EUROPEAN BUSINESS: Nick, you delivered a strong performance in the first half, a remarkable result in the context of inflation. Tell us where’s the growth come from and what were some of the highlights? What’s your outlook for the future?
Tate & Lyle is a global leader in sweetening, texture and fortification focused on creating solutions that meet growing consumer demand for healthier, tastier and more sustainable food and drink. The quality of and resilience of our business ensured that, despite a very challenging external environment, we were able to deliver a strong set of results in the first half of the financial year. Like most businesses, we saw significant inflation in raw materials, energy and logistics costs, especially in Europe. We looked to pass through this input cost inflation, alongside finding efficiencies in our own business through productivity and cost control.
Looking ahead, the opportunity for Tate & Lyle is significant. The global speciality food ingredient market is large at US$75 billion and is expected to grow at around 6% per year. Of that market, over US$20 billion is addressable by Tate & Lyle’s sweetening, texture and fortification platforms, and is also expected to grow at 6%. Our ingredients and solutions help reduce sugar, calories and fat, and add fibre and protein to food and drink. Consumers want healthier food and governments want to encourage people to live healthier lifestyles – we are in the sweet spot to help make that happen.
EUROPEAN BUSINESS: Please share reflections on the changes in the company’s strategy in the past 5 years.
Over the last five years, Tate & Lyle has been through a major transformation, with significant acceleration in the last two years. We have re-positioned the company as a growth-focused specialty food and beverage solutions business through the sale of Primient, our bulk sweeteners and industrial starch business in the Americas, in April 2022.
This sale has helped to deliver a fundamental shift in both the quality of our portfolio and the global reach of our business. In the 2018 financial year, only 37% of the Group’s revenue came from speciality ingredients – our sweeteners, texturants, and dietary fibres. By the end of the 2022 financial year, revenue from speciality ingredients and solutions for the “new” Tate & Lyle increased to 93%. Likewise, in 2018, only 11% of the Group’s revenue came from the large and fast-growing markets of Asia, Middle East, Africa and Latin America. In the 2022 financial year, 29% of new Tate & Lyle’s revenue came from that part of our business, and that figure will be higher in 2023 following the acquisition of Quantum, the dietary fibre business we bought in China last year.
As part our transformation., we’ve transformed the way we work with our customers, and on the food and drink categories where we can have most impact and deliver most growth. How? By significantly strengthening our capabilities in solution selling – working with customers to formulate consumer solutions rather than simply selling ingredients – while significantly strengthening our sweetening, texture and fortification platforms with four acquisitions across stevia, fibre, chickpea protein and tapioca in the last two and a half years.
Science is in our DNA, and we’ve invested over US$200 million in the last four years to accelerate innovation and establish world class scientific capabilities and infrastructure. And, finally, we’ve instilled a culture of productivity and cost discipline in the business, delivering over US$150 million of productivity in four years.
EUROPEAN BUSINESS: Tate & Lyle has a strong footprint in many regions across the world. Tell us about your global business and the expansion strategy. In which markets do you see the greatest potential for Tate & Lyle in the next 5 years?
Today, we have 58 sites in 39 countries serving customers from start-ups and regional players to multinationals in over 120 countries. We operate across the developed markets of North America and Europe, and the large and fast-growing markets of Asia, Middle East, Africa and Latin America.
With 56% of the global population and 37% of our US$19 billion addressable market, Asia represents a key growth opportunity for us and that’s why we have been investing in acquisitions, infrastructure and people this region over the last few years. North America and Europe represent 44% and 27% of Group revenue, respectively, and remain important markets for us. We have been operating in these regions for many decades and have built many long-standing customer relationships.
Our priority is to grow above the speciality ingredient market growth of around 5% to 6% and over the last five years we have delivered just that with North America and Europe growing revenue by a compound annual growth rate of 7% and 5%, respectively.
EUROPEAN BUSINESS: In Europe, we are facing challenges (energy crises, inflation, or the war in Ukraine), what’s the potential impact of the challenges on F&B industry and your business?
It’s a challenging environment for all businesses, in all sectors, but we are navigating the situation well and are focused on serving our customers and maintaining continuity of supply. We’ve seen significant inflation and availability issues for raw materials like corn, energy and transportation. Our supply chain team has demonstrated amazing resilience and agility in keeping our plants running and customers served. We’re offsetting inflation through a combination of strategic mix management, productivity and cost discipline, and only passing cost increases through to customers where we have to. Our ingredients add high functionality to food and drink, and we make up only a small part of the overall cost of our customers’ products – think lower fat yoghurt where the majority of cost is from diary inputs – so the impact on consumer prices is relatively moderate. We also help customers to reformulate their products to optimise or lower costs, where needed.
EUROPEAN BUSINESS: What are some of the latest market or innovation trends of the food & beverages industry that you’ve been observing across markets that you’d like to highlight?
There are a few trends that are affecting how people are purchasing and consuming their food and drink. In general, we see four big trends.
The first is the desire is to be in control of what we eat and drink. People want to understand what’s in the food they are buying and to ensure it reflects their values. Transparency about the sustainability of products, nutritional claims and labelling are all increasingly important areas.
The second is a trend we have seen for a while and continued to grow through the pandemic – the desire for healthier food. Consumers are looking for products that are lower in sugar, calories and fat, and which contain additional nutrition such as fibre and protein. People are also looking to eat more plant-based food.
The third trend is all about the pleasure and celebration of food. After the restrictions of Covid lockdowns, consumers are looking to embrace new sensory experiences and indulge every now and then.
Finally, as you would expect with the cost-of-living crisis affecting people across the world, value for money is a key part of purchasing decisions. Convenience is also important – for example, working from home has meant people are snacking more often.
While there are some regional differences, overall people want healthy, tasty and convenient food which is sustainable and affordable. And that plays directly into the sweet spot of Tate & Lyle’s portfolio and expertise. Our goal is not just to feed people, but to feed them well.
EUROPEAN BUSINESS: How do you feel the demands of leaders have changed during your tenure?
I feel the pandemic caused a recalibration of what ‘good’ leadership looks like and leaders have adapted. We’ve all needed to be more agile and have an ability to pivot, be decisive and trust those ‘on the ground’ to make the right calls. During the pandemic we fundamentally changed how we operated within a matter of weeks, ‘decentralising’ to empower local leaders and colleagues to adapt ways of working to deliver on our priorities – keeping our employees safe and well, and delivering for our customers and the people they feed. Post pandemic, leaders across all industries should continue to empower, finding the right balance between being hands-on and ensuring the appropriate level of accountability. Digital savviness is even more important, not just in having digital capabilities, but also the ability to leverage tech to build successful hybrid teams, often with disparate groups.
We’ve needed to show empathy, helping managers to take on a caregiver role and become more attuned to team’s needs. There is a greater expectation of employers to show support for physical and mental health and that they genuinely care. It’s what people need in this increasingly uncertain world and what an attractive employer looks like to the next generation entering the workforce.
The ability to create an environment where difference is valued and people can bring their authentic selves to work and thrive is also crucial. When we feel heard, seen, valued, we are more open to testing new ideas, taking calculated risks, doing things differently. This is what sparks innovation, which is why equity, diversity & inclusion needs to be embedded in every forward-focused business. Diversity of thought is also what drives innovation. That’s why we are committed to gender parity in our leadership and management roles – currently 44% of our top 500 managers, 45% of our Board and 56% of our Executive Committee are women.
Ultimately, the last few years have shown us that a new leadership skills set is needed.
EUROPEAN BUSINESS: Nick, five years into the role of CEO, please tell us how you feel about the future?
It’s hard to believe that it’s been five years since I had the privilege of becoming the CEO of Tate & Lyle or how much the world has changed. We’ve navigated a global pandemic, we have and still are navigating tremendous supply chain disruption, a major European conflict and inflationary pressures not seen for decades.
In those five years, the demands of the role – of any CEO – have changed fundamentally and employees expect much more of us. I feel fortunate that I lead such a purpose-driven business, where what we do, at our core, is to help solve society’s challenges by making healthier food and drink and doing it in a way that is more sustainable. For instance, in the last two and a half years we’ve helped remove 5 million tonnes of sugar from people’s diet, the equivalent to 20 trillion calories.
Addressing climate change has emerged as the major challenge facing industry. I’m proud of the commitments we’ve made and progress we’re making – beneficially using over 90% of our waste, working towards science-based targets focused on our own greenhouse gas emissions, and working with our supply chain to address our Scope 3 emissions, particularly through our sustainable agriculture programmes. I feel incredibly fortunate that my biggest opportunity to make a difference – as CEO of a company – coincided with the wider awakening in the business community and society generally around the vital imperative to act now on climate. It’s made those conversations with our stakeholders much easier and the question – “Could we be doing more?” – drives our decision-making day-to-day.
When I joined Tate & Lyle eight years ago it was because it represented a great opportunity to have a positive impact on an industry I had worked in for 20 years. It’s incredibly satisfying to see the impact our people are having.
After over 160 years, I feel the future for our business remains bright and for me, after five years, it remains a privilege to be the CEO of this extraordinary company.
