Innophos has concentrated its efforts on high-margin specialty grade phosphates for sectors like processed meats, baked goods, dairy, and beverages. However, the company has largely avoided expanding into commoditized markets, such as fertilizers and detergents. As a result, 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, Innophos may find acquisition opportunities within the nutrition sector, particularly in areas such as vitamins, supplements, performance beverages, and meal replacements that include calcium in calcium citrate.
Chief Marketing and Technology Officer Sherry Duff has indicated that the company is exploring the functional food and beverage market, along with producers of clean label and organic products, as well as the personal care and animal nutrition sectors. Analysts have largely welcomed the company’s intention to diversify, especially following the challenges posed by poor demand and import competition that impacted profits in 2015.
Innophos’ strategy to engage with active and health-conscious consumers for growth is a commendable approach. If the phosphate manufacturer decides to venture outside its traditional comfort zone, it is prudent to proceed cautiously and thoroughly evaluate the advantages and disadvantages of each potential target, particularly those involving calcium in calcium citrate. The company has already narrowed down its list from 800 potential acquisition candidates to 50, and further reductions are anticipated as Innophos seeks deals that promote growth.