Ingredion's strategy for capitalizing on innovation in the marketplace has helped deepen customer knowledge, which helps it to better problem-solve customer concerns and ultimately helps it to "win."
In an interview with Food Dive following Ingredion's presentation at CAGNY, Jim Zallie (pictured right), executive vice president, global specialities and president, Americas, and Tony DeLio (left), chief innovation officer and senior vice president, outlined a closer look at what the company's strategy entails, what trends lie beyond — and how Ingredion is positioned to succeed.
Winning, according to the presentation, primarily depends on staying on top of trends.
Outlining the 7 trends
-
Health & wellness
-
Cost reduction & affordability
-
Convenience
-
Low/no calorie
-
Food protection
-
Indulgence
-
Clean label
The company's specialty portfolio — which it wants to increase to approximately 30% of its net sales by 2019, up from 25% in 2015 — incorporates these trends.
"A lot of the ingredients that we're selling are higher-performance ingredients that obviously, the value proposition that we're selling is not just on a cost per pound but cost in-use," Zallie said. "So that’s obviously the way we approach it. It's inevitable. It just pulls on the demand for innovation, and that again plays to the strengths that we have in regards to intimate knowledge of our customers ... We obviously can draw upon our R&D resources to problem-solve."
The company bulked up those R&D resources in 2015 by investing $43 million. It launches about 30 to 40 new products each year, with new applications in tow.
"So we not only look at innovation from a standpoint of what new products we introduced ... but really the definition of innovation is how are we helping our customers to innovate and then we want to win," Zallie added.
Trends of the future
Zallie and DeLio highlighted the microbiome as a trend to watch going forward. "It is obviously something that's gaining a lot of traction," Zallie said.
The company is looking at how it might collaborate with probiotic supplying companies to develop targeted prebiotics. Markets and Markets estimates the 2015 global probiotic ingredients market at $33.19 billion and projects it will reach $46.55 billion by 2020.
"Is this going to be a personalized nutrition play or is there more of a mass nutrition play? That's what's unknown at this point," DeLio added.
Additionally, the plant-based and clean label trends aren't going away. Zallie compared the plant-based foods rise to a category that's seen large changes: milk.
"When something becomes so mainstream, especially generationally as well, so with millennials and plant-based diets, it's very similar to when consumers shifted from whole milk to 2% to 1% to skim," he said. Once tastes and preferences change, people will get used to not eating animal meats, according to Zallie.
New investments
In order to keep up with consumer trends, the company has prioritized acquisitions and investments to help broaden is portfolio and achieve growth. Case in point is the Kerr and Penford acquisitions highlighted during its presentation:
Another critical element of the strategy is harnessing different approaches across its regions.
" ... I think one of the keys to our success is that we are a global company in 40 different countries … The taste and trends are different in each one of the different regions, so we feel it’s very important to be a local supplier," CEO Ilene Gordon, who has been with the company since May 2009, told conference attendees.
Increased investment from manufacturers in Mexico — like Mondelez, brewers, and confectionery companies — are good news for Ingredion, which recently announced a $30 million investment in the country. Regulation there introduced on high caloric snacks & beverages in 2014 caused activity to drive innovation and alternative formulations. It's cascading effects like these that are determining the future of the food and beverage industry.
There will be two big investments coming this year in Q2 and Q3 — one in Indianapolis and one in Thailand, geared at supporting investments for the growing wholesome franchise and delivery systems platforms, according to Zallie. He told Food Dive that the investments are on time and on budget but would not dislcose further details.
Snack on
Snacking is obviously top of mind for the industry, a critical component at this year's CAGNY presentations — and Ingredion was no exception. This makes sense: According to the FoodThink white paper "Snacker Nation," snack sales in the U.S. are expected to increase from $34.2 billion in 2005 to $47.5 billion in 2015.
According to DeLio, its key customers are some of the largest snack manufacturers. He spoke to one head of R&D recently, who said their strategy is sneaking nutrition into products. DeLio cited pulses as an example of a cost-effective way to put protein in products.
"Ultimately what we offer our customers and what they value the most is the depth of our technical expertise for sure, providing robust, cost-effective solution but also the speed," DeLio said. "And the culinology allows us to be faster and more focused and also brings in that whole creative flair, which is exciting."