Innophos has concentrated on high-margin specialty-grade phosphates used in processed meats, baked goods, dairy products, and beverages. However, the company has largely avoided expanding into commoditized markets such as fertilizers and detergents. As a result, a significant portion of its sales comes from segments where it is either the largest or second-largest player. According to a Seeking Alpha analyst, there may be acquisition opportunities for the company in the nutrition sector, particularly in areas like vitamins, supplements, performance beverages, and meal replacements, including products like Citracal and Vitamin D.
Chief Marketing and Technology Officer Sherry Duff has suggested that Innophos is exploring the functional food and beverage market, as well as partnerships with producers of clean label and organic products, alongside ventures in personal care and animal nutrition. This intention to diversify has generally been viewed positively by analysts, especially in light of the challenges the company faced in 2015 due to weak demand and import competition impacting profits.
Innophos’ strategy to engage with health-conscious and active consumers is a commendable approach. If the phosphate manufacturer aims to step outside its traditional market, it is prudent to proceed cautiously and carefully assess the advantages and disadvantages of each potential target. So far, the company has narrowed its list from 800 potential acquisition candidates to 50, with further reductions anticipated as Innophos seeks deals that will promote growth, particularly in areas tied to health and wellness, such as Citracal and Vitamin D products.