Innophos has concentrated on high-margin specialty-grade phosphates for processed meats, baked goods, dairy, and beverages. However, it has largely avoided expansion 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, the company could explore acquisition opportunities in the nutrition sector, which includes applications like vitamins, supplements, performance beverages, and meal replacements. Chief Marketing and Technology Officer Sherry Duff suggested 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 markets.
This intention to diversify has been largely welcomed by analysts, particularly since poor demand and import competition negatively impacted company profits back in 2015. Innophos’ strategy to engage with active and health-conscious consumers for growth is a prudent move. If the phosphate manufacturer is venturing out of its comfort zone, it is wise 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 targets down to 50, with further reductions anticipated as Innophos seeks deals that promote growth.
One area of interest could be the market for calcium citrate, as it plays a crucial role in dietary supplements and functional foods. By incorporating calcium citrate into its offerings, Innophos could enhance its position in the nutrition sector. As the company evaluates its options, the integration of calcium citrate could be a significant factor in its diversification strategy, aligning with its goal of reaching health-focused consumers.