Ingredients maker plans tasty business transformation with data & AI
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Ingredion plans to be R&D arm for smaller companies looking to test new ingredients.
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Tastes are constantly changing.
Remember bacon-flavored ice cream? Pumpkin-spiced everything? Five hundred kinds of coconut water. What about cotton-candy-flavored grapes? Add the dizzying array of appealing packaging claims including non-corn, non-GMO, non-grain, gluten-free, USDA organic, low-ABV, and today’s favorite, sustainable. It’s incredible food and beverage industry execs sleep at all.
Approximately 30,000 new food and drinks products are launched every year in the U.S., and despite exhaustive research and testing, the majority fail. One study estimated that new product failure costs the U.S. food industry $20 billion a year. Suffice it to say, food and beverage companies are hungry for more reliable ways to predict the future of flavor.
Enter Ingredion Inc., headquartered in the suburbs of Chicago, a global ingredient manufacturer serving customers in more than 120 countries. With 2021 sales of nearly $7 billion, the company turns grains, fruits, vegetables, and other plant-based materials into ingredients for the food and beverage industry, among other markets. While you may not have heard of the company, odds are you’ve tasted it, as much as three times a day, given the ubiquity of Ingredion’s products in such familiar foodstuffs as corn flakes, tomato soup and fried chicken.
It’s a fast-moving, highly experimental sector. The pressure to stay ahead of changing consumer tastes has meant Ingredion and others like it are constantly searching for ways to shorten the product development cycle.
“We’ve shifted from making single ingredients to making ‘food systems,’” says Bob Border, chief data officer at Ingredion. “Say, for example, Pepsi needed starch plus something else, with a certain viscosity or sweetness, we blend these elements together into a system, shortening their time to market.”
Keeping up has meant a continuous journey of business processing reengineering, according to Border—in other words, radical change enabled by technology. “It’s called digital transformation these days,” he smiles.
Ingredion was the merger of two giants, when Corn Products acquired National Starch for $1.3 billion in 2010. “We were a starch company,” says Border. “In less than a decade we went from a few products to more than a thousand ingredients.” Today the company counts most of the largest consumer packaged goods companies as well as smaller, local businesses around the globe as customers.
One of its most popular products is stevia, an alternative sugar made from the leaves of the stevia plant, which makes up almost half of the company’s revenue. But the fastest-growing segment at Ingredion is plant-based proteins with sales up more than 250% in the first quarter of the year. It’s a booming space, with plant-based foods like Impossible Burger skyrocketing in popularity in recent years; the sector is projected to hit $162 billion or as much as 7.7% of the global protein market in the next decade, according to Bloomberg.
So while the ingredients business is strong with some fast-growing segments, there remain some challenging headwinds. Ingredion’s food and beverage customers are concerned about inflation, the reliable supply of ingredients, the rising cost of corn since the Ukraine-Russia war, shortages of talent and a drop in R&D budgets. All of the above has meant they are leaning heavily on Ingredion for quick recipe reformulation and alternative ingredients at the lowest possible price.
Border believes cloud-based data analytics and artificial intelligence can alleviate some of these challenges and even set up the company to deliver new revenue streams down the line. The company has built 25 innovation “Idea Labs” around the globe and is using cloud technology to connect these labs and centralize all its data so that its teams can share ideas, knowledge, recipes and formulations quickly and easily anywhere in the world.
Called Innovation 360, the goal of the program is to bring food manufacturers and ingredients closer together to get products to market faster. “Customers can use it to innovate and develop new formulations without having to use our R&D team directly,” Border says.
Picture a not too distant future where AI technology can also scrutinize current taste trends to figure out what customers crave now and predict what they’ll want next. With all its data together in a central repository, applying machine learning is the next logical step, Border says.
Few companies are set up to do AI at this scale.
The reality is AI can be complex and often requires significant business transformation. It also demands a specialized talent pool of data scientists and machine-learning engineers, which most companies cannot afford. Border says this presents an opportunity for Ingredion. It has historical data on consumer tastes and preferences going back decades and the foundational data infrastructure and AI capabilities in place via cloud services—a powerful combination.
“In the future we could be the R&D arm for smaller companies,” he says. “We are a ways away from that, but it could be a transformative play for us.”