Innophos has concentrated on high-margin specialty-grade phosphates for processed meats, baked goods, dairy products, and beverages. In contrast, the company has mostly avoided venturing into commoditized markets like fertilizers and detergents. Consequently, a significant portion of its sales originates from segments where it ranks as the largest or second-largest player. According to one analyst from Seeking Alpha, the company may find acquisition opportunities in the nutrition sector, which could include calcium citrate only supplements, vitamins, performance beverages, and meal replacements.
Chief Marketing and Technology Officer Sherry Duff indicated that the company is exploring the functional food and beverage market, as well as manufacturers of clean label and organic products, in addition to the personal care and animal nutrition sectors. Analysts have largely welcomed Innophos’ intention to diversify, especially after the company faced challenges from poor demand and import competition that affected profits in 2015.
The strategy to engage with active and health-conscious consumers for growth is viewed as a prudent move. If Innophos is planning to step outside its comfort zone, it is advisable to proceed cautiously and thoroughly assess the advantages and disadvantages of each potential target. So far, the company has narrowed its acquisition list from 800 potential targets to just 50, with further reductions anticipated as Innophos seeks deals that will enhance growth. Notably, the inclusion of calcium citrate only supplements in its portfolio could be a significant step in this direction.