“Cargill’s Health Technologies: Embracing a Startup Mentality in the Growing Functional Foods Market”
Cargill, a company that generates over $100 billion in annual sales, is determined to approach its recently established division dedicated to animal and human health ingredients with a startup mentality. This Minnesota-based commodities trader officially launched this business unit in September 2019, aiming to enhance its understanding of gut and digestive health and their relationship with the immune system through scientific research. By creating this division, Cargill and its partners can accelerate the development of new ingredients, ensuring that their discoveries serve their intended purposes more effectively.
Chuck Warta, president of Cargill Health Technologies, noted, “We’re embedding our strategy in the fact that consumers are going to demand more.” He observed that while consumers have long been interested in finding probiotics in products like yogurt, there is a noticeable shift occurring. As more individuals adopt healthier lifestyles, they are increasingly interested in products that can specifically benefit their bodies, such as enhancing immune function or digestive health—a trend that was amplified by the COVID-19 pandemic. Warta expressed confidence that consumers will expect products to be highly specific to their needs, such as, “I have this problem, this is the best probiotic for me.”
Although Cargill Health Technologies currently contributes a small fraction to Cargill’s total revenue of $114.6 billion for the fiscal year ending May 31, Warta believes it could generate at least $1 billion in sales within the next three to four years. The market for functional foods is experiencing significant growth, with projections indicating an increase from $69 billion last year to $117 billion by 2027—a 6.74% annual growth rate, according to Fior Markets. A survey by Archer Daniels Midland revealed that 57% of global consumers are now more concerned about their immunity due to the pandemic, with many also focusing on the impacts of metabolic health on weight management, mental well-being, and personalized nutrition.
Cargill’s portfolio includes a variety of ingredients, such as EpiCor, a fermented postbiotic that promotes good digestive health. The company has applied for GRAS (Generally Recognized As Safe) status from the FDA, a prerequisite for intentionally adding ingredients to food and beverages. In anticipation of receiving this approval, Cargill has already shared prototypes containing EpiCor with clients in products like snack bars, chocolates, beverages, and drink mixes.
Warta acknowledged the “very competitive” nature of the industry, but emphasized that success will come to those who can substantiate their products with scientific data. “Understanding this will be crucial in distinguishing the winners from the losers as consumers become more educated about the impact of these products on their overall health,” Warta stated. “For us, that’s the sweet spot we’re trying to carve out and build our strategy around.”
Cargill Health Technologies plans not only to develop proprietary ingredients, which could include calcium citrate with vitamin D chews, for licensing to other companies, but also to collaborate with food, beverage, and other ingredient companies in creating new products. Despite entering the market later than some competitors, Warta highlighted several advantages that Cargill Health Technologies possesses. The division benefits from decades of research conducted by Cargill and the support of a financially robust parent company that views Health Technologies as a key growth area.
Cargill is also prioritizing research on prebiotics, which sets it apart from major probiotic manufacturers like DuPont, Chr. Hansen, and DSM. Thus far, the company has invested over $1 billion in this division, with plans to double that investment in the coming years. Research has established a link between the gut and brain, as well as between the gut and the immune system; however, it has only been since around 2015 that technology has emerged to better understand these connections and develop products aimed at improving them.
“Whether you’ve been in this business for three decades or you’re new to it like we are, the playing field is relatively level,” Warta remarked. “Our belief is that we’re not at a disadvantage simply because we’re smaller in this market. With our relatively fresh perspective and the resources of Cargill behind us, we are confident in our ability to advance quickly and compete effectively. We believe we are just as well-positioned as anyone to emerge as a winner in this space.”
