Oterra, the world's largest manufacturer of natural food colours, has increased its presence in the natural ingredient market with the acquisition of Akay Group for an undisclosed sum. Akay is a manufacturer of natural ingredients for the food, beverage, and nutraceutical industries based in Kerala.
Natural colours and flavours, nutraceutical and dietary supplement ingredients, spices and seasonings are all available from Akay. The company serves over 40 countries, employs over 400 people, and has four manufacturing sites in southern India.
Oterra, an EQT-owned company, stated that the acquisition gives it access to a wide range of natural colour products, as well as access to Akay's manufacturing plants and R&D capabilities.
"Akay is a great strategic match for Oterra," said Cees de Jong, chairman of Oterra. “Its nutraceutical product portfolio supplements Oterra's existing portfolio of natural dietary supplement products."
Akay's acquisition comes at a time when EQT claims that the global market for natural colouring ingredients is large and growing rapidly, supported by strong secular megatrends. "Demand for all-natural products in this market is increasing, and so is Oterra," says de Jong.
According to the global investment firm, the trend's drivers include increased consumer awareness about health and the environment, as well as the ongoing transition from synthetic components to natural ingredients.
Growing demand for sustainable and plant-based food is also driving growth. According to Allied Market Research, the food colours market, which was valued at US$2.1 billion in 2019, is expected to reach US$3.5 billion by 2027, with a CAGR of 12.4% from 2020 to 2027. Oterra's acquisition of Akay Grou is the company's fourth strategic acquisition in the last 14 months.
The most recent was in January, when the company acquired the US-based Food Ingredient Solutions, which manufactures natural antioxidants and colours. Food Ingredient Solutions has over 400 customers and two certified processing facilities in Teterboro, New Jersey and Marshfield, Missouri. The transaction was expected to allow Oterra to offer a line of USDA and EU organic-certified colours to its customers and market partners, as well as strengthen the company's backward integration of red beet.
Meanwhile, the parent company claims that Oterra is well-positioned to accelerate organic growth by capitalising on the significant natural colour conversion runway, particularly in key growth markets such as the United States and Asia. EQT states that it intends to significantly invest in the company's organisation in order to strengthen its digital infrastructure, sustainability capabilities, and supply chain setup.
In addition, Oterra is expected to benefit from EQT's in-house expertise in digitalization and sustainability, as well as EQT's global advisory network, which has extensive experience in developing strong ingredient companies.
