Ingredion – A Hyper Focus on Speciality Ingredients – 20
August 2021
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Specialist:
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Bob O’Mara (BO)
Former Senior Director, Marketing Food & Beverage Segments, US & Canada at Ingredion Inc
Agenda:
1. Ingredion (NYSE: INGR) Q3 2021 strategic update – foodservice as a future success opportunity
rather than a requirement
2. Volume growth across consumer segments
3. Increasing specialities as a percentage of net sales, including how Ingredion can enter and compete
with players such as Cargill and ADM (NYSE: ADM) in the alternative proteins segment
4. Demand trends amid coronavirus
Contents
Q: Could you give an overview of how new entrants, pressing challenges and the overall growth opportunity
have evolved over your time in the speciality ingredients industry?
Q: Could you explain how the dynamics have changed across different speciality segments such as plant-
based and sugar reduction? How has the demand for speciality platforms changed in the last five years?
Q: Which of the trends you mentioned do you think Ingredion will focus on to be the next growth driver
within the core speciality ingredients segment, which has experienced double-digit growth?
Q: What are your thoughts on Ingredion’s size and ability to capitalise on key trends in a scalable way? Do
you think the company’s capacity limits it in being more aggressive? You mentioned Ingredion was a first-
mover in clean label.
Q: Could you elaborate on why you think Ingredion was late in entering the plant-based segment? You
mentioned that you think the company is playing catch-up.
Q: What’s your take on how trends we’ve discussed in the US have developed internationally? Are the same
adoption rates happening in Europe or are certain categories within specialities more adopted than others?
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Are certain categories prevailing better in the US? You mentioned you worked as a Technical Director in
Europe for five years.
Q: How consistently do you think Ingredion can take advantage of consumers being able to pay more for
speciality products in order to raise the product pricing it’s charging the larger CPGs and other food
processors?
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Q: Large CPGs with the know-how and balance sheets seem to want to bring plant-based and alternative
meat procurement and production in-house. How much flexibility do those players have to wean themselves
off the suppliers so that they’re not able to control certain crucial aspects to the product?
7
Q: How large is the opportunity for Ingredion to build a significant presence in foodservice? How is the
macro situation hindering foodservice companies’ ability to stay afloat?
Q: Dynamics are changing around “dirty labelling” and the historical trend of foodservice having more
leeway with ingredients. Consumers want to know more about what’s in their McDonald’s burger, not just
their supermarket aisles. How could Ingredion approach this? Could larger foodservice companies consider
cleaning up their ingredient lists?
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Q: Are there any areas besides plant-based products where you think Ingredion lacks significant presence? 9
Q: Are there any markets that you think Ingredion can focus more on scaling? It seems Ingredion is evenly
split across its geographies, except for the US, which is the biggest. Where is the company headed, given
management has talked about China? All the geographies seem to be growing at the same rate.
9
Q: What are your thoughts on saturation in the addressable market? It seems there’s always a new start-up
trying to innovate an alternative meat or product but there are too many products. Could you outline the
implications of plant-based meat or other products stalling in reaching newer consumers if plant-based meat
grow from 6% to 10% of overall meat consumption then plateau? Do you think adoption will increase and
there won’t be a short-term horizon to it?
9
Q: What’s your take on Ingredion’s agility in the rapidly changing environment given its capabilities and
tech offerings? How does this agility affect the company’s core-customer volume?
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Ingredion – A Hyper Focus on Speciality Ingredients
Transcription begins at 00:00:07 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Ingredion – A Hyper Focus on Speciality
Ingredients. I’m Nyree Hinton and I’ll be facilitating today’s Interview with Mr Bob O’Mara, former Senior
Director of Marketing for Food and Beverage Segments, US and Canada at Ingredion Inc.
Bob, before we get started with today’s Interview, please state I agree or I disagree to the following statement:
You understand the definition of material non-public information and agree not to disclose any such
information, or any other information which is confidential, during this Interview.
BO: I agree.
NH: Thank you, Bob. Could you start by giving the audience an introduction of your background and various
roles you’ve held in the industry?
BO: In this industry, I started working at one of the predecessors of Ingredion, National Starch, which was
acquired in 2010, and one of the reasons for acquisition of National Starch was they wanted to diversify and
get more into the speciality ingredient space with corn products at the time, being a company that was mostly
selling basic ingredients. Originally, I’m a chemical engineer by training, but have had a variety of roles,
including five years as a Technical Director in Europe, and then I went to the business side and had a variety of
roles where I was leading a global specialities platform and then finally, with the marketing group in US and in
Canada. I know the speciality ingredients business. I would hope so. I’ve spent the bulk of my career in that
particular area and I really have a good grasp of both the technical business, as well as the marketing
challenges that the industry is associated with.
[00:02:21]
Q: Could you give an overview of how new entrants, pressing challenges and the overall growth opportunity
have evolved over your time in the speciality ingredients industry?
BO: Just so that we’re on the same page, when we talk about speciality ingredients, and this can cross across a
number of specific types of ingredients that do a range of things, but the commonality that speciality
ingredients have is that they’re really value-added ingredients. There is some sort of a step or something
unique in these ingredients and they’re typically used in more specialised applications than what we would
classify as basic ingredients or commodity ingredients, things like flour or corn starch. These are things that
are used in quite large percentages. Typically, speciality ingredients are more specialised and are unique in
providing a level of functionality. One of the things is, a good amount of these players actually do still supply
these commodity or basic ingredients and some of the assets or at least a portion of them are shared, so it can
be a bit confusing when looking at a company’s product portfolio if you’re on a website or whatever to really
know which ones are which, but typically, these are higher-margin, higher-valued products. I think probably
the most relevant thing that I can talk about that’s so current is really, there’s been an evolution of the
speciality ingredients space to meet the challenges of the food industry and I think the companies that have
been successful are the ones that have aligned themselves with more enduring trends, which I think Ingredion
has done quite well. I’m sure we’ll probably talk about that in a little bit, but if we look at what’s happening
right now, I think that the issue is really recovery of the disruption from COVID is key for all the major players,
and I think that some might have maybe even seen a boost from COVID.
I think this is really dependent on where their product mix was sold, whether it was geared more towards
Private and confidential 3
grocery or foodservice, or geared more towards frozen meals and things which consumers were stocking up
on, so there was actually quite a lot of luck involved in where this would happen where maybe some
customers, actually some companies saw a bit of gain from COVID. What I think is probably the biggest
challenge that they have is that they had a game plan, a strategic plan. Typically, I would think that they’re
looking out at at least five years, possibly longer depending on which suite that you’re talking about, but
typically, operational strategic plans are five years, and this all really went to hell because of COVID. I’ll give
you a really good example because pre-COVID, the handwriting was on the wall that sales were shifting from
buying food in a grocery store to dining out or purchases away from home, more pre-prepared meals, so a
good amount of their strategy was geared towards, “How do we leverage this? How do we change? How do we
direct resources?” and I think that putting together a plan, and I think there’s still quite a lot of uncertainty as
how things settle down, I think is really going to be one of the key challenges that are really pressing the
leadership at all of these companies. Regarding new entrants, I would say that this year marks the finalisation
of the IFF and DuPont deal, and it’s a mega-merger in a sense, companies of similar size, and DuPont had
acquired a number of what I would consider, being a long-standing member in the food industry, a number of
iconic companies in this ingredients space.
These were technically companies that were selling hydrocolloids and gums, and providing food systems. One
that just certainly comes to mind as being one of these iconic names was Danisco, a company that was very,
very active in Europe, and in the US and Canada, and I look at this company really as a speciality powerhouse
that is not necessarily saddled with the large corn wet-milling assets that produce products like high fructose
corn syrup. Ingredion, Tate & Lyle, ADM, Cargill, all of those companies have to manage their way through
this, and all of these companies have recognised the need for diversification and bringing on more speciality.
ADM, they purchased a number of years ago a German flavour company, a very, very good company, Wild as
it’s called here in the States, a few years back. There is all this interest in really creating at least a speciality
wing of these ingredients businesses, but I think the caveat is really that there have been plenty of companies,
including Ingredion back in the National Starch days, that actually had companies that were flavour
companies, Cargill as well, and they wound up spinning them off because they could not really leverage the
synergy. That’s really a challenge for IFF as they put on the texturising part of their portfolio and the
ingredients part. Can they really leverage that and create this speciality powerhouse, and leverage all of that
capability? I think a company that they should look as someone that I think has done a really good job of
supplying true specialities is Kerry. I think Kerry has done a great job of that and while maintaining a
significant flavour business as well.
[00:10:44]
Q: Could you explain how the dynamics have changed across different speciality segments such as plant-based
and sugar reduction? How has the demand for speciality platforms changed in the last five years?
BO: I think that the trends that have really been driving the speciality growth, and those were really ones that
were really heading into COVID and I think the only one that I think has really become wounded has really
been the whole foodservice trend where companies were looking to do that, but I think in some cases, these
major trends have actually intensified by some of the things that have happened during COVID. Probably the
biggest trend and most enduring trend that probably is going back maybe 15 years, and has just really gotten
quite intense probably in the last 10 in the States has been this whole area of wholesome, clean label. This is
encompassing, I’ll put in there, organic and non-GMO. These are providing simple labels for consumers.
They’ve indicated a preference time and time again that they would prefer to understand ingredient labels
rather than not, and certainly price factors in and everything, but if you ask any consumer and do good
consumer research, most of the consumers are going to indicate a preference for having familiar ingredients.
This is something that companies like Ingredion that has really been a pioneer in this category have really
taken advantage of, and I think wholesome, clean label has endured through COVID, and may be picked up
with an emphasis on healthy eating for sure, but I’ve seen sugar reduction and plant-based foods certainly
accelerate. Sugar reduction, I think that there’s just a clear emphasis. I think people have seen the devastating
effect of COVID with people that are obese, and I think that a number of people have really started to look and
say, “I need to prepare myself maybe to get through this pandemic,” and potentially, would see things in the
future happening, things where they need to be in better physical condition, so sugar reduction.
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Typically, what’s accepted with sugar reduction needs to be also with labels that people want. They don’t want
the artificial aspartames and products that might taste good, might taste sweet, but carry the baggage of that,
so that’s a combination and there have been a number of new products that have been introduced, as well as
improvements on the stevia platform that have been driving in producing really good products with reduced
sugar, and then the whole area of plant-based foods, I think, has accelerated. COVID has accelerated the
adoption not only from health, but I think that people have just been exposed to a lot of horror stories about
the meat industry. The use of antibiotics with cows and everything really has driven the adoption of almond
milk way back when and that whole plant-based milks area has really taken a significant share out of that. I
liken what’s happened with showing how meat is produced and the conditions, I think, has really given a bit of
a bad image to the meat industry, and I think people are more willing to even jump into the plant-based foods
and they have just been a lot more accessible, and the products that have been produced have been very, very
good and have gotten good reactions, so I see that accelerating at least in the near term. Those are the trends
that I think are probably the most relevant for the ingredient companies and especially Ingredion, these
continued wholesome, clean label, sugar reduction, plant-based foods, and maybe foodservice goes in the back
and maybe comes out at another time when things make a bit more sense. I think that.
[00:17:00]
Q: Which of the trends you mentioned do you think Ingredion will focus on to be the next growth driver
within the core speciality ingredients segment, which has experienced double-digit growth?
BO: I think Ingredion has done a really good job over the last number of years of focusing resources and
aligning to these big, enduring trends, so they’ve changed their focus and tried to consolidate resources behind
some of these big, enduring trends, and you can look to their website and you could see their offer. They were
really first and pioneered the whole wholesome, clean label area, so that they’ve been doing for quite a long
time. They’ve been involved in sugar reduction, but they’ve placed some really bold bets recently over the last
number of years in acquiring PureCircle, which was one of the leading, if not the leading stevia producer, as
well as allulose. This whole issue around obesity and diabetes, and consumers really indicating a preference, “I
need to reduce the amount of sugar,” they’ve bet heavily on and really put their money where their mouth is by
making these investments, and the last one which they have really made a big bet on has really been the whole
plant-based foods area where they’ve really acquired a pulse protein business. Pulses are peas, and chickpeas
and lentils, areas where they’re able to deliver proteins that are actually very well-received by consumers as
compared to some other functional plant proteins and are finding a way to really grow that business, as well as
building a plant to deliver the protein isolates that make up a big part of that. Essentially, this speciality
growth has really, really come from making these bets, as well as doing a good job of selling their other
specialities compared to their competition, but essentially, I would say what their strength has been, has been
that they’ve been very forward-looking and have done a good job of aligning to those key trends, which I don’t
see going away in the short-term.
[00:20:54]
Q: What are your thoughts on Ingredion’s size and ability to capitalise on key trends in a scalable way? Do you
think the company’s capacity limits it in being more aggressive? You mentioned Ingredion was a first-mover in
clean label.
BO: They were a first-mover in clean label. Let’s be clear. They were not a first-mover when it came to the
whole sugar reduction and as well as the plant protein business. In the plant protein business, I think they just
got in in the nick of the time and they are playing catch-up. I think Ingredion is a pretty big company these
days and certainly have a lot more resources than the company that I had worked for years and years ago,
which had no source of good ideas, but not necessarily the capital to invest. I think part of it is you have to
deliver results and place some bets, and maybe not all of them are going to pan out, so I would say probably
Ingredion’s challenge is how to take and place those bets, in recognising that some of them, they’re going to
Private and confidential 5
cost money, but they’re not going to pan out. Make sure you fail early, but make sure that you are taking
enough risk in helping to drive the innovation in the space, and I think that that’s probably their big challenge,
to keep current, and from my perspective, looking at the things they’ve been doing in JVs and things that
they’re doing, they’re looking to push the envelope more today than ever before. I think that will certainly help
them to keep current and relevant, and sustain momentum moving forward.
[00:23:23]
Q: Could you elaborate on why you think Ingredion was late in entering the plant-based segment? You
mentioned that you think the company is playing catch-up.
BO: There were other companies that had assets. Specifically Roquette, and Cargill and ADM had the ability
to make plant proteins and specifically, pea protein, and that’s really been the crown jewel of late because of
the usage of this in all of the higher-volume plant-based meat burgers like Beyond and Impossible. They’re
using a healthy slug of pea protein, so they needed to acquire and get those assets, and build a plant to be able
to supply, while the people that they’re competing in this space have had that, had those assets in place and
were able to supply right from the start. That’s where they had to play catch-up. Where I think Ingredion has
advantage in the sense that their culture in terms of providing support to customers and working on projects,
and innovating and delivering new products is, I think, where they will potentially outshine some of these
competitors that I don’t believe have the same level of innovation power. They essentially are supplying an
ingredient and the innovation in this space has really been taken by the Beyonds and the Impossible who use
proprietary processes to produce these products. I think what you’ll find is that Ingredion with their technical
resources and everything will bring new innovative products to the marketplace, and will probably take more
of a speciality approach than the other companies that are currently supplying. Hopefully, that clears that.
[00:26:08]
Q: What’s your take on how trends we’ve discussed in the US have developed internationally? Are the same
adoption rates happening in Europe or are certain categories within specialities more adopted than others?
Are certain categories prevailing better in the US? You mentioned you worked as a Technical Director in
Europe for five years.
BO: The whole clean label driver, it started in Europe and basically, it was started because the European
Union labelling and everything wanted to assign E numbers to everything that was considered, quote,
unquote, a food additive. The perception of this is that anything that had an E number was a chemical and
would be perceived bad, so this was the driver to really, can you take and produce things that would not be
necessarily considered this food additive? I would say that specifically, the birthplace of wholesome and clean
label really, if we say, is Europe, and the biggest volumes and everything really, if we’re even being more
specific, were in the UK where companies, specifically the makers of their ready meals, and these are at the
large supermarkets like Sainsbury’s, and Waitrose and Tesco, they wanted to have these appear as just like
shelf, things that consumers would work with. That was the drive and the adoption of removing things like
modified food starch and everything from the label, and that’s really where the trend took on and built
momentum. Since, has gone onto the continent, as well as in the US. I would say probably where it started in
the 2000s momentum-wise in Europe, I would say greater momentum in the 2010 decade for sure in the US,
as well as, at one time, non-GM. GM was not a big issue in the States. It since has become an issue, and I can
link a lot of this stuff potentially to social media and the chatter of some thought leaders and everything, but in
short, I think a lot of these trends, these markets, Europe and US, there are consumers that can afford to pay
more for some of these foods. In some of these markets, you don’t have the same level of consumers, so you’re
going to see less of these trends in some areas just because based on economy, so that’s something to drive,
but I think overall, and just like as social media, internet and everything, I think trends truly have become
more global. I would certainly say the plant-based trend, it appears to be just as strong in Europe as it is in the
States.
Private and confidential 6
[00:30:14]
Q: How consistently do you think Ingredion can take advantage of consumers being able to pay more for
speciality products in order to raise the product pricing it’s charging the larger CPGs and other food
processors?
BO: You have far more leverage when you have products that are special than when you have products that
are not special, that can be supplied very easily by a number of products, by a number of companies. Adding
on the large CPG companies and how they operate, and can switch business on and off, and things and try to
have that leverage, it can be very, very difficult to increase price depending on what the market is doing, but
the companies that Ingredion is competing with are all faced with similar factors, If we look at a variety of
input costs, whether it’s energy or corn costs or other employment-related things, they’re all faced with the
same mix of costs, but the key determinant in how much leverage you have is, number one, how much value
are you really providing to the customer? If I miss out and I switch to another competitor for a product that I
think is going to be equivalent, am I going to miss out on something else, maybe some value-based services
and things, and everything that’s helping to drive innovation?
I think and it’s certainly been my experience that I would say that Ingredion tends to be aggressive regarding
price increases and I think as a rule, the higher level of differentiated the product, the more that they will try to
take advantage of that to keep their margins up, but I think also, it comes down to the professionalism of the
salespeople and the risk profile. I would say overall, the industry probably has gotten more responsible where
they’re not looking to take and make the volume plays, and take on big volumes that may be less than
profitable, so if everyone is behaving in a responsible way, which I think is probably where the industry is right
now, I think their ability to pass on increases so that there isn’t a margin erosion, I think, is pretty good. I
would say that it’s probably better now than it was maybe 10 years ago. I do think that some of the strength of
the large CPGs has diminished just because I think in some cases, they’re relying on a lot of innovation and
ideas, and things from their suppliers. I think they are more dependent on suppliers and in turn, have lost
some leverage.
[00:34:23]
Q: Large CPGs with the know-how and balance sheets seem to want to bring plant-based and alternative meat
procurement and production in-house. How much flexibility do those players have to wean themselves off the
suppliers so that they’re not able to control certain crucial aspects to the product?
BO: Ideally, all of these CPG companies would love to just buy basic ingredients and just have processing that
they’re able to do it in-house. What I don’t think they would necessarily want to do is to really become
vertically integrated where they would be taking on a lot of the processing. I think a lot of them have done that
from time to time and have seen the pitfalls in that, but I would expect that especially for ingredients that are
very specialised and expensive, and that they pay a lot of money for, they’re looking at ways for how do they
remove cost, and honestly, if I’m going to be critical of the large CPGs in the industry, their innovation power
hasn’t been that great. A lot of the innovation has come from smaller firms that have brought new things and
they’ve either bought the companies or purchased. What they are good at doing is taking cost out, so if
something’s expensive, they go through a methodical process, and some would argue maybe sometimes that
they go beyond taking the unnecessary costs out and they really degrade the product to a point where it
doesn’t necessarily capture the attention of the consumer. These are lessons that all of them are learning at
different rates, but there’s certainly always an appetite with this group of going to what they know how to do
best, which is to focus on reducing costs, beating up suppliers, trying to really get margin that way, as opposed
to increasing their sales and innovating with new products.
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[00:37:32]
Q: How large is the opportunity for Ingredion to build a significant presence in foodservice? How is the macro
situation hindering foodservice companies’ ability to stay afloat?
BO: If you think about the whole trend towards dining out has changed completely, and I think that if we look
at this whole space and where it was pre-COVID, it was really, as I mentioned earlier, these ingredient
companies were, “How do I get involved in this? How do I design products that are going to be speciality in
this place? Which products can we leverage?” Foodservice was not subject to the same labelling rules in the
States as things on the supermarket shelf, so there was a greater ability to use, for lack of a better term, we talk
about clean label and wholesome, kind of like dirty label ingredients. Chemical-sounding things would find
their way in and consumers wouldn’t know the difference unless they went through some sort of internet
search or requested information, but in any event, foodservice was seen as a place of growth. I honestly think,
as I mentioned earlier, as part of the strategic plan, how is it going to be? What I don’t have in front of me is
you break that down, are there some areas that are doing better than others, like in foodservice, and are those
impacting sales or not? Pizza, for example, could very well be doing well and all of the products that would go
into pizza, cheese and everything, those might be doing well. Some of the items that would be going into
maybe bakery or fillings or whatever might not be doing so well, so I think a part of is really very much the
overall what category in specific.
I think that what people don’t know is what does the new normal look like, and I think a lot of it depends on,
things were starting to seem a bit normal and now, with the Delta variant, people are pulling back. When do
we get to a place where people are going to feel comfortable living their lives again and doing the things that
they used to do? I think that’s really a very big question that’s probably impacting more than just the food
industry, but food is key because you’re actually doing things that people are advising against, and
congregating and enjoying food in restaurants and things, so I certainly think that that is a key challenge.
Regarding how it’ll impact Ingredion, I think Ingredion has enough other interests and focuses in trends that
this would not necessarily impact them as maybe it would other companies. A company like Kerry, I know,
might have been really, really impacted significantly with foodservice because they’re making a lot of products
that would then in turn be used in a variety of quick-serve restaurants and casual sit-down restaurants. I think
a lot of it depends, and how much willingness is there to stay in, but if we’re looking specifically at Ingredion, I
think they were looking at it probably more as an opportunity and I think that if anything, their business was
probably more focused, geared towards the grocery than in foodservice.
[00:43:04]
Q: Dynamics are changing around “dirty labelling” and the historical trend of foodservice having more leeway
with ingredients. Consumers want to know more about what’s in their McDonald’s burger, not just their
supermarket aisles. How could Ingredion approach this? Could larger foodservice companies consider
cleaning up their ingredient lists?
BO: There are companies that have done that and I think about probably the best example of a foodservice
company that has done that is Chipotle where they have just put everything out there and have leveraged this,
and have been quite transparent in that. Other companies, given with the rules and everything, have made
some of it transparent. It all depends on does the foodservice company feel that their brand, if they could
leverage this? Another one that has done it to a certain extent and talked about all the ingredients would be
Panera where they, “Here’s what we’re using. Here are no-nos,” and I think they’ve been quite successful with
it. Other companies just want to keep it and make it challenging to find ingredients. Go try to find what’s in
Pizza Hut pizzas or whatever. That’s a bit of a challenge because what people will find is that there are maybe a
lot of things that they just assume, because it’s in a restaurant, they’re not necessarily using the same
ingredients that the guys in the grocery store are, but I can assure you that they are, that this isn’t all just made
fresh and ready. They’re using a lot of things to try to make it as easy-to-put-together pizzas in a Pizza Hut or
other large chain as possible.
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[00:45:50]
Q: Are there any areas besides plant-based products where you think Ingredion lacks significant presence?
BO: There’s one that really, really comes across to me as an area. When you think about the demographics, if
you think about the ageing population, certainly in the western world, and the elderly population, this whole
area of clinical nutrition, I think, is an opportunity that they’re not capitalising on. They do have products that
are used in clinical nutrition, but I think that there is an opportunity for more, and I think there’s an area for
innovation and supplying a range of foods and nutrient-dense products. I could spend quite a long time
talking about where I think that there’s opportunity, but I do think they have some excellent capabilities where
they could use those capabilities to really help companies design better clinical foods. They have to be smart
enough to make sure that they’re getting to maybe different business models and things, and everything. They
might have to look at things a little bit differently because the sheer volume of what they’re going to be selling
is going to be different than things on a grocery shelf, but I do think that that’s an opportunity for very high
levels of profitability.
[00:48:14]
Q: Are there any markets that you think Ingredion can focus more on scaling? It seems Ingredion is evenly
split across its geographies, except for the US, which is the biggest. Where is the company headed, given
management has talked about China? All the geographies seem to be growing at the same rate.
BO: Ideally, the easiest places to grow are in the so-called emerging markets, theoretically, but then, there has
to be a level of infrastructure, and the ability to actually supply companies and get paid. I would say the least
developed area and continent would certainly be Africa where the coverage is really, it’s north Africa and
South Africa, and the whole middle is just truly a challenge, and knowing people that have tried to pioneer in
that space and everything, I think that there are a lot of challenges and I think it would be maybe something
for longer than the five-year future. If we’re looking on areas, and challenges and things, China has its
challenges and Ingredion has been set up well, has facilities there and I think is probably doing a good job, but
there are other countries. India, there’s huge population, wonderful food culture, but there are a lot of
protective measures to prevent companies from supplying to them, so that would be certainly an opportunity,
would there be places where they could grow in India? Emerging geographies are clearly the easiest and the
place to grow, and as I said, the thing is, is there enough infrastructure there that you’re able to actually to do
business and to get the products, and ultimately have these small companies be successful and to grow into
bigger ones?
[00:51:34]
Q: What are your thoughts on saturation in the addressable market? It seems there’s always a new start-up
trying to innovate an alternative meat or product but there are too many products. Could you outline the
implications of plant-based meat or other products stalling in reaching newer consumers if plant-based meat
grow from 6% to 10% of overall meat consumption then plateau? Do you think adoption will increase and
there won’t be a short-term horizon to it?
BO: My personal belief is that plant, and for a variety of reasons, will continue to grow and be a great industry
for these food ingredients to capitalise on. Ingredion does sell to processed meat, but to be honest, that’s
rather small and nowhere near the opportunity that they would have with plant-based, with the proteins and
texturisers. They also have interest in regular dairy, but the products that they would sell into plant-based
dairy would probably be higher level of speciality products. If you’re assuming that somebody’s going to go
from regular yoghurt to plant-based yoghurt, they would be probably making out better in terms of their sales
to plant-based yoghurt than they would to regular, so this is a trend that is something that certainly favours
Ingredion. If it did stall, I think it would certainly stall part of their growth. They would have to identify
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another area. I think that there are some barriers to entry in this particular space. These aren’t insignificant
manufacturing plants, to deliver these protein products and these protein isolates. These aren’t something you
can easily do. It does take some capital and some know-how to make these products. My personal opinion is
that, and I don’t know where it will level out, but I think there are going to be a number of drivers, and one of
the key ones is cost. It seems that the cost of meat is just increasing, and increasing and increasing, and we’re
talking about plant-based meats, and then there are also potentially fermentable products and cultivated
meats. Those potentially could be maybe more of a risk to Ingredion where they’re not necessarily formulated
with their products, then the whole plant-based slowing down. That would be, I think, more of a risk, in my
opinion, growth of these other areas of non-animal-based meats where Ingredion would not be selling
products or speciality products into them than that, my personal opinion, and we could certainly have a
debate. I don’t see it getting saturated in the next 10-15 years.
[00:56:15]
Q: What’s your take on Ingredion’s agility in the rapidly changing environment given its capabilities and tech
offerings? How does this agility affect the company’s core-customer volume?
BO: I think that that is really an absolute challenge, is to keep their existing customers happy both from a
supply, as well as giving them attention, giving them innovation, while able to focus on the innovators, the new
segments and things, and it is just an absolute challenge to be able to do that. Certainly spending time with a
lot of the big companies maybe where profitability isn’t that good, but just based on the overall size of contract,
managing resources and everything is truly a challenge. I’ve been involved in the middle of it and it’s always a
debate you have with salespeople and everything, what’s the right amount of time, what should we be doing,
and I think doing that well, which is something that I would describe as execution business development and
everything, having the products and doing that well is really the key to being able really to grow. I think
everybody has mixed practice on it. No one does everything well and I think learning from what you’ve done
well, and improving on it and everything, I think, is really essential and key to the success of these companies,
and it shouldn’t be underestimated, but I do think it is a key factor, is really delivering on this to keep
momentum rolling.
[00:58:37]
NH: Thank you a lot, Bob. This was a really good Interview. We covered a lot and we went into a lot of detail,
which was helpful, and thank you clients for joining Third Bridge Forum’s Interview today. If you would like to
speak to Bob in a private call or meeting, please let your relationship manager know. Have a good one.
BO: Thank you. Been a pleasure.
Transcription ends at 00:58:54 of the recorded material.
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