Kerry to buy clean-label preservatives maker Niacet for $1B

Dive Brief:

• Irish ingredients company Kerry Group has agreed to acquire clean-label, low-sodium preservatives specialist Niacet from private investment firm SK Capital for roughly $1 billion. Following the deal’s closing — slated to happen by the end of the third quarter — Niacet will become part of Kerry’s global food protection and preservation platform.

• In a press release, Kerry noted that Niacet’s portfolio of conventional organic acids will complement its clean-label focus. Niacet offers vinegar-based preservation technologies for meat and plant-based foods, and has a proprietary drying and granulation process for bakery, meat and pharmaceutical applications. 

• In 2021, Niacet is expected to have sales of approximately $220 million, according to Kerry. As demand is growing for clean-label products, Kerry has made several acquisitions to increase its capabilities in the space over the past few years. 

Dive Insight:

Many consumers are starting to prioritize natural ingredients and clean labels over brand recognition and product descriptions when making food purchases, according to a 2019 white paper from Kerry. Preservatives in particular are an ingredient that consumers take into consideration. Recent research from the International Food Information Council found that four in 10 consumers seek out natural preservatives. 

With territory across a number of segments including baking, meat and plant-based foods, Niacet’s clean-label preservation technologies have broad applicability for Kerry.

“The acquisition of Niacet’s complementary product portfolio enhances our leadership position in the fast-growing food-protection and preservation market and significantly advances our sustainable nutrition ambition,” said Kerry CEO Edmond Scanlon in a statement. “Niacet is a business with market-leading positions, differentiated technologies and a strong and highly experienced management team.”

Founded in 1924, Niacet has produced propionate salts for the bakery industry since the late 1970s, and today is said to have the largest capacity in North America for organic acid salts, including sodium acetate, sodium diacetate, and calcium propionate. In the clean-label space, it offers several vinegar-based preservatives, for applications ranging from meat, poultry and fish to baked goods. It has customers in 75 countries and manufacturing facilities in Niagara Falls, New York, and The Netherlands.

Kerry has been closely tracking the clean-label space through consumer-focused research and positions itself as a resource for product reformulations. In a 2020 interview with Food Ingredients First, company execs noted that the pandemic has caused consumers to focus more on product labels and avoid artificial ingredients.

Last year, Kerry announced a goal of reaching over two billion consumers per day with its ingredients by 2030. To that end, it has adopted an aggressive M&A strategy to quickly ramp up its offerings. 

In 2018, it announced it was purchasing Ariake USA, a manufacturer of clean-label taste solutions for poultry, pork and vegetables, and Southeastern Mills’ North American coating and seasonings business. It also partnered with Renaissance BioScience to make, sell and distribute the clean-label Acryleast, a non-GMO, acrylamide-reducing yeast enzyme. At the end of 2019, it acquired Georgia-based IsoAge Technologies, a supplier of healthy, clean-label, muntifunctional ingredients, and Quebec-based Biosecur Lab, which provides natural antimicrobials made from citrus extracts.

The wider range of options Kerry is able to offer by picking up clean-label providers such as Niacet, the stronger its position will be as a leader in that space, and the better understanding it will have of how different ingredients work together to achieve successful product reformulations.