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.
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.
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.
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.
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.
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