“Rising Demand for Healthier Ingredients Drives M&A Activity in the Food Additive Sector”
As consumers and food manufacturers seek new flavors, textures, and healthier options, the role of food additive and ingredient companies has become increasingly significant. It’s no surprise that the DuPont unit is one of the fastest-growing divisions within a company that recently became independent following a three-way split earlier this year. According to Bloomberg, the bioscience division has experienced strong growth in areas such as probiotics and plant-based substitutes, which are currently in high demand. The success of products from Impossible Foods and Beyond Meat has motivated established CPG companies like Nestlé, Hormel, and Tyson Foods to enter this evolving market.
As more food companies venture into this sector, ingredient manufacturers will be on the lookout for additives that are not only better for consumers but also serve as realistic alternatives to traditional meat products. Merging the DuPont unit with another company’s resources could provide a more extensive toolkit and deeper employee expertise, enabling the creation of these ingredients in a quicker and more cost-effective manner. This concept could also extend to other areas in the food industry, such as developing substitutes for ingredients consumers are avoiding, like sugar. Researchers are also focused on finding ways to replace artificially produced flavors and colors with more natural options, as well as alternatives that are less volatile in price and less harmful to the environment.
The ingredient and food additive sector has been a hotspot for mergers and acquisitions (M&A) in recent years. Last year, International Flavors & Fragrances acquired Frutarom Industries for $7.1 billion, enhancing IFF’s capabilities in natural colors, enzymes, antioxidants, and health ingredients, while also expanding its reach to smaller and mid-sized customers, including private-label products that accounted for 70% of Frutarom’s sales. Additionally, Geneva-based Givaudan agreed to purchase a stake in the French plant-based ingredient company Naturex last year. Illinois-based Ingredion has also been actively acquiring companies like Sun Flour Industry, a rice starch and flour manufacturer in Thailand, and TIC Gums, known for its texturizers and gums such as acacia and guar.
According to Allied Market Research, the global flavors market for food and beverages was valued at $12.4 billion in 2016 and is projected to reach $18.1 billion by 2023, representing a compound annual growth rate of 5.5% from 2017 to 2023. As demand for their products intensifies, food additive and flavor companies are exploring more avenues for growth, with M&A taking center stage—a fact that both DuPont and any potential buyer of its rapidly expanding unit are likely cognizant of. However, the primary obstacle in any deal may be the price tag; at $20 billion, it could restrict the pool of potential buyers, despite the advantages that a merger could offer.
This surge in the food sector also aligns with the rising interest in health-oriented products, such as bariatric multivitamins with calcium citrate, which many consumers are seeking as part of their dietary supplements. The emphasis on creating healthier food options and ingredients, including those that can be integrated into products like bariatric multivitamin with calcium citrate, reflects a broader trend towards wellness. As the market evolves, the integration of such health-focused ingredients will likely play a crucial role in shaping the future of food innovation.
