International Flavors & Fragrances’ $4.3 billion sale of a majority stake in its food ingredients business reflects a broader push among multinational food and ingredient companies to prioritize businesses with stronger margins and more specialized capabilities amid a difficult operating environment.
The company is divesting 90% of its food ingredient business to CVC Capital Partners, a private equity firm specializing in buying and scaling companies across sectors like consumer goods, chemicals and healthcare. The deal is expected to close by Q2 2027 and IFF will still retain a 10% minority stake in the business.
The global ingredient manufacturer announced its plans to divest its food ingredients division earlier this year as a way to reduce debt, buy back shares and reinvest in what the company sees as its core, higher-value businesses: scent, taste and health and biosciences.
IFF’s deal is part of a longer-term strategy to navigate an increasingly cost-sensitive market and consumers’ shifting health preferences. Over the past several years, IFF has divested 13 non-core businesses, generating about $10 billion in gross proceeds, which it redirected to higher-margin areas. Some of the notable deals include selling its pharma solutions business to French ingredient manufacturer Roquette for $2.85 billion and its soy protein concentrate unit to New Jersey-based agribusiness Bunge.
Food ingredient division is the largest despite weak sales
Although IFF’s food ingredients unit is its largest by revenue – generating roughly 30% of the business as of Dec. 31, 2025 – its margins lagged behind the rest of the portfolio. The division brought in $3.28 billion and adjusted operating EBITDA margin of 12.9%, according to the company’s 2025 results.
The food ingredients division includes emulsifiers, sweeteners and pastes in product formulations. While demand in some areas has held up, the division’s sales declined by 3% in 2025 to $3.28 billion from roughly $3.38 billion the prior year. The company said the sales decline was partly due to slow demand in protein ingredients and because it cut lower-margin products.
However, the margins across IFF’s other units were higher than the food ingredient business.
Scent brought in $2.48 billion in sales at a 20.8% profit margin; health & biosciences reached $2.28 billion but at a much stronger 26% margin; and taste generated $2.48 billion, with a 19.3% margin.
So, while food ingredients revenue was larger, its margins were slimmer than the other divisions.
In total, IFF reported $10.9 billion in sales for 2025, with organic sales growing by 2%.
Once the deal closes, the company will reinvest the proceeds from the sale – about $3.8 billion expected upfront – toward its remaining business. Last year, scent and taste each made up about 23% of the portfolio, while health and biosciences accounted for around 21%.
Where is the food market headed?
IFF leaning into taste, fragrance and health is a strategic shift towards higher-margin and resilient products in the health and wellness market, according to the company.
Price, function and value play a critical role in consumers’ purchasing decisions as they choose products that and deliver on health benefits and taste – or switch brands if those needs aren’t met. Additionally, growing scrutiny and legislation over additives are creating new pressures for reformulation compliance.
Weight-loss drugs like GLP-1 also are changing how and what people eat, and in turn what kinds of products companies need to develop.
Precision around M&A, divestments and investments amid market pressure
IFF’s divestment reflects a broader trend where multinationals are reshaping their portfolios to amid a volatile food landscape, in which geopolitical tensions, higher input costs, economic uncertainty and demand for cleaner, nutrient dense foods squeeze margins.
Rather than relying on price increases that could alienate consumers, companies are using acquisitions and divestitures to shift toward higher-margin and faster-growing businesses
Kraft Heinz, for example, planned to split its business last year. Instead, the company announced a $600 million investment into its workforce, marketing and R&D.
Global ingredient manufacturer Ingredion recently made a $3.7 billion bid to acquire Tate & Lyle to expand its texture capabilities and enhance its ingredient solutions business. If approved, the buy would position Ingredion as a $10 billion ingredients leader.
