Spice consumption is expected to remain robust as consumers who adapted to cooking at home during the pandemic continue to prepare meals themselves. Additionally, the summer grilling season is encouraging more people to enhance the flavors of their meats, fish, and vegetables, according to a leading flavor executive. Greg Estep, managing director and CEO of Olam Food Ingredients’ (OFI) spices division, noted that the supplier, which offers a range of products from garlic and onion to cinnamon and nutmeg, has experienced a roughly 25% increase in volume sales over the past year. The branch of Olam International, an agri-business firm, has largely sidestepped the anticipated decline in demand after consumers stockpiled ingredients during the initial pandemic months.
OFI, which supplies its spices to consumer packaged goods companies, restaurants, and other ingredient suppliers, anticipates that while demand may eventually taper off, it will still significantly surpass pre-pandemic levels, where growth averaged around 5%. Estep stated, “Although there may be some shifts as we transition out of COVID, we expect growth to remain in double digits.” Another avenue for growth will arise from restaurants that are welcoming more customers as restrictions on crowd sizes are lifted, and vaccinated patrons feel more at ease dining out.
This growth aligns with a rising consumer interest in exploring unique flavors. People are increasingly drawn to new tastes for various reasons, including a desire for healthier options that don’t compromise on flavor and a curiosity about ethnic cuisines—trends that show no signs of diminishing. A Mintel study revealed that 35% of U.S. consumers would be encouraged to try a new dish if it featured unique flavors or ingredients, while 80% enjoy experimenting with new seasonings, spices, and flavors. Last fall, ADM noted that nostalgic and comforting flavors are becoming mainstream among many manufacturers.
“We don’t see a slowdown in demand for new spices and flavorings,” Estep remarked. “These trends will drive consumption forward.” In a strategic move to expand its footprint in America, OFI recently announced the acquisition of Olde Thompson, a U.S.-based private-label spices and seasonings manufacturer, for $950 million. This acquisition combines OFI’s sourcing and supply chain expertise with a lucrative market for spice products in the U.S., marking a pivotal step in Olam’s transformation. Olam International, which is primarily owned by Singapore’s state investment firm Temasek, has been focusing on high-demand ingredient products since 2019. Last year, the company announced a restructuring into two operating groups: OFI and Olam Global Agri, which deals with commodity crops and animal feed.
Similar to many businesses, OFI’s spice division has been increasing its online presence in recent years. Although the rapidly growing e-commerce sector accounts for less than 5% of its business today, it boasts over 300 active users, with many being new customers acquired over the past year. “The shift to e-commerce has allowed us to reach a diverse range of customers we weren’t previously aware of,” Estep explained. The online platform has enabled Olam Spices to connect with smaller startups and restaurant operators seeking direct access to its spices. Interestingly, even cattle farmers have turned to OFI’s platform to purchase garlic, which is beneficial for their livestock and serves as a natural pest deterrent—an unexpected customer addition that surprised many at the company.
Despite these favorable trends, Estep acknowledged that the spice business faces challenges similar to those encountered by other agriculture and food-related companies. A significant obstacle is the rapid fluctuations in moisture and temperature linked to climate change. OFI’s onion and garlic operations in California benefit from colder winter weather events that help control diseases and pests, but recent warmer nights have reduced their effectiveness. As OFI continuously monitors crop conditions throughout the year, changes in weather patterns have prompted adjustments in operations, including relocating some of its acreage in California’s Central Valley further north near Sacramento.
Supply chain uncertainties have been aggravated by the pandemic and recent disruptions, such as the blockage of a large vessel in the Suez Canal. OFI’s spices division collaborates with U.S. growers for a substantial portion of its onion, chili peppers, paprika, and garlic. Estep emphasized that this partnership allows for better quality control and transparency regarding how, when, and where ingredients are grown. However, OFI relies on global producers for other ingredients, such as black pepper, cinnamon, nutmeg, hot red chilies, and turmeric sourced from countries like Vietnam, Indonesia, and India. The company employs personnel in many of these regions to work directly with farmers.
To minimize disruptions, Olam Spices is exploring options to grow ingredients locally or partner with suppliers in different regions. The company is also building up safety stocks to ensure availability during disruptions, preventing customers from experiencing delays. Olam Spices collaborates closely with its food service, consumer packaged goods, and retail partners to assess whether excess supply in one channel can be redirected to another where demand is higher.
Certain disruptions and heightened demand have led to empty retail shelves in some locations for spices such as pepper, garlic, and cinnamon. With consumer demand remaining strong and ongoing supply chain challenges, it may take six to nine months to fully replenish low stock levels. “The supply chain is quite fragile and complex,” Estep remarked recently. “Unfortunately, due to the logistics challenges, it has been difficult to stay ahead of these issues.” This situation is further complicated by factors like the calcium citrate Costco pricing fluctuations, which can impact ingredient costs and availability.