ADM’s nutrition business adopts ‘ambidextrous’ growth approach amid slowdown

USA – ADM, a global nutrition giant, has unveiled a resilient strategy to navigate a slowdown in its nutrition segment with an aim to adapt and thrive in the market, ensuring its continued leadership in the global nutrition industry.

The company’s executives detailed their “ambidextrous” approach, focusing on enhanced productivity and innovation to drive both short- and long-term growth across the organization.

With an impressive annual operating profit exceeding US$700 million, ADM has maintained a strong presence in both human and animal nutrition.

However, executives acknowledged a decline in this sector relative to two years ago. This downturn has led the company to revise its growth projections for 2025, initially set in December 2021.

CFO Vikram Luthar recognized the cyclicality of market forces in ADM’s business and stated that the last few years, it has been net positive.

However, the nutrition segment has faced challenges, prompting Luthar to explain that ADM’s nutrition business would continue to outperform the market but at a slower growth rate than previously anticipated.

Vince Macciocchi, President of Nutrition and Chief Sales and Marketing Officer at ADM, attributed the nutrition slowdown to widespread destocking, which has negatively impacted numerous consumer packaged goods (CPG) companies in recent months. ADM’s plant-based meat business has particularly felt the pinch due to this trend.

Additionally, fulfilment issues in ADM’s flavors and pet businesses throughout late 2022 and into 2023 further impacted the nutrition business. Macciocchi noted that these issues are expected to persist throughout the year but should be resolved by 2024.

Despite these challenges, Macciocchi expressed optimism about ADM’s flavors business, which achieved a remarkable 21% growth in the second quarter.

He emphasized that ADM’s flavors business primarily caters to the beverage sector, offering a unique value proposition. Macciocchi sees continued accelerated growth in this area.

ADM also plans to bolster its nutrition business by assisting food and beverage manufacturers in managing inflation through “cost-out innovation.”

This entails helping them innovate and reformulate products with more cost-effective ingredients and processes without compromising product quality.

ADM is not only assisting others in cost management but is also closely monitoring its own input and manufacturing costs to effectively address inflationary pressures.

Furthermore, ADM envisions potential growth in its nutrition business through mergers and acquisitions (M&A). CFO Vikram Luthar emphasized that nutrition remains a ripe space for M&A opportunities.

ADM’s commitment to disciplined investments, value, and returns has led to over 50 acquisitions and 20+ partnerships, many of them in the nutrition sector, over the past decade.

ADM’s executives reiterated their confidence in the nutrition segment, despite recent slowdowns. They believe in a multi-pronged approach that combines innovation, cost management, and strategic M&A to achieve their growth objectives, even if at a more moderate pace.

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