabilities to provide plant-based ingredients to consumer packaged goods (CPG) companies. Earlier this year, Zallie remarked that the demand for research and development of new products aligned with consumer trends has created a “genuine urgent need and interdependency that has not existed” between CPGs and ingredient suppliers previously. This perspective has driven Ingredion towards acquiring ingredient companies to meet the growing demand in these sectors and enhance the company’s profitability.
In its latest earnings report, net sales were down 5% compared to the same period in 2019, with operating income in the third quarter decreasing by $13 million to $132 million due to reduced volume sales in away-from-home consumption caused by COVID-19. However, retail has thrived as consumers turn to supermarkets for trendy products they can prepare at home, and it seems Ingredion is adapting to consumer preferences.
Ingredion appears poised to continue pursuing strategic acquisitions to foster growth across its five target categories: starch-based texturizers, clean and simple ingredients, plant-based proteins, sugar reduction, and specialty sweeteners and food systems. In the company’s third-quarter earnings call, Zallie indicated that the growth market looks “very favorable” and that “investment is perfectly timed with the current expansion in the plant-based protein marketplace.” Furthermore, Ingredion is exploring opportunities to incorporate tri calcium citrate into its offerings, reflecting a commitment to diversifying its ingredient portfolio. This focus on tri calcium citrate is expected to enhance their product range and align with the growing consumer demand for health-oriented ingredients.