BOCA RATON, FLA. – With total fiscal 2015 sales of $5.6 billion, Ingredion’s specialty ingredients business makes up approximately 25% of that amount. Management has set a goal to grow that amount to 30% of sales. The goal will be achieved by focusing on changing consumer preferences in developed markets, new opportunities in emerging markets and expanding the company’s texture, sweetness and nutritional offerings.
|Jim Zallie, executive v.p. of global specialties and president of the Americas for Ingredion|
“Around the world we think the growth will be balanced,” said Jim Zallie, executive vice-president of global specialties and president of the Americas for Ingredion, in an interview with Food Business News following the company’s Feb. 18 presentation at the Consumer Analyst of New York conference in Boca Raton. “As far as regions, North America is the largest and will propel a lot of the growth. Asia Pacific has been on a steep trajectory with double-digit growth in specialty ingredients. Our European business has the highest percentage of specialties as a region. Our most differentiated product lines are in that region.”
The company’s specialty ingredients portfolio includes such brands as Novation, Precisa, Hi Maize and Endura.
“We are continuously iterating,” Mr. Zallie said. “The Novation line first came out 19 years ago with three or four workhorse products. Now we have 60 or 70.”
In his presentation at CAGNY, Mr. Zallie highlighted consumer trends he believes will contribute to Ingredion’s specialty ingredients growth goal.
“The first is an overarching trend that has obviously been around in the food industry which is health and wellness,” he said during the presentation. “And we look at that in three different categories. One would be better-for-you; this could also be looked at as nutrition-minus … (and include) gluten-free or fat-free, for example.”
He added that nutrition-plus is another aspect of health and wellness and would involve the fortification of products with fiber or protein.
“Then there is the area of specialty nutrition,” he said. “These are very high margin products that are sold in the area, for example, of clinical and infant nutrition.”
Another trend he highlighted is affordable formulating.
“Five years ago we ramped up our marketing toward that and branded it as ‘value matters,’” he said. “Then we realized we had to be much more direct. So now it is ‘save money.’ We are working with customers to understand their processes to simplify the ingredients they use to reduce the energy they use to produce it, to reduce breakage, to reduce waste, and working capital. We are working in this initiative to save money, and we are getting a lot of kudos for that.
“It’s a universal conversation, especially in the emerging markets, which are really under pressure from a strong U.S. dollar. That approach is serving us well in South America and Asia Pacific.”
At CAGNY, Jack Fortnum, Ingredion’s chief financial officer, said acquisitions will also play a role in future growth.
|Jack Fortnum, c.f.o. of Ingredion|
“The ideal target would be $250 million to $500 million,” he said. “Obviously we don't want it to be dilutive to our specialty target. So based on our definitions of specialties it would have to have about 30% or more specialties.
“It has to have contracted growth opportunities, it has to be in a growing field, there have to be synergies coming out of it either from a revenue side or a cost side. And it has to be accretive to our margins.”