Platforms, Not Products: A New Model for Ingredient Companies

The ingredient industry has traditionally operated on a product model. Companies develop specific compounds, manufacture them at scale, and compete on price, quality, and technical support. Success is measured in volume and margin per kilogram. The competitive moat, to the extent one exists, comes from manufacturing efficiency, regulatory approvals, and customer relationships.

This model has worked well enough for commodity ingredients. But for companies seeking to create lasting value in specialty and functional ingredients, it has fundamental limitations. Product-based competition inevitably leads to commoditization, margin compression, and a perpetual treadmill of new product introductions to replace declining legacy products.

The Platform Alternative

Platform companies think differently. Rather than focusing on individual products, they build capabilities that generate multiple product opportunities over time. The products themselves become expressions of underlying platform capabilities rather than standalone businesses.

In the ingredient context, a platform might encompass:

• Production technology: Fermentation systems, extraction methods, or purification processes that can be applied across multiple ingredient categories
• Biological assets: Libraries of production organisms, enzyme systems, or proprietary strains that enable diverse product portfolios
• Market access: Customer relationships, regulatory expertise, and distribution infrastructure that can support multiple product launches
• Data and analytics: Accumulated knowledge about process optimization, market dynamics, and customer needs that informs all product decisions

The key insight is that these platform capabilities compound over time. Each new product leverages existing infrastructure, each customer relationship opens doors for additional offerings, each data point improves future decision-making. The value of the platform grows faster than the sum of its individual product contributions.

Structural Advantages

Platform models offer several structural advantages over product-focused approaches:

Risk Diversification

Single-product companies are inherently vulnerable. Regulatory changes, competitive entries, or demand shifts can devastate a business built around one compound. Platform companies spread risk across multiple products, geographies, and customer segments. When one area faces headwinds, others often continue performing.

Capital Efficiency

Building manufacturing capacity for a single ingredient requires significant capital investment. The same facility, optimized for platform flexibility, can produce multiple ingredients and adapt to market changes. This improves return on invested capital and reduces the risk of stranded assets.

The companies that will lead this industry are not those with the best individual products, but those with the most capable platforms for continuous product creation.

Customer Value

Customers increasingly prefer working with fewer, more capable suppliers. A platform company can offer broader portfolios, more responsive technical support, and more innovative solutions than a collection of single-product specialists. This translates into stronger customer relationships and better commercial terms.

Talent Attraction

The best scientists and engineers want to work on interesting problems with visible impact. Platform companies offer more varied challenges, clearer paths to impact, and better career development than narrow product companies. This becomes self-reinforcing: better talent produces better platforms, which attract more talent.

Building Platform Capabilities

Transitioning from product to platform thinking requires deliberate capability building across multiple dimensions:

Technology Infrastructure

Platform companies invest in flexible production systems that can accommodate diverse products. This often means accepting somewhat lower efficiency for any single product in exchange for dramatically improved ability to introduce new products and respond to market changes.

Organizational Structure

Traditional ingredient companies organize around products or manufacturing sites. Platform companies often organize around capabilities: R&D, production, commercial, and strategic functions that serve multiple product lines. This requires different management approaches and performance metrics.

Commercial Model

Product companies sell ingredients. Platform companies sell solutions. This distinction has practical implications for how commercial teams are structured, compensated, and trained. It affects everything from pricing strategy to customer segmentation.

Capital Allocation

Platform thinking changes how companies evaluate investments. Rather than projecting returns on individual products, platform companies assess how investments strengthen underlying capabilities. Some investments may not generate direct returns but dramatically improve the platform's overall value.

The Holding Company Model

One expression of platform thinking is the holding company structure, where related businesses share platform capabilities while maintaining operational independence. This model offers several benefits:

• Clear accountability for each business unit's performance
• Flexibility to pursue different strategies for different market segments
• Ability to partner, acquire, or divest at the business unit level
• Shared services that create economies of scale without bureaucratic overhead

The holding company model works particularly well when different parts of the value chain have different optimal structures. Early-stage R&D may benefit from startup-like agility. Manufacturing may require disciplined operational excellence. Consumer brands may need creative marketing capabilities. A holding company can accommodate these differences while capturing synergies at the platform level.

Looking Forward

The ingredient industry is maturing. Easy growth from emerging market expansion and new category creation is giving way to more competitive, efficiency-focused dynamics. In this environment, the companies best positioned for long-term success are those with genuine platform advantages.

Building platforms takes time, investment, and strategic patience. It requires accepting near-term complexity in exchange for long-term optionality. It demands leadership teams capable of balancing operational excellence with strategic ambition.

But for those who execute well, the rewards are substantial: more defensible market positions, better returns on capital, and sustainable competitive advantages that grow stronger over time. In an industry facing increasing competition and margin pressure, platform thinking offers a path to enduring value creation.