Acquiring these two U.S. companies will strengthen Kerry’s clean-label portfolio and, particularly in the case of Southeastern Mills’ coatings and seasonings division, enhance offerings for its meat clients. Kerry has expressed its intention to leverage Ariake’s “highly specialized extraction technologies and development capabilities [that] produce a suite of tailored solutions” across various markets. Overall, the Irish company is performing well, especially in the flavor segment. According to Food Ingredients First, Kerry reported a 4.1% increase in its taste and nutrition division during the first nine months of this year and confirmed an expected growth in full-year earnings per share of 7% to 10%. In this period, volumes rose by 3.5%, and revenues grew by 2.2%. The company estimates that 53% of its revenue is derived from the Americas.
While both Ariake USA and Southeastern Mills are privately held and do not disclose their earnings, they have been planning or executing facility expansions. In October 2017, Ariake announced a $17 million investment to expand its manufacturing space by 20,000 square feet at its Virginia plant. In August, Southeastern Mills revealed plans to construct a 120,000-square-foot warehouse and distribution center in Rome, Georgia.
Kerry has been actively pursuing acquisitions, having acquired probiotic developer Ganeden last fall for an undisclosed sum, and Wellmune from Biothera Pharmaceuticals in 2015. In October, Kerry agreed to purchase Fleischmann’s Vinegar Company and AATCO Food Industries for a total of $414 million. Recently, Kerry announced a partnership with Renaissance BioScience to produce, market, and distribute Acryleast, a non-GMO acrylamide-reducing yeast enzyme. This surge in mergers and acquisitions illustrates the company’s optimistic outlook on customized ingredients and seasonings, aligning with consumer preferences for maintaining flavor while opting for healthier food and beverage choices. A Technomic study from last summer revealed that 87% of consumers order ethnic dishes or foods with ethnic flavors, and 36% are interested in exploring regional varieties of mainstream ethnic cuisines to try new foods and flavors.
More importantly for ingredient companies, the study found that one-third of consumers consume ethnic food at least once a week, and 32% are willing to pay a premium for authentic options. In light of these trends, Kerry may seek to drive innovation with its two newly acquired seasoning companies and could pursue additional acquisitions soon.
McCormick & Co. serves as a prime example of a seasoning company that has thrived by capitalizing on consumer interest in flavors, particularly among millennials. McCormick’s sales are projected to rise by 12% to 14% during its current fiscal year, driven by demographic shifts and continuous innovation. As long as these ingredient-related deals yield positive results, M&A activity in the sector is expected to persist. This area appears to be a bright spot attracting both consumers and revenue, even as other consumer packaged goods companies face challenges. It is reasonable to anticipate that more businesses will seek to enter or expand their footprint in this domain.
In relation to health trends, products like Citracal Maximum Plus D3 may also gain traction as consumers increasingly look for ways to enhance their well-being, further driving interest in innovative food and ingredient solutions. The integration of such health-focused products could complement Kerry’s strategic acquisitions and market positioning.