Ingredion Sees Opportunity in Emerging Businesses

(Baking Business) – A key growth platform for Ingredion, Inc. is emerging businesses. Like other major food and beverage companies, the ingredient supplier sees a strategic benefit in helping entrepreneurs refine product offerings and set the stage for future scalability.

At the Consumer Analyst Group of New York conference this past February, Jorgen Kokke, executive vice-president of global specialties and president of North America, outlined the company’s approach. Labeling the strategy “food systems,” Mr. Kokke described the emerging business initiative as combining different ingredients synergistically.

“This really leverages Ingredion’s food science and formulation capabilities in our Ingredion Idea Labs,” Mr. Kokke said. “What is important to realize with this particular platform is that it resonates very well with the small- and medium-sized enterprises. Although many of these businesses are very well funded, they oftentimes lack scale, (and) access to good R.&D. resources.

“So, in a sense, you could say they partner with Ingredion and outsource the R.&D. to Ingredion. And this platform not only provides a very good revenue growth opportunity but also at margins that are double the rate of what we generally see in our specialties franchise.”

The challenge for the executives running Ingredion’s emerging business effort is engaging with smaller food and beverage businesses and beginning a dialogue.

“Ingredion started looking at this in a proactive manner three, three-and-a-half years ago,” said Evan Hyman, director of emerging business. “We have always worked with small companies, but we, like a lot of others, have seen changes in the market and wanted to approach this in a strategic manner.”

Ingredion did a survey of smaller food and beverage companies that revealed several insights, most notably many small companies had heard of Ingredion but didn’t know all of its capabilities. Additional insights included the need for a quick response to inquiries and the ability to order online and pay with a credit card.”

Ingredion is working with small business incubators like The Hatchery in Chicago and Mista in San Francisco to boost awareness. Mr. Hyman said he has four people on his team who are interacting with companies that fall into the emerging category, and it is a full-time job.

“We are not short of leads or companies coming to us for solutions,” he said. “And we are learning from them; many of these companies are driving trends.”

Unlike Ingredion’s larger customers, which have a technical team of experienced food science professionals to manage product development, some emerging businesses may pose their own set of unique challenges.

“The typical entrepreneur is someone who is wearing many, many hats,” Mr. Hyman said. “Maybe they have an M.B.A. and are the c.e.o., but they may also be the chef and the janitor. The start-up ecosystem is diverse and you have to be flexible in how you work with inbound requests.”

Giving emerging businesses center stage

At Natural Products Expo West, held March 5-9 in Anaheim, Calif., Ingredion had two booths at the show. One exhibited the company’s ingredient solutions portfolio and the second featured three emerging businesses with which the ingredient supplier has worked.

Jacob Deleon is the founder and “chief almond presser” for Origin Almond, a processor that manufactures a juice-like beverage made from almonds.

“The problem is things people initially thought were healthy, like juices, are loaded with sugar,” he said. “We wanted too find a way people could enjoy juices without the guilt of all of the sugar and carbs.

“So, we innovated with almonds. We developed a technology and process where you produce a beverage that is made from almonds, but the taste profile is that of a fruit juice.”

Mr. Deleon said he initially started calling the product almond milk, but since the taste profile is fresh and clean, like a juice, he tried positioning it as a juice and that seems to resonate with consumers, because it manages their taste expectations.

Unsuccessful efforts to replicate the sweetness of juice in a low sugar, no sugar formula is what led Mr. Deleon to Ingredion.

“They have helped us with the formulation, and we’ve been using one of their ingredients that is Reb M (stevia),” he said. “We added it to our formulation to give it that nice subtle sweetness without the aftertaste people associate with stevia.”

Through his early formulation efforts, Mr. Deleon learned quickly that all forms of stevia are not alike.

“My early iterations were actually using stevia I found on Amazon,” he said. “I thought stevia was stevia.”

Origin Almond has been on the market for approximately two years, but officially launched with its latest version in February in Whole Foods Market and Central Market in Texas.

“We’ve got about 50 doors so far and the response has been very good,” Mr. Deleon said. “I think the uniqueness of the product is one thing, but the low sugar is a differentiator in the juice aisle.”

The company is one of five start-ups participating in the Kraft Heinz Co.’s Springboard accelerator platform in 2019. Participants are given access to pilot plants and kitchens at Kraft Heinz’s innovation center in Glenview, Ill. The also will receive $50,000 in funding and a chance to earn up to $50,000 more during the program.

Moving cacao into the mainstream

Another emerging business Ingredion is working with is Upriver Cacao, a manufacturer of a cold brew beverage that features cacao as its central ingredient. Founders Claudia Bomgaars and Curtis Bomgaars started testing their product in farmers markets and have been refining the formula.

“We are the first cold-brew cacao on the market and we didn’t pretend we knew exactly what customers wanted it to be,” Mr. Bomgaars said. “We listened to them and that is what this whole first year has been about.”

Ms. Bomgaars is from Colombia and said she grew up drinking cacao.

“We wanted to create something that is creamy, a little more indulgent,” she said. “But then we also wanted to explore the goodness of cacao.”

Upriver Cacao products come in several varieties, including Dark Wild, Salted Caramel and Midnight Mocha. Dark Wild is the most popular variety and has 10 calories, zero grams of sugar and the antioxidant equivalent of 5 to 10 bars of chocolate, Mr. Bomgaars said.

The company started working with Ingredion as they were seeking stabilization options for the beverage.

“We’re not food scientists,” Mr. Bomgaars said. “I studied finance and Claudia studied art. We’re entrepreneurs and fine jumping into the unknown, but when it came to formulation, we needed support.

“What we found with Ingredion is they could provide us with support not only about what ingredients we should use, but in what ratios and how we could integrate everything into our production process.”

Product development at Upriver Cacao continues, Mr. Bomgaars said. The company is now focusing on using “clean” ingredients and reducing the sugar content.

“Sugar is a hot topic right now and we are trying to figure out where people want us to land in terms of total sugar content,” he said. “Right now, the idea is to be able to cut our sugar in half and be able to target single digits. We are always looking for ways we can improve. We’re small and that comes with its disadvantages, but one advantage is we can move fast.”