The changing ingredients landscape: overview
- The ingredients market is split into three tiers: global giants, diversified majors and hundreds of specialist niche players
- Pressure from GLP-1 drugs and clean-label demand is forcing companies across all three tiers to rethink growth strategies
- Mid-sized players are increasingly turning to acquisitions
- Success is shifting from broad portfolios to deep expertise
- Despite a flurry of M&A activity, the sector remains highly fragmented
The world of ingredients houses some of the world’s biggest and most influential companies yet can still often feel like it resides in the shadows. It receives sparse coverage from analysts. Minimal attention from national media. Tate & Lyle’s ongoing sale to Ingredion is one of the few examples that receives a spotlight.
It’s especially curious as there’s a major transformation going on in the sector. Tate & Lyle is just the latest of several notable deals including Döhler’s £183m takeover of Treatt and IFF’s sale of its food division to private equity, both of which happened earlier this year.
There was also the huge $41bn merger of Royal DSM and Firmenich and the joining of two industry stalwarts, Chr. Hansen and Novozymes, among others.
So how is this enigmatic market shaping up after all these deals?
Feeling the heat
The ingredients industry can broadly be grouped into three tiers. At the top is Cargill and ADM, two global giants with combined revenues of over $200bn.
The next tier down includes the likes of Tate & Lyle, IFF and Glanbia which, while significantly smaller than the industry giants, are still often big enough to be listed on major stock exchanges and sell a wide portfolio of ingredients.
Tier three, meanwhile, contains hundreds of firms selling a small range of specialised goods and with revenue typically less than $30m.
However, whether big or small, nearly all are now feeling the heat from the proliferation of GLP-1 weight-loss drugs and a backlash against processed food. It’s a tough time to be dealing in sweeteners, preservatives and emulsifiers when those are often the very ingredients customers are reading labels to try and avoid. Tate & Lyle has consequently struggled to meet investor expectations for several years while IFF’s food ingredients division was its weakest across the whole company.
“The Western world is approaching peak calorie consumption, so volume-led growth is largely over and every ingredient now has to earn its place in the formulation,” says Ina Dawer, an analyst at Euromonitor.
“They are not attempts to cover the entire ingredients landscape. They are targeted moves to build depth and comprehensiveness within specific complementary segments.”
Oliver North, a director at Oghma Partners
Strongest demands
For ingredients companies, the strongest demands coming in from manufacturers are for healthier fats, more protein and fibre, and less sugar and salt, says Willian Oliveira, Cargill’s vice president of strategic marketing.
They also increasingly want ‘clean-label’ ingredients like starches and sweeteners, which can meet expectations for minimally processed foods while still delivering the functionality required in modern food products. “These trends are directly influencing where Cargill invests and innovates,” Oliveira says.
But few companies have Cargill’s budget and scope for innovation. That means even among major players like Ingredion or Döhler, it’s often felt the best option is to look externally and find another company to try and solve their problem.
In many cases, that means doubling down on existing specialities and developing greater expertise in those areas rather than nudging the portfolio into wider corners of the ingredients world.
Oliver North, a director at Oghma Partners, believes deals like Ingredion’s buyout of Tate & Lyle or the DSM-Firmenich merger all share a clear strategic logic. “They are not attempts to cover the entire ingredients landscape,” he says. “They are targeted moves to build depth and comprehensiveness within specific complementary segments.”
There is good reason for this, North argues. Primarily, that there remains an absence of a credible playbook for building a true “one-stop-shop” global ingredients platform. IFF arguably came closest, he suggests, having pursued an aggressive acquisition strategy of acquiring Frutarom in 2018 and DuPont’s Nutrition & Bioscience business in 2021. “But the group found itself with a wide portfolio that proved difficult to manage cohesively.”
The value of expertise
The other reason is that expertise has become increasingly valuable in a world where customer expectations are driving ever more complex food science, says Elizabeth Thundow, vice president for food and nutrition at Kline and Company.
While adding ingredients is often fairly straightforward, the huge swathe of replacements required at the moment is a far more difficult affair, Thundow explains.
This is because manufacturers will typically need an entirely new suite of ingredients alongside the replacement just to maintain the old taste and texture, she says. “So as an ingredients manufacturer, they need a whole toolkit of different ingredients to then sell these ready-made systems.”
“That’s what’s driving a lot of these mergers,” she adds. “They not only they need a whole portfolio, they also have to become a formulation specialist, technical support and regulatory experts.”
If that’s the case, then it would appear to favour the biggest companies such as ADM and Cargill who already have the broadest range of ingredients as well as the most sophisticated technology able to produce new ones.
“They will be the winners,” says Thundow. “They’ve not only got those big R&D centres but I think we’ll also see more consolidation as they look to gobble up those smaller players bringing novel ingredients.”
Cargill’s Oliveira similarly acknowledges that it will be the companies that combine scientific credibility, ingredient innovation and global scale that are best positioned for growth.
A fragmented market
But even after a recent wave of consolidation and a sweep of trends that seemingly favours the big players, the ingredients market generally remains structurally fragmented, says North, pointing out there are still about 30 ingredients businesses with revenues over €1bn.
The alternative sweeteners market, for example, was worth around $6bn in 2025 yet a combined Ingredion Tate & Lyle entity would represent just 15% of that, according to research from Kline and Company.
“The market is far from approaching the kind of oligopoly structure seen across other sectors in the wider food industry,” North explains. “For example, Big Food, where Nestlé, Kraft Heinz, PepsiCo and Coca-Cola control a massive share of the industry.”
Ultimately, the recent wave of mergers is less about creating ingredient conglomerates than adapting to a food industry that is becoming more scientifically demanding and commercially unforgiving.
Consolidation is creating bigger, more capable businesses and, for now at least, expertise rather than sheer scale may prove the industry’s most valuable ingredient.
