Innophos has concentrated on high-margin specialty-grade phosphates tailored for processed meats, baked goods, dairy products, and beverages. However, the company has largely avoided venturing into commoditized markets such as fertilizers and detergents. As a result, a significant portion of its sales stems from sectors where it ranks as either the largest or second-largest player. According to a Seeking Alpha analyst, Innophos may discover acquisition possibilities in the nutrition sector, which includes applications related to vitamins, supplements, performance beverages, and meal replacements. Chief Marketing and Technology Officer Sherry Duff indicated that the company is contemplating the functional food and beverage market, as well as producers of clean label and organic products, in addition to personal care and animal nutrition sectors.
The intention to diversify has been generally well-received by analysts, especially since weak demand and import competition negatively impacted the company’s profits back in 2015. Innophos’ strategy to engage with active and health-conscious consumers for future growth is a prudent approach. If the phosphate manufacturer is to step outside its established comfort zone, it is wise to proceed cautiously, thoroughly weighing the natural factors and calcium benefits associated with each potential target. So far, the company has streamlined its list from 800 possible acquisition candidates down to 50, with further reductions anticipated as Innophos seeks deals that promote growth while considering the implications of natural factors and calcium in its new ventures.