ADM to buy Deerland Probiotics & Enzymes

Dive Brief:

• Archer Daniels Midland (ADM) has agreed to purchase Deerland Probiotics and & Enzymes, a provider of probiotic, prebiotic and enzyme technology. Terms were not disclosed for the acquisition, which is subject to regulatory approval but expected to close within the coming weeks.
• Deerland’s 320 employees would join ADM after the deal closes. The Kennesaw, Georgia-based wellness ingredients company has five manufacturing facilities, a fermentation plant and eight R&D labs globally, with 12 product lines focused on digestive health, women’s health, food intolerance, sports nutrition and immunity.
• ADM said the acquisition will help it capitalize on the $775 billion health and wellness category. Gut health has become a major driver of sales in the ingredients space in recent years as consumers prioritize products with functional benefits.

Dive Insight:

ADM said its acquisition of Deerland is part of a larger strategy to build a “full-scale global” wellness branch that could see revenues exceeding $500 million with the addition of the probiotics specialist.

In the press release, ADM pointed to other acquisitions it has made in support of its push into probiotics. These include the purchases of probiotics company Protexin, biotechnology company Biopolis, the expansion of probiotic production capacity in Valencia, Spain, and its joint venture with Vland on feed enzyme technology development.

The purchase also follows ADM’s investment last November in Seventure’s Health For Life Capital Fund II, a venture capital fund dedicated to health, nutrition, microbiota and digital health. These investments come as company research indicates that demand for functional ingredients has been booming amid the pandemic, with consumers especially interested in the link between immunity and their gut health.

Specifically, millennial and Gen Z consumers have taken a greater interest in probiotics and other gut health products than previous generations. This has helped drive the popularity of products that are said to be good sources of probiotics such as yogurt, kefir, kombucha, miso and kimchi. Food manufacturers have also explored the potential of probiotics. Chobani has launched a probiotic yogurt and drink line and Danone has played up their role in its Activia yogurt.

While there is still ongoing research into gut microbiota and its impact on health, scientists have discovered that it has a significant influence over a person’s digestion and weight. Research has indicated that probiotics can reduce flu-like illnesses along with boosting the immune system.

In a statement, Deerland CEO Scott Ravech said that the “hand-in-glove fit” of his company’s “portfolio of branded technologies, clinical studies and world-class dosage form production capabilities combined with ADM’s Health and Wellness solutions is strong and unparalleled, allowing us to provide our dietary supplement, food/beverage and companion animal customers with a much broader array of products and capabilities.”

The global probiotics market is expected to surpass $74 billion by 2025, according to Fortune Business Insights.

As probiotics and other gut-friendly ingredients have proved lucrative, other companies have made investments in the space. Cargill launched its Health Technologies division in 2019 with the expectation that it could reach $1 billion in sales in the next few years by delving into gut health and its effect on the immune system.