Kalsec touches a number of interesting food and beverage segments, evidenced by hop scientists and chili experts working at the company. What is the Kalsec story and why are you relevant in today's world?
Robert: Kalsec, since its founding in 1958 by Paul Todd Jr., has been committed to producing natural products leveraging sustainable agriculture and scientific innovation. This foundation has enabled us to become leaders in the development of natural extracts for the food and beverage industry. Our focus on creating natural products that enhance taste, appearance, and longevity aligns with the growing consumer demand for clean, safe, and healthy ingredients, distinguishing us in the market.
Mark: My joining Kalsec was motivated by its longstanding dedication to natural ingredients, which meets the increasing consumer and industry demands for clean labels. Our expansion into global markets, such as Asia and Europe, is a response to the worldwide call for natural ingredients, demonstrating our integral role in the food and beverage sector.
What challenges and innovations are involved in creating long-lasting, natural products?
Robert: Kalsec’s innovation is rooted in our founder's respect for nature combined with scientific curiosity, leading to pioneering work in natural ingredients. Our expertise in creating high quality and consistent natural extracts reflects our broader commitment to leveraging natural compounds for taste, color, and preservation. We emphasize the development of natural antioxidants from rosemary to replace synthetic preservatives, showcasing our ability to extend product shelf life naturally. This approach not only meets the demand for cleaner labels but also contributes to food sustainability by reducing waste.
Mark: The misconception that natural ingredients can't offer the same shelf life as artificial ones is challenged by our work. Better-tasting, longer-lasting food and beverages are what you can expect when you utilize our oxidation management systems and extracts. We’ve spent more than 30 years perfecting rosemary as a powerful natural food protector, while also incorporating it into potent blends of other natural preservatives to provide maximum protection from multiple aspects of oxidative deterioration. Our efforts in agriculture, especially in developing highly concentrated plant varieties such as rosemary, also demonstrate our commitment to sustainability and non-GMO practices, reinforcing our role in reducing food waste through natural means.
Why do we not see greater market penetration of Kalsec's natural additives in regular supermarkets?
Robert: Achieving market penetration involves navigating global regulations and market acceptance challenges. Our efforts to register rosemary as a natural antioxidant across different regions exemplify the extensive work required to gain approval within various regulatory frameworks. This process, while time-consuming, reflects our commitment to making our natural solutions widely available, supporting our vision for cleaner and healthier food products globally.
Mark: Educating the market and overcoming regulatory hurdles are significant factors in expanding the use of our natural ingredients. While there's a growing market interest, achieving widespread acceptance takes time. Despite these challenges, Kalsec works closely with leading food manufacturers, ensuring our natural ingredients, such as those that adjust heat levels in salsas, are integral to numerous products worldwide. Our expertise in regulatory affairs further enables us to support our customers through these complexities, offering both large-scale capabilities and personalized service.
Considering the cost and scalability of natural products, how does Kalsec compare to synthetic alternatives, and what is your capacity for scaling up production?
Robert: Natural products often incur higher costs due to agricultural sourcing, but Kalsec is well-positioned to scale up as needed. Our vertical integration and global sourcing strategies ensure supply reliability and the ability to meet increasing demand. Our experience during the COVID-19 pandemic demonstrated our resilience and capacity to adapt, highlighting our commitment to business continuity and the ability to support our customers through challenging times.
Mark: Scalability and cost are key considerations in the shift towards natural ingredients.
Kalsec’s approach balances these factors, with our investments in research, development, and global sourcing allowing us to provide reliable, natural solutions.
Our ability to maintain supply chains during crises, such as the COVID-19 pandemic, showcases our strength in meeting large-scale demands while adhering to our commitment to natural, sustainable practices.
What are the exciting developments and demands you are anticipating in the market over the next five years?
Robert: The trends toward health, natural ingredients, clean labels, and sustainability are expected to persist and intensify, with consumers increasingly demanding ethically sourced products. This movement is driven by a desire for transparency in sourcing, from farm to fork, ensuring products are sustainably and ethically obtained. Despite challenges like inflation impacting consumer spending, the trajectory towards natural and clean label products is a long-term trend we see continuing. This reflects a broader industry shift towards healthier, more sustainable food choices, reinforced by our efforts to validate the sourcing of our ingredients.
Mark: The demand for natural, clean label products is growing across all demographics, including boomers, millennials, and Gen Z, indicating a widespread market shift. Kalsec’s certification as a B Corp underscores our commitment to sustainability and ethical business practices, distinguishing us from competitors. Our increase in B Corp certification score by 25% demonstrates our continued dedication to environmental and carbon footprint goals. This alignment with consumer values, especially regarding sustainability and clean labeling, positions us well in the market as a trusted supplier.
Can you discuss an innovation at Kalsec that you are particularly proud of?
Robert: Kalsec has historically pioneered in areas like heat management and antioxidants, and we are now advancing into natural antimicrobials, expanding our food protection category. Our innovation extends to using fermentation for creating sustainable products and developing encapsulation techniques to enhance shelf life and effectiveness. Our focus on regional and ethnic flavors, through our culinary platform, enables us to offer tailored taste solutions, such as the authentic profiles of fried onion or roasted garlic, enhancing the consumer experience with globally inspired cuisine.
Mark: The global cuisine trend, amplified by COVID-19 as people explored the world through food, aligns with our capabilities in delivering a wide range of natural flavors and heat profiles. Our ability to specify the type of heat, like habanero or ghost pepper, meets a growing consumer demand for authentic and varied culinary experiences. This innovation in taste and sustainability, coupled with our efforts to meet specific market needs like the European demand for natural colors, positions us as a leader in natural food ingredients.
With significant Capex investments and expansions, Kalsec is clearly growing, but what are your concerns in the current market?
Robert: Challenges related to supply chain disruptions, climate change, and geopolitical events are significant concerns. Events like droughts, floods, and wars impact global food production and supply chains, affecting ingredient availability and costs. Our investments, such as the new manufacturing and distribution center in Singapore and the Savory Product Innovation Center of Excellence (SPICE) in Europe, aim to improve our service and innovation capabilities. These strategic expansions enhance our global manufacturing footprint and business continuity, preparing us to better navigate the complexities of global supply chains and environmental sustainability.
Looking ahead, what can we expect from Kalsec in the next five years?
Robert: Kalsec aims to live out its purpose of unlocking the potential of people, nature, and science to nourish the world, guided by our founding principles and commitment to sustainability and innovation. Our strategy involves expanding our global reach, enhancing leadership in the natural ingredients space, and fostering collaboration with customers to deliver winning solutions. We plan to continue investing in innovation labs and bringing new natural innovations to the market. As a certified B Corp, we're dedicated to benefiting employees, communities, and the environment, with long-term plans to uphold our founder's legacy and meet our SBTI targets for 2033. The trend toward natural and clean label products will drive our efforts to expand globally and introduce innovations that meet consumer demands for healthier, more sustainable food options.
