ARCHER DANIELS MIDLAND COMPANY

ARCHER DANIELS MIDLAND COMPANY Overview

Company Headquarters: Illinois, US

Founded: 1902

Workforce: ~38,100

Company Working: Archer Daniels Midland Co (ADM) specializes in manufacturing food and beverage ingredients and other varieties of agricultural products. The company's product portfolios include natural flavors and colors, health and nutrition products, vegetable oil, corn sweeteners, flour, animal feed, and biofuels. It primarily operates in three business segments: Ag services and oilseeds, carbohydrate solutions, and nutrition. The origination, marketing, transportation, and storage of agricultural raw materials are all included in the worldwide operations covered by the agricultural services and oilseeds category. The section for carbohydrate solutions is involved in the wet and dry milling of corn and wheat, among other things. The segment converts corn and wheat into ingredients and products that are used in the food and beverage industry including sweeteners, corn, wheat starch, dextrose, syrup, glucose, and wheat flour. The nutrition segment serves customer needs for food, beverages, health, wellness, and many more. The nutritional segment covers the manufacturing, sale, and distribution of specialty products that include natural flavor ingredients, flavor systems, natural colors, plant-based proteins, emulsifiers, soluble fibers, polyols, and other specialty food and feed ingredients. With more than 270 processing plants, 500 crop procurement facilities, and a vast crop transportation network, Archer-Daniels-Midland Company (ADM) has a presence in over 160 countries worldwide. The company provides tapioca maltodextrins and syrup solids those are highly versatile and a taste neutral ingredient that offers various functionality, offering humectancy and adhesion and helps in preventing sugar crystallization, and the maltodextrin and corn syrup solids offers functionality that don’t impact the finished products taste.

Strategy

The Archer-Daniels-Midland Company (ADM) aims advanced productivity and innovation strategies which include: unlocking $1.6 billion through Billion Dollar Challenge; beginning a worldwide push to upgrade, digitize, and automate production facilities; expanding a comprehensive portfolio of initiatives to decarbonize the value chain, particularly through the rapid expansion of regenerative agriculture work; and showcasing the benefits of decarbonization work through joint ventures with LG Chem for lactic and polylactide. One of ADM’s key strategies is to expand its global reach through acquisitions and partnerships. In 2020, ADM acquired the remaining 50% stake in British grain trader Gleadell Agriculture Ltd. This acquisition will enable ADM to expand its presence in the UK and enhance its global grain trading capabilities. In addition, ADM has also invested in expanding its operations in Asia, particularly in China, where it has a joint venture with COFCO. The firm is putting a lot of effort into accelerating its international growth to enhance its presence through a number of joint ventures, partnerships, and development initiatives. The firm provides goods that are region-specific and meet the needs of the end-use industry. To be competitive in the market, the organization makes investments in research and development. For instance, research and development costs for the fiscal year ending in 2022 were $216 million after deducting grant reimbursements.

Company Snapshot

$64,656M

Revenue

38,100

Employees

1902

Founded

Illinois, US

Headquarters

SWOT Analysis

Strengths

State-of-art manufacturing facility
Wide global footprint
High investments in R&D
High investment in research and development
Leading share in the global bio-based chemicals market
Focus on R&D and process automation
Provision of online services such as e-ADM platform
Wide distribution network
The company is upfront towards adopting new technologies to enhance their production capacity and deliver quality product to the consumers
The company has a strong foothold in the global market and constantly indulge in innovation, product development and sustainability to strengthen their business portfolio.
A wide variety of clean label ingredient product portfolios are present
Strong research & development investments across laboratories and technical innovation centers
Comprehensive network of R&D across the globe such as state-of-the-art equipment and culinary center, innovative laboratories, and production unit worldwide
Strong workforce and robust financial performance of the company
Diversified product portfolio for ingredients for various sectors
Broad range of food and beverage ingredients, including sweeteners, which provides the company with a competitive advantage in the sweetener market.
Globally dispersed R&D facilities, as well as modern laboratories and pilot plants.
Exhaustive network of R&D across the globe such as state-of-the-art equipment and culinary center, innovative laboratories, and production unit worldwide
The company has a strong financial position with a substantial work force.
Broad range of product portfolio for ingredients for various sectors
The logistics of the company is considered a leader in supply chain solutions and has access to far-reaching transportation networks across the globe
The company has had robust final performance over the years owing to expertise in the domains coupled with a highly skilled workforce
The company has made proficient at entering new markets and creating success in the newly added segments

Weaknesses

Increasing dependence on key retailers in developed markets
Declining revenue since 2015
Increased production costs
High attrition rate
ADM witnessed an increase in its debt in FY2016. The company's total long-term debt increased from $5,779 million in FY2015 to $6,504 million in FY2016.
Limited presence in Europe, Asia-Pacific, and Middle East & Africa
Increasing prices of raw materials and high energy consumption are adversely impacting the cost of production in the ingredients industry
The volatility in the commodity prices
Sweetener production relies heavily on the supply and price of raw materials, which can be volatile and subject to supply chain disruptions.
Exchange rate impact due to the high ratio of overseas sales
The company is heavily depended on United States market.
The company is making expenditures above the industry average on R&D; however, it is unable to compete with its rivals operating in the industry in terms of innovation
The reduced demand for synthetic ingredients-based products such as colors, preservatives, anti-oxidants flavor enhancers, along with artificial sweeteners, may hamper the sales of some of the product offerings

Opportunities

Expansion in developing countries
New product launches and development of novel technologies
Supply of natural food ingredients
In order to generate high revenue out of their product portfolio, the company needs to strongly focus on expansion of their geographical presence and to strengthen their footprint
More investments in strategic acquisitions will enhance its operations.
Strategic mergers and acquisitions, partnerships and joint ventures to strengthen its global presence in the clean label ingredients market
The wellness market is creating opportunities, for scientific and naturally sourced ingredients
Partnerships with various commodity providers in developing regions may create growth prospects for the company
ADM could innovate and develop new products, such as low-calorie or functional sweeteners, to meet changing consumer demands.
New product launches, acquisitions, and collaborations can be the major factors that can create the growth opportunities for the company.
More focus on partnership as company has recently introduced its new line of tapioca maltodextrin with Vedan International can lead the market growth of the company.
Technological innovation is considered one of the major opportunities for the company to make a differentiated strategy for pricing in the new markets
Opening into emerging nations as new markets with the government agreement with the adoption of new standards based on production, along with the free trade agreement with the government may create lucrative prospects for the company

Threats

Increase in raw materials prices
Rivalry among food industries and bio-based chemicals producing industries regarding raw materials that are high in demand in both the industries
Regulatory concerns over GMOs
Intense market competition
Intense competition and presence of established players in the animal feed market tends to hamper the growth of the company
Logistics and transportation costs during market expansions across the globe
Fluctuations in the prices of fuels can be a major threat to the profitability and the production cost of the company
The company is susceptible to progress the new alternative products
High logistics and expansion costs in emerging economies
Strict regulations from country to country
Due to foreign exchange rates, product qualities, price, substitute products the company is facing a significant competition in the market.
Dynamic rules & regulations regarding to the market.
Shifting preferences of the buying pattern of consumers from online retailing could be a threat to the company
The continuous fluctuation in raw materials, fuels, and energy prices can also be a major threat to the profitability and the production cost of the company

Key Developments

Date	Approach	Development
Jan-2015	Joint-Venture	ADM and Quality Liquid Feeds entered into a 50-50 joint venture for the production and sale of liquid feed supplements for livestock to generate high revenues through the segment.
Jun-2016	Expansion	ADM opened its new, high-tech feed facility in Glencoe, Minnesota.
Mar-2017	Expansion	ADM announced the expansion of its Animal Nutrition footprint in China with the construction of a new feed-premix facility in Xiangtan, in Hunan Province, central China. They also announced the addition of aquaculture feed production lines at its existing Nanjing complex in Jiangsu Province, eastern China.
Oct-2017	Expansion	The company announced its plan to open new feed premix plant in Zhangzhou, China.
June 2019	Product Launch	The company participated in the Institute of Food Technologists Expo, held in New Orleans, and came up with a new product portfolio consisting of clean label ingredients such as Kombucha Bite for Gut Health.
May 2019	Product Launch	Archer-Daniels-Midland Company boosts its clean label product portfolio with a range of organic flours.
May 2019	Product Launch	In order to meet the rising demand for clean label products, Archer-Daniels-Midland Company introduced two organic flours to its complementary range of organic and grain-based products.
September 2021	Expansion	ADM Expands Global Nutrition Capabilities with Advanced Flavor Manufacturing Facility in Pinghu, China.
March 2019	Acquisition	ADM acquired Florida Chemical Company, the key manufacturer of citrus oil and ingredients.
March 2018	Acquisition	ADM announced the agreement to the acquisition of 50% of Russian firm Aston Foods and Food Ingredients, the company mainly operates in the business of starches and sweeteners. This strategic move made by ADM has enabled its business in the Russian market.
March 2017	Launch	ADM launched two sweetener brands VerySweet monk fruit, and SweetRight stevia.
December 2019	Expansion	Archer Daniels Midland Company had expanded its reach of its starch portfolio to the Canadian market through a partnership with IMCD, a leading distributor of specialty chemicals and food ingredients, effective immediately. ADM texture solutions available to buyers in the Canadian market will include tapioca starch, corn starch and tapioca maltodextrin in addition to a range of other ADM solutions. This strategic partnership with IMCD will enhance the ability of the food industry to innovate and meet consumer needs in the Canadian market.
July 2018	Partnership	Archer Daniels Midland Company had introduced a new line of specialty tapioca starches and tapioca maltodextrin ingredients in partnership with Vedan International. ADM’s tapioca maltodextrin is non-GMO and is available in an organic version. ADM’s tapioca modified starches are also non-GMO.

Product Offering

ARCHER DANIELS MIDLAND COMPANY
- Ginger Extract
- Bio-based Chemical
- Animal Feed
- Clean Label Ingredients
- Global Sugar Reducing Ingredients Market
- Global High Intensity Sweeteners Market
- Maltodextrin
- Global Sugar Alcohols Market

Financial Performance

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