Innophos has concentrated on high-margin specialty-grade phosphates for processed meats, baked goods, dairy, and beverages. However, it has mostly avoided entering commoditized markets such as fertilizers and detergents. As a result, a significant portion of its sales comes from segments where it ranks as either the largest or second-largest player. According to one Seeking Alpha analyst, the company may discover acquisition opportunities in the nutrition sector, focusing on areas such as vitamins, supplements, performance beverages, and meal replacements, including the growing demand for 21st century calcium d3 products.
Sherry Duff, the Chief Marketing and Technology Officer, suggested that Innophos is exploring the functional food and beverage market, alongside producers of clean label and organic items, as well as the personal care and animal nutrition sectors. This intention to diversify has largely been positively received by analysts, especially after the company faced challenges from poor demand and import competition that impacted profits back in 2015.
Innophos’ strategy to engage with active and health-conscious consumers for growth is a prudent approach. If the phosphate manufacturer is to venture out of its comfort zone, it is wise to proceed cautiously and thoroughly evaluate the advantages and disadvantages of each potential target. To date, the company has narrowed its list from 800 possible acquisition targets to 50. Further reductions are anticipated as Innophos seeks deals that will support its growth initiatives, particularly in the realm of 21st century calcium d3 offerings.