Cargill Targets Wholesome Food Production with Acquisition of Diamond V

Cargill announced it has agreed to acquire Iowa-based Diamond V, a leading global producer of natural animal feed additives, for an undisclosed amount.

Established 75 years ago in Cedar Rapids, Iowa, Diamond V produces innovative natural solutions and immune support technologies that work naturally in partnership with animals’ biological systems to promote a healthy digestive system, improve animal health, and to enhance food safety.

“This acquisition strengthens Cargill’s and Diamond V’s shared vision to be a leader in creating new solutions for evolving consumer preferences for sustainable and wholesome food production,” said David MacLennan, Cargill’s chairman and chief executive officer. “Our combined businesses will accelerate growth, build industry-leading capabilities and natural solutions for animal health and food safety, and help fulfill Cargill’s purpose to nourish the world in a safe, responsible and sustainable way.”

Driven by shifting consumer preferences, and a heightened awareness on the part of consumers in regard to how livestock are raised and what they are fed, this acquisition, together with Cargill has been pursuing acquisitions that will advance its presence in the $20 billion global animal feed additives market.

D & D

This acquisition of Diamond V follows only months after Cargill announced its plan to enter into a strategic partnership with Delacon - the pioneering global leader in phytogenic (plant-based) feed additives – through an unspecified minority equity investment. Although the financial details of the deal were not disclosed, Chuck Warta, president of Cargill Premix and Nutrition, told the Star Tribune that the investment was the largest investment to date by Cargill in the area of natural animal feed.

The wave of preference for plant-based proteins by consumers, combined with a deepening knowledge about the food supply chain, has resulted in consumers not only wanting more plant-based proteins in their own diets, but in the diet of the chickens that lay their eggs, and the livestock that are raised for consumption.

“…the growing ranks of novel protein sources and potential replacements appeal to the everyday consumer foreshadowing a profoundly changed marketplace in which what was formerly ‘alternative’ could take over the mainstream,” noted the Global Food and Drink Trends Report 2016 issued by Mintel.

Cargill’s investment in Diamond V taps into this shift by aligning the company’s animal nutrition business even deeper with consumers who are turning toward natural technologies aimed at feed improvement and better animal health. The deal for the company includes all of Diamond V’s businesses including its human health business, its Embria Health Sciences business, and its EpiCor brand.

“Diamond V is a tremendous company with deep scientific expertise and a highly respected global brand,” said Warta. “Adding Diamond V’s leading talent and technology as well as its applications for sustainable protein production will enable us to deliver improved profitability and performance for our customers. Together, Cargill and Diamond V will accelerate the pace of innovation and drive strategic, long-term growth.”

These two deals are reflective of a ‘new mainstream’ - something that Cargill has identified, and has driven the company to take steps to be ahead of the curve.

Last year the company announced its decision to sell its feed yards in Bovina and Dalhart, Texas, to Friona Industries, and in May of this year announced the sale of its two remaining feed yards located in Leoti, Kansas, and Yuma, Colorado, to Green Plains Inc., a vertically integrated ethanol producer with feedlot operations in Kismet, Kansas, and Hereford, Texas, for $36.7 million.

Together with a string of other divestments of lower-margin assets that included the sale of its ag-retail unit to Calgary-based Agrium; the sale of its condiments business to Ventura Foods; its exit from the crop inputs business in Central and Eastern Europe; and the sale of its U.S. pork business to JBS USA in 2015 for $1.45 billion, Cargill was able to build a war chest of capital that the company stated was to be allocated toward investments that will strengthen its North American protein business through the expansion into plant-based proteins, insect proteins, and aquaculture.

“The fundamental trend is the average consumer does care about how their food is produced, and care more and more about the specifics of how the animal was produced, what it ate, was it healthy, was it treated in a respectful way,” Warta told the Star Tribune in June of this year. “Consumers of animal protein around the world are looking for things they deem as natural. People want to feel good about their food.”