January 5, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

The bio-based food ingredient market is expected to grow at a CAGR of approximately 5.93 percent between 2020-2027, to reach a market value of nearly $3 billion, according to the report Bio-Based Food Ingredients Market: Global Demand Analysis & Opportunity Outlook 2028, recently released by Research Nester last month. 

This market has been identified by Cargill as a priority for the company, and is a strategic goal that has been reflected in its latest announcement outlining its agreement to acquire the majority of the performance technologies and industrial chemicals business from Croda for EUR 915 million (US$1.03 billion). 

“The bioindustrial space is a priority for Cargill, as we strive to support our customers with innovative, nature-based solutions that deliver real-world benefits,” said Colleen May, president, Cargill’s Bioindustrial business.

This deal will significantly expand Cargill’s bio-based market presence, especially in Europe, the U.S., and Asia –  three key, high-growth markets for bio-based solutions. Under the terms of the agreement, Cargill also will gain nearly 1,000 global employees and production facilities located throughout Europe and Asia.

The deal also delivers Cargill a strong technology portfolio supporting leading market positions in food packaging applications, polymer, and automotive applications, noting that more than two-thirds of the raw materials used to manufacture these solutions are bio-based and renewable.

“Combining our diverse, global supply chain and deep operational expertise with Croda’s extensive industrial business capabilities and broad bio-based portfolio will spark a new wave of innovation and create tremendous value for our customers,” said May.

This deal builds upon other recent moves by Cargill undertaken to strengthen its standing in the bioindustrial market including its acquisition of Floratech and Arkama’s epoxides business; and its joint venture announced in June 2021 with Germany’s HELM, one of the largest chemical marketing, logistics, and distribution companies in the world, to launch Qore – a venture to produce QIRA™, a new, next-generation biological 1,4-butanediol (BDO) made by the fermentation of plant-sugars from corn.

With a 38 percent market share in 2018, North America is expected to be the most lucrative bio-BDO market due to a significant uptick in demand for disposable plastics leading to U.S. production facilities to experience a 50 percent increase in production rates over the coming 10 years, and a tripling of plastic exports by 2030, according to the Surfrider Foundation.

Furthermore, since the bulk of these exports will be bound for developing and emerging nations, which lack the infrastructure and management framework to handle non-biodegradable plastic waste, the pressure is further increased on the U.S. to export more bio-based variants.

And as consumer demand for more environmentally friendly products consistently gains strength, Cargill and HELM are collectively investing $300 million to build the first commercial-scale, renewable BDO facility in the U.S.

Located at Cargill’s existing biotechnology campus in Eddyville, Iowa, the plant will not only give farmers a new market channel for their corn, but will give diverse and disparate industries the ability to improve their environmental footprint without compromising product performance or manufacturing processes.

“With consumers demanding more sustainable products, brands are not only looking for more innovative, environmentally-friendly solutions but also are needing supplier capabilities and resources that can consistently meet those expectations,” said Jill Zullo, vice president, biointermediates/bioindustrial, Cargill.

It also follows Natureworks – the world’s leading manufacturer of low-carbon polylactic acid (PLA) made from renewable resources – gaining final authorization from parent companies Cargill and its partner GC International Corporation Company Limited, a subsidiary of PTT Global Chemical Public Company Limited (GC), to build a new manufacturing complex in Thailand at a cost of $600 million. 

“Thanks to the ongoing support of our parent companies, our plans for a second Ingeo PLA manufacturing location continue to progress,” said Rich Altice, president and CEO of NatureWorks, in August 2021.  “This authorization was an important milestone that ensures we will be ready to begin construction in 2022 on an integrated manufacturing complex that will help us address the increasing global market demand for sustainable materials.”

Steve Foots, CEO of Croda, noted that these deals, together with Cargill’s history, global-scale supply chains, and massive capabilities, will ensure continued success for Croda, saying, “Cargill is a company with a distinguished history and strong values. Under its ownership, the divested business and our talented, hardworking employees can look forward to a bright future.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com. 

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