Competitor Strategies in Ingredients

August 2020

There are four key trends which are shaping the ingredients industry; naturally functional food, plant-based eating, clean label and organic, which have been amplified by the Coronavirus. Ingredients companies are expected to intensify their activities around these key trends to respond to changing consumer eating habits, while the adverse impact of COVID-19 in foodservice is expected to see companies shift their activities to the retail side of the business.

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Key Findings

Ingredients companies innovate to keep pace with consumers' changing habits

Innovations have been key to growth in the ingredients industry, as consumers’ eating habits have evolved significantly over the past decade. Health and environmental concerns have increased the number of consumers trading up to naturally functional food with sustainable sourcing, leading ingredient companies to seek alternative protein sources beyond the popular soy, such as pulses.

M&As remain an important way of ensuring future growth for ingredients companies

The ingredients industry was quite dynamic in terms of M&A activities in 2019, with the merger of Dupont and IFF having the highest profile, due to the scale of the deal. To accelerate their growth in this highly competitive environment, international players have acquired smaller scale speciality companies to address evolving eating trends more quickly, or to position themselves better in emerging markets.

Growing interest in food origins and traceability leads ingredients companies to adopt a vertically integrated supply chain model

Ingredient origins and traceability have become more important not only for food manufacturers but also for end consumers, leading more and more ingredients companies to opt for vertical integration in their business, looking for greater control of the supply chain.

Asia Pacific sits at the centre of new investment, with its high potential for food consumption

With its substantial population, Asia Pacific leads food and beverage consumption, making it one of the first choices when it comes to expanding businesses. To capitalise on this demand, many major players in the ingredients industry are investing in Asia Pacific, either through M&A or by launching new products specifically targeting this region.

Industry Impact

COVID-19 impact summary
The five-step consumer progression of COVID-19

Introduction

Scope
Key findings

Business Strategies

Packaged food maintains its leadership among eight industries
Total volume growth is hindered by low sales in foodservice
Givaudan: “Natural” acquisitions for expansion
Cargill capitalises on growing demand for protein
Cargill: China sits at the centre of investment for future growth
Kerry blends authenticity with functionality
Kerry gains from meat-free launches in the UK
Dupont invests in probiotics
COVID-19 strategy: identify the key categories
IFF shifts from flavours and fragrances to taste and scent
COVID-19: essentials gain while discretionary and foodservice lose
IFF to merge with Dupont’s Nutrition and Bioscience unit
Ingredion focuses on speciality ingredients portfolio to drive growth
COVID-19’s immediate impact on Ingredion
Royal DSM invests in “better for you”
DSM focuses on infant nutrition for future growth
Firmenich looks to partnerships for improved market response
ADM capitalises on the growing demand for ancient ingredients
Starch and sweeteners lose out from the impact of COVID-19
Tate & Lyle’s growth strategy: “sharpen, accelerate and simplify”
Sucralose thrives in retail due to stockpiling

Key Trends Impacting the Industry

About the strategic themes…
Strategic themes and hot topics in packaged food (1)
Strategic themes and hot topics in packaged food (2)
Examining key trends impacting ingredients

Case Studies

Demand for natural drives the growth of clean label
Givaudan strengthens its clean label credentials with acquisitions
Dupont builds up its clean label solutions with new launches
Kerry invests in acquisitions to enhance its capabilities in clean label
Tate & Lyle expands its clean label line, Claria
Supplying alternative proteins is on the agenda of big players
Givaudan looks for future protein sources
Could pea protein be the next frontier in plant-based?
Cargill to capitalise on growing demand for private label
DSM and Avril seek “Proteins of the Future”
ADM and Marfrig join forces
Kerry expands its plant-based offerings
Firmenich focuses on a better taste and texture for plant-based
Firmenich continuously promote new and ancient ingredients
Firmenich fights against waste of so called “ugly” berries
Organic is benefiting from increasing health conscious
Regulations are tightening around organic…
…which means opportunities and challenges for companies

Conclusion

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