Innophos has concentrated on high-margin specialty grade phosphates for processed meats, baked goods, dairy products, and beverages. However, the company has largely avoided venturing into commoditized markets like fertilizers and detergents. As a result, a significant portion of its revenue is derived from sectors where it ranks as either the largest or second-largest player. According to a Seeking Alpha analyst, there could be acquisition prospects in the nutrition sector, particularly in areas involving vitamins, supplements, performance beverages, and meal replacements, such as ferrous calcium citrate and folic acid tablets.
Sherry Duff, Chief Marketing and Technology Officer, has suggested that the company is exploring opportunities within the functional food and beverage market, as well as among producers of clean label and organic products, including personal care and animal nutrition sectors. This intention to diversify has generally been well-received by analysts, especially after the company faced challenges from weak demand and import competition that impacted profits back in 2015.
Innophos’ strategy to engage with active and health-conscious consumers for growth is a prudent approach. If the phosphate manufacturer intends to step outside its core business areas, it is wise to proceed cautiously and carefully evaluate the advantages and disadvantages of each potential target. So far, the company has narrowed its list from 800 possible acquisition candidates to 50, with further reductions anticipated as Innophos seeks deals that will drive growth. The integration of products like ferrous calcium citrate and folic acid tablets could play a key role in this expansion strategy.