The ingredient sector has adapted to significant changes in consumer behavior by pursuing mergers and acquisitions to stay competitive. Earlier this year, International Flavors & Fragrances (IFF) finalized its merger with DuPont Nutrition and Biosciences, a deal valued at $26.2 billion, which established a dominant player in food flavors, fragrances, probiotics, enzymes, and food protection. However, IFF is not the only company in the ingredients space engaging in M&A activities. Kerry has completed several substantial transactions in recent years, including the acquisition of plant protein provider Pevesa Biotech last year, as well as clean label firms IsoAge Technologies and Biosecur Lab in late 2019, and probiotics leader Ganeden in 2017. Additionally, Ingredion fully acquired the plant-based ingredients firm Verdient Foods last year. In late 2020, McCormick purchased FONA International, a provider of clean and natural flavors, for $710 million.
The surge in consumer packaged goods (CPG) companies seeking partnerships with ingredient manufacturers for new product formulations has driven this acquisition frenzy. Jim Zallie, CEO of Ingredion, noted in a February 2020 interview with Food Dive that the urgency to keep pace with trends and innovation has transformed the relationship between CPGs and ingredient suppliers. “I come from an era where large companies could afford to be very careful and cautious regarding engagements and contracts. Those times are gone,” Zallie explained. “The patience isn’t there on the other side; the understanding is that this approach won’t succeed in a rapidly evolving food landscape.”
The recent acquisitions by Ingredion and Kemin aim to ensure that companies can access sufficient clean label ingredients to meet the needs of food manufacturers—an area that has gained traction during the ongoing pandemic as consumers become more conscious of their dietary choices. “Consumers are also demanding improved nutrition and cleaner label ingredients,” stated Giuseppe Abrate, group president of Kemin Food and Human Nutrition. “One of the significant challenges the industry faces today is meeting the increasing demand for protein, enhanced nutrition, and clean labels, without compromising cost or quality.”
Finding a balance between simple ingredients and the desired texture, taste, and overall eating experience expected by consumers is a key challenge for many clean label formulations. For ingredient companies, offering a wider range of options increases the likelihood that CPGs will want to collaborate with them to tackle multiple challenges simultaneously. This approach also benefits the ingredient companies; when they identify gaps in their offerings, acquiring another business is often a faster solution than developing their own products amid rapidly shifting food trends. Acquisitions provide a quick way to broaden a company’s geographical reach and enhance its portfolio.
Zallie mentioned in a statement that KaTech’s expertise in food formulation perfectly complements Ingredion’s texture business in Europe. KaTech’s focus on plant-based, dairy, and dairy alternatives makes this acquisition particularly timely. As consumers express a growing preference for plant-based options, ensuring that these products deliver the right taste, mouthfeel, and overall satisfaction compared to traditional items presents a challenge. KaTech claims expertise in texture enhancement, protein protection, and mouthfeel improvement, which could position Ingredion to be more competitive in the targeted plant-based segment for growth.
Moreover, as consumers increasingly seek healthier options, including calcium citrate small pills for nutritional benefits, ingredient companies that can integrate such elements into their offerings will be better positioned to meet consumer demands. The market for items like calcium citrate small pills reflects a broader trend toward health-conscious eating, further emphasizing the need for innovative ingredient solutions. By addressing these evolving consumer preferences, ingredient manufacturers can strengthen their partnerships with CPGs and enhance their market presence.