30K Feet: Key Takeaways from Food Ingredients Europe 2019

Harris Williams professionals regularly attend industry conferences and events. On the flight home, they share three key takeaways to help shape your strategy.

Event: Fi Europe & Ni—the world's largest gathering of ingredient buyers and decision-makers.

Report By: Will Bain, managing director; Andreas Poth, director; Andy Warczak, vice president; and Konstantin Molinari, vice president, all from the Harris Williams Consumer Group

Why is this industry segment on your radar?

Bain: Food ingredients are at the forefront of every trend in the broader food and beverage industry. The ingredients segment has become one of the industry’s leading sources of innovation, providing value-added, customer-centric product components that cater to or even inspire nutritional trends.

Poth: This was clear at the event. It’s the largest European gathering of ingredient companies, and it is the go-to show to see what the competition is doing and exchange knowledge on innovation and technology.

Warczak: This year there were more than 27,000 attendees and 1,700 suppliers spread across themed and country-specific pavilions. The scope of the event makes it a great place to quickly find relevant business partners, network and see emerging industry trends.

Which trends, companies or business models were top-of-mind at the event?

Poth: Many ingredient companies are focused on health-conscious consumers and on sustainability, so plant-based solutions were prevalent at the show. Exhibitors were showcasing meat substitutes, especially textured pea and bean proteins. While we expect this category—which is still smaller than the organic meat industry—to grow significantly over the next few years, it will probably remain a niche compared to the animal protein industry.

Molinari: It was also clear at the event that high-protein solutions are no longer limited to the meat and sports nutrition industry. Protein solutions are being incorporated into new applications such as ice cream, confectionery and even beverages (including the upcoming trend of collagen drinks) to add functionality to daily meal components and combine taste with nutritional value.

Warczak: The global call for more natural, clean label ingredients continues as well. More consumers are demanding natural flavors, colors and sweeteners. Natural sugar substitutes such as stevia and monk fruit, as well as selected sugar alcohols such as erythritol, are replacing traditional sugar and artificial sweeteners, and they were a prominent discussion topic throughout the trade fair.

What opportunities are these dynamics creating for strategic buyers and private equity investors?

Bain: As the industry continues to cater to all these trends, many ingredient producers are trying to become one-stop shops for their customers. There are several niche players trying to add other product categories or end applications through acquisitions. In addition, some large ingredient companies are considering acquisitions in specific areas that will move them closer to end consumers.

Poth: Consolidation in the ingredients space is certainly increasing, actively driven by large strategic players. There is also significant interest from private equity investors, particularly due to the B2B component and high-margin profile. In the past, low availability of attractive targets was the biggest issue for investors. Now we’re seeing more private equity investors acquiring smaller businesses with the intent to add other niche players and create a platform large enough to attract the attention of strategic buyers.

Published December 2019