Extending ADM From Seed to Fork

ADM is a $64 billion global enterprise with hundreds of facilities and nearly 40,000 employees in dozens of countries that collect, transport, and process oilseeds, wheat, corn, and other agricultural commodities and turn them into vegetable oils, flour, biofuels, sweeteners, and animal feed.

But Leticia Gonçalves is betting that the future of the food giant is unfolding in a far smaller footprint: ADM’s facility in Decatur, Ill., where the company recently committed to a $300 million expansion to vastly increase its production of plant-based proteins and to create a new, state-of-the-art Protein Innovation Center for advancing its interests in that rapidly growing part of the food business.

“That means it’s not enough just to work on the first part of the food value chain—sourcing, transportation, and management to final destinations—but also we must help improve the quality and health of the population,” says Gonçalves, ADM’s president of global foods and a member of its executive council, who is presiding over much of the company’s huge move into this arena. “So we are extending ADM from seed to fork, from the fields and grains to the consumer’s fork, which is the ultimate food opportunity.”

ADM has undergone some big transitions over the past several years, including moving its headquarters from Decatur to Chicago and changing CEOs, to Juan Luciano, who succeeded Patricia Woertz in 2015.

But likely no change will be as important as how ADM responds strategically to the opportunities Gonçalves describes to find ways to add value to its previously commodity-oriented food chain for its suppliers, customers, partners, and global consumers.

And Gonçalves seems slated to play a key role. A native of São Paulo and a chemical engineer by training, she joined Monsanto in Brazil as an intern in food and ingredients. “It was the start of a kind of circle in my career,” she says. “I was in charge of creating a biocapture mechanism to capture technology from farmers in Brazil, and companies including ADM helped us with that.”

Gonçalves rose through Monsanto, to president of the company for Europe and the Middle East, where she oversaw the row crops and crop protection business across 29 countries. Most recently, she was senior vice president and U.S. division head for Monsanto, which has become part of Bayer, with management responsibilities for seeds, crop protection, and digital solutions. She joined ADM in 2020 in her current position.

Gonçalves spoke with Food Technology about the transformation of ADM and her role in that.

Please tell me about ADM's evolution from a commodity-oriented, grain trading/grain processing giant to a more value-added processor and investor in the future of the global food industry.

ADM is a 120-year-old company and really focused on commodities and agribusiness. But in the last decade, there’s been a significant transformation from being an agribusiness company to becoming a leading nutrition company, expanding our capabilities to address three global trends: food insecurity, health and well-being, and sustainability.

We need to care for food security and getting products on people’s plates in underdeveloped countries and understand what consumers need to address food quality. Sustainability, being responsible to the environment and our communities, is the third pillar that ties it all together.

This ranges from our efforts to implement carbon-free policies to things like our 2014 acquisition of Wild Flavors, which brought our legacy together with a major natural flavors company in a way that is now becoming a huge pantry of ingredients for product solutions and systems. And now we’ve got joint ventures in plant-based food where we’re selling directly to consumers.

What is the business rationale and overall strategy behind this evolution?

[Luciano] felt there was the opportunity to create and deliver more value in agriculture and the food chain if we were to really participate as a vertically integrated company, not just an agricultural one. We could bring more value-added solutions in nutrition, and health and wellness. So he shaped a new vision where we’re unlocking the power of nature and enriching the quality of life. Quality is as important as quantity.

We have two pillars: productivity and innovation. And especially in the last five years, innovation is becoming more prominent. Not just our R&D capabilities, but also our ingredient and process innovation and creation, designing and developing final products for customers through partnerships and ADM Ventures. We’ve made significant investments into startup companies. There are a lot of aspects of innovation in next-generation technologies and how we continue to reinvent ourselves for the future.

So how did you end up at ADM and participating in this journey after your career of more than 20 years at Monsanto?

ADM approached me, and I was intrigued with ADM and their vertical integration. I joined in February 2020, just before the pandemic. ADM already had spent five years building a nutrition division, and it was the right time for me to come and accelerate it to the next phase, to approach it as a food-systems opportunity, to bring concepts to market, increase our win rate with customers, leverage this vertically integrated company, and connect all the divisions.

What are your goals?

Our goal is to double our [nutrition] business in the next few years; we have made that public. So the food team is expected to double our revenues to $2.2 billion in the next five years, by increasing the productivity in our core business, but most likely accelerating innovation as part of growth by launching new products, partnerships, and acquisitions and expanding sources of innovation for replacement technology and new innovation—things that don’t exist today.

How will you get there?

ADM has three unique differentiators. We are vertically integrated from seed to fork. Second is our broad pantry of ingredients, from flavors to colors to oils and fats, a robust portfolio that comes from our corn division, and a pantry of nutrition [ingredients] that include prebiotics, probiotics, dietary supplements, fat solutions, and lot of other things.

And the third piece is how we go to market, how we can drive from concept to market with tremendous opportunities, co-developing with our customers new innovations and new solutions and connecting with future technologies and new investments in technologies that will be part of the pantry of the future.

With the consumer in mind, we align our innovation to the problems the industry is trying to solve for consumers today and into the future. That helps inform our innovation opportunities and even our fields of innovation.

What are the trends in foods and nutrition that ADM is most playing into as you help lead this new focus for the company?

There are seven trends in innovation that are important to us. One is novel protein sources from cell-based to fungi and air protein. Second is fermentation as a service, not just a product. Third is the next generation of plant-based and whole-muscle solutions. There also is innovation and transparency from seed to fork. Another is moving toward price parity for cultivated meat product. Sixth is keeping friendly product formats. And seventh is plant-based versions of traditional authentic cuisines.

You’ve made it clear that plant-based proteins, and even cultivated meat substitutes, will be key to the future of foods for ADM. That will keep taking you far from the company’s roots that include being a major feed grain supplier for livestock. How can you be confident about tacking so hard in the alt-meat direction in the wake of evident marketplace challenges that recently have arisen for some of the leaders in plant-based proteins?

We are hearing about the challenges, but the plant-based market remains a growth category. We continue seeing double-digit growth in sales in the category overall, and we see many customers growing significantly in the market.

What’s been happening is that, sometimes, negative news about a few companies will dominate the media. That often happens. But overall, if we normalize and get to the average [performance of] companies, we’re still seeing tremendous opportunity. We expect plant-based meat, combined with plant-based dairy, to become a $155 billion market opportunity in the next 10 years.

So I don’t think this category is niche. But there will be a continued need for innovation, a continued need to find connections to sustainability to make sure consumers aren’t just buying for taste and texture but also for animal welfare.

We also will see expansion beyond burgers and nuggets into new formats that give consumers more options to try—breakfasts, snacks, lunches, and dinners. We do see some product saturation in burgers and other initial categories. But the category is expanding to so many different places that we see tremendous growth opportunities.

But will that include consumers making the leap to fermented or lab-grown meat and dairy, which goes way beyond simply eating products that substitute pea protein for beef or milk?

Globally, we expect cultivated meat to be about 10% of the overall meat market by 2030. It will take a bigger and bigger share of the pie and also create a bigger pie for the future, allowing consumers to take in more protein, and a diversity of sources.

ADM is investing in expanding relationships in this universe of new sources of protein. We spent much of last year raising $347 million in a round of investments led by ADM Ventures, the largest-ever investment in cultivated meat, for mass production. And I happen to be on the board of Future Meat, which is in Israel.

Basically, the key hurdle for these companies is regulatory approval: proving the technology is safe and can be used by consumers. The second thing is, how do you scale and reduce costs in terms of growth and development, and mass production in manufacturing? The third is to continue finding solutions in taste, texture, and nutrition in the finished products that will be appealing to consumers.

We are working with cultivated meat companies to help them with product development. Most likely the first products will be blends of [cultivated] with plant-based, and we are leading players there. This will help address the initial costs, to make cultivated products affordable to consumers, and also to make sure we’ve got enough cultivated meat products. It’s a supply and cost equation. So we’re developing those products; they’re not in the market yet.

You’ve also identified ancient grains as an important growth opportunity for ADM. Why?

Yes, [ancient grains] and edible beans are a tremendous opportunity to address the wholesome nutrition needs of consumers. More of them want a diet of products that come from nature, increasing the fiber and protein in their foods.

So we continue to drive those businesses with our vertical integration capabilities, to work with farmers and directly source with them, and also to continue thinking about how to leverage some of those products, such as chickpeas and peas, into starches and proteins.

What is your concern now about global food security, especially in the wake of new developments such as the war in Ukraine, which has devastated its important wheat crop and ability to get it to market?

ADM is addressing this in several ways, working with not-for-profit organizations to support communities with critical needs related to food, for instance; supporting minority groups; and helping people get into the science of ag and food. We also support many partnerships that address food insecurity. And we work with our manufacturing assets to develop jobs in rural areas.

And we are focusing on Asia in particular, looking to boost sustainable practices in food in some Asian countries.

Climate change is a growing concern for the food industry and, particularly, for companies like ADM that depend for raw materials on food supplies grown all over the world. How are you addressing that?

Yes, it’s become less predictable for farmers for knowing what to plant and grow, given changes in climate and patterns that may be associated with future climate changes.

We pair our partnering in digital agriculture to help farmers predict their crops better and to manage their farms better. We also are helping boost traceability, which can help overall sustainability and provide opportunities to reduce costs. It helps meet one of the requests of consumers, which is where their food comes from.

ADM is also working in regenerative agriculture, working on reducing carbon emissions on the farm and in our assets. We have a lot of carbon-reduction programs across the value chain.

Also, we are working on digital transformation, where we can use information better from farming practices as well as throughout the value chain.