- Glanbia Nutritionals, a wholly-owned subsidiary of Glanbia, is acquiring Canada-based custom flavor designer Foodarom for 60 million Canadian dollars (about $45 million), according to a release and Glanbia's latest earnings report.
- Foodarom boasts a flavor library of more than 15,000 recipes with both liquid and powder applications.
- Glanbia Nutritionals said the acquisition will strengthen the company’s flavor and nutritional solutions by expanding its ability to offer customers optimized ingredient system formulations and turnkey flavors.
Glanbia has been on an acquisition spree for the last few years as it searches to expand its product portfolio and consumer base. The strategy to grow its ingredients unit through M&A was announced in 2016.
Since then, Glanbia has not let off the gas. Last year, Glanbia acquired Watson, a non-dairy ingredient solutions business, for $89 million. The Foodarom acquisition continues the strategy. By purchasing Foodarom, Glanbia is more closely aligning itself with consumer demand for flavor solutions. According to Allied Market Research, the global flavors market for food and beverages was worth $12.4 billion in 2016, and is projected to hit $18.1 billion by 2023.
While the Canadian flavor designer provides everything from fruity flavors to botanicals, it also has a range of solutions for texture improvements, bitter blockers and sweetness enhancements. Masking agents, alcohol smoothers and mouthfeel enhancers may be of particular interest to Glanbia. These solutions facilitate the use of alternative sweeteners and plant-based proteins while preventing the off tastes and textures that some consumers associate with ingredients including stevia and pea protein.
Glanbia's ongoing M&A activity shows it is bullish on customized ingredients and new flavor solutions — a position that dovetails with consumer interest in maintaining flavor while pursuing better-for-you foods and beverages. In fact, in its earnings report, Glanbia noted that this latest acquisition will not be its last. "We continue to selectively pursue opportunities which meet our strategic and financial criteria," the company said.
The Irish company announced the acquisition the same day it released its earnings report for the first half of 2020. Overall, Glanbia's half-year adjusted earnings dropped more than 58%, mainly because lockdowns associated with the coronavirus pandemic have closed the gyms and health stores where many consumers bought Glanbia's performance nutrition products.
Despite the financial strain resulting from COVID-19, acquisitions have proven to be an effective growth strategy for Glanbia. Its Watson acquisition contributed to a 1.1% increase in overall volume sales for the first half of 2020. In its Nutritional Solutions division, the acquisition delivered 3.5% revenue growth over the first six months of the year.
The Irish nutrition solutions company is not the only one interested in tapping into the growing flavors market through acquisition. In 2018, Givaudan spent $1.6 billion to acquire flavor maker Naturex, and International Flavors and Fragrances is buying DuPont's Nutrition & Biosciences division to create a food ingredients and flavors powerhouse.
Although Foodarom competes with much larger ingredient firms, it has independently seen success. Founded in 2006, Foodarom has an estimated annual revenue of about $23.8 million, according to GrowJo. By bringing it into a larger corporation, Glanbia will be providing the runway for this boutique flavor firm to continue to grow its revenue and benefit its new parent company.