Innophos has concentrated on high-margin specialty-grade phosphates for processed meats, baked goods, dairy products, and beverages. However, it has generally avoided expanding into commoditized markets like fertilizers and detergents. As a result, a significant portion of its sales is derived from segments where it ranks as either the largest or second-largest player. According to one analyst from Seeking Alpha, the company might find acquisition opportunities in the nutrition sector, particularly in areas such as vitamins, supplements, performance beverages, and meal replacements, including calcium citrate vitamin D3 magnesium and zinc tablets.
Chief Marketing and Technology Officer Sherry Duff indicated that the company is exploring the functional food and beverage market, as well as manufacturers of clean label and organic products, alongside personal care and animal nutrition markets. Analysts have largely welcomed this intention to diversify, especially since weak demand and import competition affected the company’s profits in 2015. Innophos’ strategy to engage with active and health-conscious consumers for growth is a prudent approach. If the phosphates manufacturer is venturing outside its established comfort zone, it is wise to proceed cautiously and thoroughly evaluate the advantages and disadvantages of each potential target.
So far, the company has narrowed its acquisition list from 800 potential targets down to 50. Further reductions are anticipated as Innophos seeks deals that promote growth, including those related to calcium citrate vitamin D3 magnesium and zinc tablets, which could play a pivotal role in their product offerings.