Ingredient suppliers are among the biggest beneficiaries of the rapid shift in consumer demand for healthier and on-the-go offerings, Ingredion's top executive told Food Dive.
Ingredion CEO Jim Zallie said growing consumption of food away from home and changes in what the public looks for in what they eat — fewer ingredients, less sugar, sustainability and plant-based — has created a lucrative market opportunity for his company to help maintain the appearance and texture of these products.
"(For) those ingredient suppliers that can offer solutions faster, it means a tremendous growth opportunity for companies like ourselves, more so than ever in the past," Zallie said in an interview at the annual Consumer Analyst Group of New York conference last week. "There is just a tremendous amount of change going on, and consumers are dictating that change and driving that change."
Zallie said ingredient suppliers need to have a suite of offerings that can address everything in food — including its quality, texture, shelf life and nutritional profile, among countless other attributes that are crucial amid growing demand for shelf-stable, ready-to-eat options.
The U.S. Agriculture Department estimated that in 2017, nearly $870 million in food was purchased away from home compared to $748 million in the home, Ingredion noted in its CAGNY presentation, a gap that will further widen with increasingly on-the-go consumers.
Texture, or how the product feels in the mouth, includes crispy, hard, soft and crunchy options. It's a massive category that represents about 25% of the entire food ingredients space — nearly $41 billion in value, according to Ingredion. It's a major reason why the company continues to expand its reach across the texturizer category with an acquisition of Sun Flour Industry, a rice starch and flour business based in Thailand, and TIC Gums, a manufacturer of texturizers and gums such as acacia and guar.
As supermarkets offer more prepared foods to purchase, products are subjected to prolonged exposure to heat lamps or multiple heat cycles that risk making them less appetizing. With Uber Eats, DoorDash and GrubHub delivering more food directly to the consumer, enuring that the taste and quality mirror what is found in restaurants falls on ingredient suppliers like Ingredion.
An Asian fast food chain tasked the Illinois-based ingredients powerhouse with making sure the coating on chicken had the right amount of crispiness after it was delivered to a person's home. Ingredion also helped an English food service company develop a French fry coating to keep them crispy during delivery.
In New Zealand, it helped find a way to make a frozen gluten-free pizza with only natural ingredients stop cracking when it was baked in the oven. And in the U.S., it assisted a CPG company to make their portable bowls healthier and full of more on-trend ingredients.
Ingredion, which offers more than 1,000 ingredients to most large CPG companies as well as smaller, local businesses around the globe, increased its spending by 14% to $349 million in 2018 in an effort to capture growth, primarily in plant-based proteins and sugar reduction. Its spending level will be roughly the same in 2019.
"If you're not wired (into the market) then you’re not investing for growth," Zallie said. "Things are changing very fast right now and I think that puts you at risk" if companies aren't spending to address it.
The ingredients supplier has focused much of its work on collaborating with its customers. It has 28 "idea labs" around the world where food makers and other customers partner to help products tap into their full potential or solve problems that prevent them from getting to market. It also employs food scientists and culinary chefs who understand ingredients and how to work with them, which Zallie said gives his company — with nearly $6 billion in sales — an advantage over its competitors.
We "have the tools in the tool box built around certain attributes" that appeal to customers, Zallie said. "We're in the early innings" of the public demanding change in the foods they eat and that offers large growth potential for "innovative companies who can bring forward ideas and really offer consumers what they want."