Event: Institute of Food Technologists (IFT) 2019 Annual Event and Food Expo
Report by: Consumer Group Managing Director Brant Cash and Vice President Andy Warczak
Event Overview: IFT’s Annual Event and Food Expo focuses on “the science of food”—including research and design, ingredients, safety and quality, technology, equipment, processing, packaging and manufacturing, suppliers and buyers, policy makers, and academics—with the goal of advancing food safety, nutrition, and sustainability.
Why is this industry on your radar?
Cash: “The food ingredients industry is large and diverse, with attractive growth segments. Investors can participate in food industry megatrends such as natural, organic, clean-label, and plant-based products without having to bet on a single consumer brand. In addition to these growth opportunities, many ingredient suppliers offer staple products that consumers need across any economic environment, which provides recession resilience.”
Which trends, companies, or business models were top of mind at the event?
Warczak: “Natural, organic, and clean-label all continue to be relevant trends, as they have been for many years now. The focus on plant-based alternatives is a more recent development that we expect to be a major driver over the next several years as a result of consumers becoming increasingly interested in plant-based products, ranging from non-dairy milk alternatives to plant-based meat alternatives to plant-based proteins.”
Cash: “We are also seeing more interest among leading food brands in natural ingredients. As part of their broader clean-label initiatives, brands are looking to replace artificial flavors and colors with ingredients that consumers can pronounce on the label.”
What opportunities are these dynamics creating for strategic buyers and private equity investors?
Cash: “Large consumer food companies are transforming their product portfolios through the acquisition of emerging brands that meet today’s consumers’ needs. The leading ingredient suppliers are looking to do the same to remain relevant and generate growth. For example, Givaudan and International Flavors & Fragrances Inc. (IFF) invested billions in 2018 to acquire Naturex and Frutarom, respectively, and expand their natural, plant-based offerings. While strategic buyers are highly active in the sector, there are also meaningful opportunities for private equity investors to partner with private businesses to support their organic growth, professionalize operations, and position those companies for sale to a strategic buyer.”
Published June 2019