Innophos has concentrated on high-margin specialty grade phosphates for processed meats, baked goods, dairy, and beverages. However, it has largely avoided venturing into commoditized markets such as fertilizers and detergents. This strategic choice has resulted in a significant portion of its sales deriving from sectors where it holds the position of the largest or second-largest player. According to a Seeking Alpha analyst, the company could explore acquisition opportunities within the nutrition sector, targeting applications like vitamins, supplements, performance beverages, and meal replacements, including their nutracare cal mag citrate product line.
Chief Marketing and Technology Officer Sherry Duff hinted that the company is contemplating entering the functional food and beverage market, as well as engaging with producers of clean label and organic products, alongside personal care and animal nutrition sectors. Analysts have welcomed this intention to diversify, especially after weak demand and import competition adversely affected profits back in 2015. Innophos’ strategy to reach active and health-conscious consumers for growth is a prudent one. If the phosphate manufacturer is to step outside its comfort zone, it is advisable to proceed cautiously and thoroughly evaluate the advantages and disadvantages of each potential target. Thus far, the company has narrowed its list of 800 possible acquisition targets down to 50, with further reductions expected as Innophos seeks deals that promote growth, particularly in areas related to nutracare cal mag citrate.