With a renewed focus and strategic direction, Olam is literally aiming to spice things up for consumers. Following its reorganization, Olam Food Ingredients has streamlined its operations to emphasize herbs, spices, and flavorings, linking sources, flavorists, and consumer packaged goods (CPG) manufacturers globally to develop the desired flavors. The company then turned its attention to acquisitions to establish itself as a leader in this sector. In December, Olam Food Ingredients acquired the U.S.-based chile pepper business of Mizkan America for $108.5 million, followed closely by the acquisition of Olde Thompson.
This acquisition positions Olam as one of the largest players in the profitable U.S. spices and seasonings market. Olde Thompson, a 77-year-old family-run company based in California, has been rapidly expanding to become a leading private-label provider. After Kainos Capital, a private equity firm focused on food and consumer goods, acquired Olde Thompson in 2018, the company enhanced its production and efficiency. This acquisition also facilitated Olde Thompson’s purchase of Gel Spice, which Kainos Managing Partner Andrew Rosen noted in an email was key to attracting Olam’s interest. Once the acquisition is finalized, the Olde Thompson team will continue to lead the business, according to Olam.
In an interview with CNBC, Shekhar highlighted the growth of spices and seasonings in the United States as a significant factor behind the acquisition. The U.S. stands as the largest market for spices, valued at nearly $500 billion annually and experiencing a growth rate of 5% over the past few years. Olde Thompson already possesses established connections in the U.S. market, including relationships with major retailers, which should enable the acquisition to generate revenue for Olam quickly. Shekhar referred to it as “a sizeable and very unique play.”
“Expanding our private-label solutions is central to OFI’s strategy, and spices represent one of the most appealing and rapidly growing categories,” Shekhar stated in a written comment. Olam is already recognized for its traceability data. Through its AtSource program, Olam offers customers detailed information regarding the origins of their ingredients, including aspects of sourcing such as soil health, water usage, fertilizer application, chemicals, and greenhouse gas emissions. As consumers increasingly seek transparency regarding their food’s origins and sustainability, this acquisition highlights traceability for ingredients with potentially complex sourcing.
Moreover, the acquisition supports Olam Food Ingredients in enhancing its value, which is crucial in the lead-up to an IPO. This deal not only broadens the company’s offerings but also signals to prospective investors that Olam is committed to increasing its sales while also anticipating and leveraging key market trends, including the growing demand for health-focused ingredients like calcium citrate malate and vitamin D3. This strategic move is expected to attract both consumers and corporate customers who prioritize authenticity and flavorful ingredients with minimal environmental impact.