May 11, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Investing in human food ingredients companies offers the opportunity to tap into a diverse range of sub-sectors within the food industry. These companies may specialize in manufacturing natural flavors, food additives, or functional ingredients, among others. Such diversification can help mitigate risks and provide exposure to multiple segments of the value chain. 

Furthermore, consumer awareness regarding health and wellness has been on the rise, leading to growing demand for clean labels and natural ingredient profiles. Investing in food ingredients companies allows investors to align their portfolios with this market trend, as ingredient companies are often at the forefront of developing and supplying natural, organic, and sustainable ingredients.

Additionally, there has been a growing emphasis on convenience and on-the-go eating habits, which has led to an increased demand for grab-and-go baked goods. Busy lifestyles and time constraints have prompted consumers to opt for quick and easy options, leading to expectations that between 2022-2027, the North American baked products market will see a CAGR of 4.8 percent. Furthermore, driven by a desire for small indulgences and an interest in high-quality, novel foods, there has also been a growing interest in artisanal and specialty baked goods, prompting consumers to seek out unique artisan breads, pastries, and cakes. 

What’s the Deal?

Leading Canadian private equity firm Fulcrum Capital Partners, which focuses its investments on the lower middle market, is leveraging these opportunities, having announced its investment in FE Ingredients, the largest supplier of baking supplies and food ingredients in the Ontario, Canada, market. 

Formerly known as Far East Food Products, FE Ingredients is located in Toronto with offices in Vancouver, providing industrial bakers, food manufacturers, and distributors across Southern Ontario with core ingredients including sugar, flour, starches, oils, yeasts, fillings, baking mixes, and toppings. 

“We are excited to partner with Fulcrum to accelerate our growth strategy while maintaining our focus on customer service,” said Raymond Lee, president, FE Ingredients. “We look forward to expanding our business to meet the needs of our customers with Fulcrum’s support.”

This investment marks the fourth platform for Fulcrum’s Private Equity Fund VI, which had its final close last year. To-date, the firm’s team of 12 professionals has raised more than C$900 million over its 20-year existence, investing in more than 50 platforms and executing 39 exits. 

“We are delighted to be invested with Raymond and his family in FE Ingredients to help fuel the next chapter of growth and assist in executing multiple growth opportunities,” said Paul Eldridge, partner, Fulcrum Capital.  “The company’s stellar reputation with customers and suppliers is a testament to what has been built by the FE Ingredients team over the past 30 years.”

~ Lynda Kiernan-Stone is editor in chief 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 Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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