Ingredion’s diverse range of ingredients designed for everyday consumer staples and trendy categories positions the company well to weather economic downturns, according to CEO Jim Zallie in a recent interview. Originally focused primarily on specialty starches and sweeteners, Ingredion has evolved its portfolio to encompass over 1,300 ingredients, including texturizers, plant-based proteins, clean label ingredients, and specialty sweeteners aimed at sugar reduction. Zallie noted that this extensive portfolio aligns more closely with the needs of consumer packaged goods (CPG) companies and their consumers. “Our portfolio typically performs well during both recessionary and growth periods, which is reflected in our historical performance,” Zallie remarked during the annual Consumer Analyst Group of New York conference. “We believe this positioning will serve us well as we navigate these uncertain times and the potential for recession in certain markets.”
Ingredion’s products are available in 120 countries, serving over 18,000 customers, including restaurants, private label food manufacturers, and major CPG companies that produce everything from chips and pudding to ice cream, plant-based burgers, and candy. The diversity of Ingredion’s offerings, the variety of countries they are sold in, the range of products they are used for, and the different types of companies that purchase them help mitigate volatility that could otherwise disrupt its business if any one sector faced challenges.
The portfolio is divided into two segments: the core segment, which includes essentials like corn starch and glucose syrups used in battered and frozen foods, and the specialty segment, which provides ingredients such as plant proteins for dairy alternatives and stevia for sugar reduction. Both segments are aligned with current consumer trends, including health consciousness and environmental sustainability. Zallie noted, “There are areas of growth within both our core and specialty ingredients that have shown resilience amid last year’s uncertainties.”
The specialty segment, which is growing three times faster than Ingredion’s core business and is more profitable, accounted for 34% of Ingredion’s $8 billion revenue in 2022, up from 31% three years prior. The company’s recent successes stem largely from strategic decisions made when the economy reopened in 2021 post-pandemic, resulting in what Zallie described as “a bullwhip effect of strong demand” that strained inventories for many products. This situation compelled Ingredion to reevaluate its customer base and prioritize relationships with companies whose products align closely with its ingredient offerings. Notably, over 70% of new product launches last year contained ingredients that Ingredion produces.
While Ingredion declined some business opportunities, it compensated through enhanced operational efficiencies, increased margins, and greater profits from its most valuable products. This strategy remains intact despite improvements in the supply chain, significantly contributing to the recent rise in gross margins, even amid substantial price increases to counter inflation. “Customer centricity is one of our key growth drivers, but we recognize we cannot serve everyone,” Zallie explained. “We have strategically focused on growth opportunities and partnerships that align with our goals.”
In addition to texturizers and specialty sweeteners, a significant part of Ingredion’s future growth is anticipated in the $10 billion alternative protein market for plant-based foods and beverages, which is projected to grow at a compound annual growth rate of 6% to 8%, according to data shared during Ingredion’s CAGNY presentation. Although the plant-based meat sector has experienced a slowdown, with some companies exiting the market and others reducing their workforce or halting new product development, Ingredion is committed to expanding its customer pipeline in this area. The company has broadened its plant-based protein offerings, featuring a “diversified toolbox” of pulse protein flours, concentrates, and isolates, enabling customers to achieve the desired taste, texture, and nutritional value for plant-based products.
Zallie remains optimistic about the long-term prospects for plant-based foods and beverages, as consumers increasingly seek to reduce their animal protein intake and improve their environmental impact. “This category is still in its early stages. As with any emerging trend, it will experience periods of oversaturation where consumers may feel overwhelmed by the abundance of products, necessitating a selection process to identify the successful ones,” he said. “Our conviction remains steadfast. While there may be challenges ahead, we firmly believe this represents a growth opportunity for us.”
Additionally, in the context of health and wellness trends, Ingredion recognizes the importance of products like calcium citrate chewable supplements, which have gained popularity among consumers. The incorporation of such ingredients aligns with the company’s commitment to supporting consumer health initiatives. As Ingredion continues to celebrate its diverse ingredient offerings, including those that promote well-being, the company is well-positioned to navigate the evolving market landscape.