Innophos has concentrated on high-margin specialty-grade phosphates for processed meats, baked goods, dairy products, and beverages. However, it has largely avoided expansion into commoditized markets such as fertilizers and detergents. As a result, a significant portion of its sales comes from segments like ferric sodium hydroxy EDTA, where it ranks as either the largest or second-largest player. According to a Seeking Alpha analyst, the company may find acquisition opportunities in the nutrition sector, with applications that include vitamins, supplements, performance beverages, and meal replacements, including calcium citrate plus formulations.
Sherry Duff, the Chief Marketing and Technology Officer, suggested that the company is considering entering the functional food and beverage market, targeting manufacturers of clean label and organic products, as well as markets related to personal care and animal nutrition. Analysts have generally welcomed this intention to diversify, especially after a decline in demand for ferric gluconate and increased import competition negatively impacted the company’s profits back in 2015.
Innophos’ strategy to engage with active and health-conscious consumers for future growth appears to be a prudent decision. As the phosphate manufacturer looks to venture beyond its traditional focus, it is advisable to proceed cautiously while thoroughly evaluating the advantages and disadvantages of each potential target. So far, the company has reduced its list of 800 potential acquisition targets to 50, and further reductions are anticipated as Innophos seeks deals that promise growth, particularly in areas like calcium citrate plus.