I. Executive Summary & Investment Thesis

This report initiates coverage of Kerry Group plc (“Kerry” or “the Company”) with a Buy rating. Kerry Group represents a compelling investment opportunity as a high-quality, pure-play leader in the resilient Taste & Nutrition (T&N) market. The recent strategic divestment of its lower-margin, capital-intensive Dairy Ireland business has fundamentally simplified the investment case and enhanced the company’s financial profile, yet Kerry continues to trade at a significant and, in our view, unjustified valuation discount to its primary peers. The company’s superior integrated solutions model, robust innovation pipeline, and proven operational execution are poised to drive continued market share gains and margin expansion. This combination of strategic clarity, operational excellence, and a dislocated valuation presents a clear pathway for a valuation re-rating over the next 12-24 months.

Key Investment Drivers

• Pure-Play Transformation: The divestment of the Dairy Ireland business, completed in late 2024, marks the culmination of a multi-year strategy to transform Kerry into a focused, high-growth, high-margin T&N company. This move clarifies the business model, reduces earnings volatility tied to commodity prices, and improves the overall financial profile, making the company more directly comparable to its highly-rated peers.¹
• Durable Industry Tailwinds: Kerry is a primary beneficiary of non-cyclical, secular growth trends in the global food industry. These include heightened consumer demand for health and wellness, clean-label ingredients, plant-based alternatives, and sustainable food solutions. These trends are not fads but deep-seated structural shifts, providing a durable tailwind for growth that is resilient to economic cycles.³
• Accelerating Margin Expansion: The company’s “Accelerate Operational Excellence Programme” is delivering tangible results, driving significant efficiency gains. This, combined with a favorable shift in product mix and the divestment of the lower-margin dairy operations, led to a 120 basis point expansion in Group EBITDA margin to 15.7% in fiscal year 2024. Further margin progression is a core component of the forward-looking investment case.⁷
• Significant Valuation Dislocation: Despite its strategic transformation and strong operational performance, Kerry trades at a substantial discount to its direct peers. On an Enterprise Value to EBITDA (EV/EBITDA) basis, Kerry’s multiple of approximately 13x is 30-40% below that of industry leader Givaudan. This valuation gap appears unwarranted given the company’s enhanced strategic focus and competitive strengths, and we expect this discount to narrow as the market fully digests the benefits of the pure-play strategy.⁹

Primary Risks

• Macroeconomic Headwinds: A significant global economic downturn could temper consumer spending, particularly in the foodservice channel, potentially leading to volume pressures.
• M&A Integration Risk: While Kerry has a strong track record of successful acquisitions, any future large-scale M&A carries inherent execution and integration risks.
• Competitive Intensity: The T&N market is concentrated, with rational but intense competition from well-capitalized global peers. This dynamic could lead to pricing pressure or necessitate increased R&D investment to maintain a competitive edge.¹²

Valuation Summary

Our analysis, which combines a peer-based relative valuation and a review of discounted cash flow (DCF) models, suggests a significant upside from the current share price. The consensus 12-month analyst price target of approximately €105-€109 implies a potential return of over 30%.⁹ The investment thesis is predicated on a re-rating of Kerry’s valuation multiples toward the peer group average as the market recognizes its enhanced profile as a pure-play T&N leader.

II. Industry Dynamics & Market Environment: A Resilient Growth Story

The investment case for Kerry Group is anchored in the attractive fundamentals of the global food ingredients market. This is a large, structurally growing, and defensive industry benefiting from powerful secular tailwinds that are reshaping consumer food and beverage consumption globally.

Market Size and Growth Projections

The global food and beverage ingredients market is a vast and critical component of the consumer staples sector. Estimates place the market’s value at approximately USD 279.6 billion in 2024, with robust projections for future expansion. Forecasts suggest the market will reach between USD 452.4 billion and USD 475.4 billion by 2031, implying a compound annual growth rate (CAGR) in the range of 5.8% to 6.2%.³ The more specialized sub-segment of specialty food ingredients is projected to grow at a CAGR of 4.88%, reaching USD 210.9 billion by 2030.¹⁵ This consistent, mid-single-digit growth provides a stable and predictable backdrop for leading players like Kerry, insulating them from the volatility of broader economic cycles.

Table 1: Global Food Ingredients Market Snapshot

Metric	Value / CAGR	Key Drivers	Data Source(s)
Global Market Size (2024E)	~$280 Billion	Growth of processed food industry, rising urbanization	3
Projected Market Size (2031E)	~$450-475 Billion	Health & wellness, clean label, sustainability trends	3
Implied CAGR (2024-2031)	~5.8% – 6.2%	Demand from emerging markets, product innovation	3
Key Growth Driver: Clean Label	65% of US consumers favor products with basic, recognizable ingredients	Transparency, demand for natural alternatives	3
Key Growth Driver: Plant-Based	Plant-based ingredient sales grew 15% in 2023	Health, environmental, and ethical considerations	3
Key Growth Driver: Functional Foods	Probiotics/prebiotics demand growing ~10% annually	Proactive health management, personalized nutrition	3
Largest Regional Market	North America	High consumption of processed foods, strong innovation	16
Fastest-Growing Regional Market	Asia-Pacific	Rising disposable incomes, urbanization, changing diets	15

Secular Growth Drivers

The industry’s growth is not merely cyclical but is propelled by deep-seated, structural shifts in consumer behavior. These trends are global and mutually reinforcing, creating a powerful and durable demand cycle.

• Health & Wellness: Consumers are increasingly viewing food as a tool for proactive health management. This has spurred significant demand for functional ingredients that offer benefits beyond basic nutrition, such as probiotics for gut health, proteins for muscle maintenance, and botanical extracts for cognitive and immune support. This trend accelerated significantly in the post-COVID era as consumers became more attuned to their health and immunity.⁴
• Clean Label & Transparency: There is a powerful global consumer movement demanding simplicity and transparency in food. Shoppers are scrutinizing labels and rejecting products with artificial additives, preservatives, and ingredients they do not recognize.³ This “clean label” trend is forcing large food and beverage manufacturers to reformulate their products, creating a substantial opportunity for ingredient suppliers that can offer natural, effective alternatives for preservation, sweetening, and coloring.¹⁴
• Plant-Based Alternatives: The shift toward plant-based diets continues to gain momentum, expanding beyond meat substitutes into a wide array of categories including dairy alternatives, snacks, and prepared meals. This trend presents a complex technical challenge for food manufacturers, as they must replicate the taste, texture, and mouthfeel of traditional animal-based products. This requires sophisticated, specialized ingredients such as plant proteins, natural flavors, and texture systems, creating a high-value growth vector for the industry.⁴
• Sustainability and Responsible Sourcing: Consumers, particularly younger demographics, are increasingly making purchasing decisions based on the environmental and ethical credentials of a brand. This pressure extends through the value chain, compelling food manufacturers to demand sustainably sourced ingredients, eco-friendly packaging, and transparent supply chains. Ingredient suppliers with robust ESG programs and traceable sourcing capabilities are gaining a distinct competitive advantage.⁶

Competitive Landscape and Barriers to Entry

The global flavors and ingredients industry is characterized by an oligopolistic structure. The top four global players—Givaudan, International Flavors & Fragrances (IFF), Symrise, and DSM-Firmenich—collectively command over 50% of the market share.¹² Kerry Group is a major player positioned within the next tier of competitors.

The industry has formidable barriers to entry, which protects the profitability of established incumbents:

1. High R&D Investment: Competing at the highest level requires massive and sustained investment in research and development to create novel ingredients and proprietary technologies.
2. Deep Customer Integration: Ingredient suppliers are not mere vendors; they are deeply embedded in their customers’ product development cycles. Major food companies maintain “core supplier lists,” and once an ingredient is formulated into a successful product, the costs and risks associated with switching suppliers are prohibitively high.¹⁹
3. Global Scale and Supply Chain Complexity: Servicing multinational food giants requires a global manufacturing footprint, a highly complex and resilient supply chain capable of sourcing thousands of raw materials, and the ability to navigate diverse local tastes and preferences.²⁰
4. Regulatory Expertise: The regulatory landscape for food ingredients is increasingly complex and varies significantly by region. Large incumbents have dedicated teams to ensure compliance with food safety and labeling laws, a significant hurdle for potential new entrants.¹⁷

III. Company Overview & Business Model: A Pure-Play Transformation

Kerry Group has evolved from its origins as a small Irish dairy cooperative into a global powerhouse in taste and nutrition. Founded in 1972, the company has spent five decades strategically expanding its technological capabilities and geographic reach to become a world leader in the food, beverage, and pharmaceutical industries, now employing over 23,000 people and supplying more than 18,000 products to customers in over 140 countries.²²

The Strategic Pivot to Pure-Play Taste & Nutrition

The most significant recent development in the company’s history is the culmination of its multi-year strategy to streamline its portfolio and focus exclusively on its core, high-growth Taste & Nutrition business. This transformation involved two pivotal divestitures:

1. Sale of Consumer Foods (Meats and Meals): In June 2021, Kerry sold its consumer-facing meats and meals business to Pilgrim’s Pride for approximately $923 million (€819 million).²⁴
2. Divestment of Dairy Ireland: In late 2024, Kerry completed the first phase of the sale of its legacy dairy processing and consumer products business, Kerry Dairy Ireland, to the Kerry Co-Operative Creameries for an expected total consideration of €500 million.¹

This strategic repositioning was a deliberate move to exit lower-margin, more volatile, and capital-intensive businesses. As stated by CEO Edmond Scanlon, the Dairy Ireland disposal marks a significant step in Kerry’s history, transforming it into a “pure play global business to business taste and nutrition company”.² This move not only enhances the company’s growth and margin profile but also simplifies the investment narrative, allowing for a more direct comparison with other pure-play leaders in the sector.

Business Segments (Post-Divestment)

Following these divestitures, Kerry’s operations are now almost entirely concentrated in its Taste & Nutrition (T&N) division. This segment is the company’s engine of growth and profitability.

• Taste & Nutrition: This is the core of the new Kerry. For the fiscal year 2024, the T&N division generated revenue of €6.9 billion, delivering underlying volume growth of 3.4%, which outperformed the broader food and beverage end markets.⁷ The division provides a vast portfolio of specialized ingredients, flavors, and integrated solutions to a global customer base. Its value proposition is to help customers create better-tasting, healthier, and more sustainable products. The business serves two primary channels:

• Foodservice: This channel demonstrated strong momentum in 2024 with 6.8% volume growth, driven by menu innovations with quick-service restaurants and coffee chains.⁷
• Retail: This channel, which supplies ingredients for consumer-packaged goods, grew by 1.8% in 2024, reflecting solid performance in the Americas and APMEA regions.⁷

Geographic Footprint and Revenue Mix

Kerry possesses a well-diversified global footprint, which provides resilience and exposure to varying regional growth dynamics. The revenue mix for the core Taste & Nutrition division in 2024 underscores the importance of its international operations ⁷:

• Americas: The largest region, accounting for €3.8 billion, or approximately 55% of T&N revenue. It is a key growth driver, posting strong volume growth of 4.1% in 2024.
• APMEA (Asia Pacific, Middle East & Africa): A fast-growing region contributing €1.7 billion, or ~25% of T&N revenue, with robust volume growth of 4.8%.
• Europe: Representing €1.5 billion, or ~20% of T&N revenue. While volumes were down slightly by 0.1% for the full year, performance improved sequentially with a return to growth in the second half of the year.

Notably, emerging markets remain a critical engine for expansion, with business volumes increasing by a strong 6.5% in 2024, led by growth in the Middle East, Latin America, and Southeast Asia.⁷

Value Proposition: “Inspiring Food, Nourishing Life”

Kerry’s central value proposition, encapsulated by its purpose “Inspiring Food, Nourishing Life,” is to act as an indispensable innovation partner to its customers.²⁶ The company moves beyond being a simple ingredient supplier by leveraging its deep scientific expertise and broad technology portfolio to co-create comprehensive solutions. This collaborative approach allows Kerry to solve complex challenges for its customers, helping them navigate the evolving landscape of consumer preferences for enhanced taste, improved nutrition, and greater sustainability.²³

IV. Competitive Positioning & Differentiation

In the highly concentrated global taste and nutrition market, Kerry Group has carved out a distinct and defensible competitive position. While competing against formidable peers, Kerry’s unique integrated model, rooted in its food science heritage, provides a significant point of differentiation and a durable competitive advantage, or “moat.”

Market Position vs. Key Competitors

The competitive landscape is dominated by a handful of large, sophisticated players. Kerry’s primary competitors can be grouped into two categories: direct flavor and specialty ingredient houses, and large-scale agricultural processors.

• Direct Peers (The “Big Four”):

• Givaudan (Switzerland): The global market leader in Flavours & Fragrances. Its Taste & Wellbeing division is a direct competitor, posting strong 10.7% like-for-like (LFL) sales growth in FY 2024 on revenue of CHF 3.75 billion. Givaudan is the primary benchmark for profitability, with a group EBITDA margin of 23.8%.²⁸
• International Flavors & Fragrances (IFF) (USA): A major US-based competitor that significantly expanded its scale through the 2021 merger with DuPont’s Nutrition & Biosciences business. With FY 2024 sales of $11.48 billion, IFF is a formidable competitor across multiple categories, though it is currently undergoing its own strategic realignment and portfolio optimization.²⁹
• Symrise (Germany): A key European competitor with FY 2024 revenue of €5.0 billion and an EBITDA margin of 20.7%. Symrise has a strong, balanced portfolio and targets long-term organic growth of 5-7%.³¹
• Broader Competitors:
• ADM & Cargill (USA): These agricultural giants are primarily commodity traders and processors but have significant and growing divisions focused on value-added food ingredients. While historically more focused on bulk ingredients, they are increasingly competing in specialty areas like plant proteins and natural sweeteners.³²

Kerry’s Competitive Advantages

Kerry’s economic moat is built on a foundation of three interconnected strengths that are difficult for competitors to replicate.

1. The Integrated Solutions Model: This is Kerry’s core differentiator. Unlike competitors that may specialize primarily in flavors or a specific category of functional ingredients, Kerry leverages its “from-food-for-food” heritage to understand the entire food matrix. The company excels at combining its vast portfolio of taste technologies (flavors, extracts, smoke) with its nutrition technologies (preservatives, enzymes, proteins, emulsifiers) to deliver a single, holistic solution to the customer.²⁷ For a food manufacturer trying to launch a product that is simultaneously plant-based, low-sodium, and clean-label, this integrated capability is immensely valuable. It simplifies their R&D process, reduces time-to-market, and de-risks the product launch, making Kerry a strategic partner rather than just a component supplier.
2. Customer-Centric RD&A: Kerry’s investment in innovation is substantial, with over 1,100 food scientists globally.³⁵ The company’s approach is defined as “RD&A” – Research, Development, and
   Application. This emphasis on application is crucial. Kerry’s teams work collaboratively with customers within their own facilities to solve specific, real-world product development challenges.³⁴ This deep, embedded relationship fosters loyalty and creates extremely high switching costs. Once a complex Kerry ingredient system is designed into a major global brand’s flagship product, it is exceptionally difficult and risky for that customer to reformulate with a different supplier.
3. Global Scale and Local Expertise: With over 150 manufacturing facilities worldwide, Kerry has the global scale to service the world’s largest food companies efficiently.²⁶ Crucially, this global footprint is paired with regional innovation centers and local application expertise. This allows Kerry to help its global customers adapt their products to meet local and regional taste preferences, a critical capability in the diverse world of food.

Table 2: Peer Group Benchmarking (Fiscal Year 2024)

Company	Ticker	Revenue (Latest FY)	Revenue Growth (LFL/Organic)	EBITDA Margin (%)	P/E Ratio (NTM)	EV/EBITDA (NTM)
Kerry Group	KYGA.LSE	€8.0B	3.3% (Volume)	15.7%	~15.7x	~12.5x
Givaudan	GIVN.SW	CHF 7.4B	12.3%	23.8%	~26.1x	~20.6x
IFF	IFF.NYSE	$11.5B	6.0%	19.3% (Adj. Op.)	~16.3x	~11.0x (est.)
Symrise	SY1.ETR	€5.0B	8.7%	20.7%	~25.4x	~14.5x
Peer Average			~9.0%	~21.3%	~22.6x	~16.0x
Note: Data compiled from various sources.7 NTM (Next Twelve Months) multiples are estimates. IFF’s EBITDA margin is Adjusted Operating EBITDA. Kerry’s growth is volume-only for T&N.

V. Financial Deep Dive: A Decade of Profitable Growth

A thorough examination of Kerry Group’s historical financial performance reveals a business characterized by consistent growth, disciplined margin expansion, and strong cash flow generation. This track record of execution underscores the quality of the business model and management’s ability to create shareholder value through various economic cycles.

Historical Revenue and Profitability

Over the past decade, Kerry has delivered steady top-line growth, driven by a balanced contribution from organic expansion and strategic, value-accretive acquisitions. Revenue grew from €6.1 billion in 2015 to €8.0 billion in 2023, before settling at €7.98 billion in 2024 following strategic divestitures.⁷

The 2024 results, while showing a marginal reported revenue decline of 0.5%, mask the underlying strength of the core business. This headline figure was impacted by a deliberate pricing reduction of 1.9% (as input cost inflation eased) and the effect of portfolio disposals. The key metric, however, was the robust 3.3% volume growth in the core Taste & Nutrition segment, indicating healthy end-market demand and market share gains.¹

Profitability has been a standout feature of Kerry’s performance. The company has successfully expanded its margins through a combination of operational efficiencies, a favorable shift in product mix towards higher-value solutions, and active portfolio management. Group EBITDA increased by 7.4% to €1.3 billion in 2024, with the Group EBITDA margin expanding by a significant 120 basis points to 15.7%.⁷ This performance is particularly impressive as it was achieved during a period of negative pricing, demonstrating the company’s strong cost control and the value-added nature of its portfolio. The core T&N business exhibits even stronger profitability, with its EBITDA margin expanding by 130 basis points to 16.1% in the first half of 2024.⁴⁰

Quality of Earnings and Cash Conversion

Kerry’s business model is highly cash-generative, a hallmark of a high-quality enterprise. The company consistently converts a high proportion of its earnings into cash, which provides the financial flexibility to invest in growth and return capital to shareholders. In the first half of 2024, Kerry generated €445 million in free cash flow, which represented an exceptional cash conversion rate of 131%.⁴⁰ This strong performance underscores the efficiency of the company’s working capital management and the quality of its earnings.

Dividend Policy and History

Management has maintained a consistent and disciplined approach to shareholder returns, centered on a progressive dividend policy. The company has a long track record of increasing its dividend annually, signaling confidence in its long-term earnings and cash flow trajectory. For the 2024 fiscal year, the total dividend was increased by 10.1% to 127.1 cents per share, a continuation of its strong growth trend.¹ This commitment to a growing dividend provides a reliable return to shareholders and complements the potential for capital appreciation.

Table 3: Kerry Group – Historical Financial Summary (€ Millions, unless otherwise stated)

Fiscal Year	Revenue	Revenue Growth (%)	EBITDA	EBITDA Margin (%)	Net Income	Adj. EPS (c)	Dividend/Share (c)
2015	6,105	7.0%	N/A	N/A	N/A	N/A	N/A
2016	6,131	0.4%	N/A	N/A	N/A	N/A	N/A
2017	6,408	4.5%	N/A	N/A	N/A	N/A	N/A
2018	6,608	3.1%	N/A	N/A	N/A	N/A	N/A
2019	7,241	9.6%	N/A	N/A	N/A	N/A	N/A
2020	6,953	-4.0%	N/A	N/A	N/A	N/A	N/A
2021	7,351	5.7%	N/A	N/A	N/A	N/A	N/A
2022	8,772	19.3%	N/A	12.6% (H1)	728	N/A	115.4
2023	8,020	-8.6%	1,210 (est.)	15.1% (est.)	673	N/A	127.1
2024	7,980	-0.5%	1,300	15.7%	N/A	194.1 (H1)	N/A
Note: Data compiled from sources.1 Historical EBITDA and EPS data were not fully available in the provided materials; figures are populated where possible. 2022 margin is H1 only. 2024 EPS is H1 only.

VI. Capital Allocation & Strategic Initiatives

Kerry Group’s management has demonstrated a disciplined and strategically coherent approach to capital allocation. The company’s strategy has evolved from a phase of aggressive portfolio construction to a more mature phase of portfolio optimization, operational excellence, and enhanced shareholder returns.

M&A Strategy: Building a Technology-Led Portfolio

Historically, mergers and acquisitions have been a cornerstone of Kerry’s growth strategy, transforming the company from its dairy roots into a global T&N leader. The company has acquired 21 companies, with a clear focus on sectors like food (64%) and beverages (16%).²⁵

In recent years, the M&A strategy has become more targeted, focusing on acquiring specific, high-value technologies to bolster its portfolio in key growth areas, particularly biotechnology and health-focused ingredients. This is a clear shift from building scale to building technological depth.

• Key Acquisitions:

• Niacet (2021, $1.0B): A landmark acquisition that significantly strengthened Kerry’s leadership in preservation and food protection technologies, a critical area for clean-label solutions.²⁴
• Biotechnology Platforms (2021-2022): The acquisitions of Biosearch Life (nutraceuticals and functional foods) and c-LEcta (biotechnology and enzyme engineering) demonstrate a clear strategic push into the high-science, high-margin field of fermentation and bio-based ingredients.²⁴
• Enzyme Technology (2022-2023): The purchase of Enmex (a Mexican enzyme manufacturer) and the lactase enzyme business from Chr. Hansen and Novozymes further deepened Kerry’s capabilities in enzymes, which are crucial for applications ranging from dairy to baking.²⁴
• Strategic Divestitures:
• Equally important has been the active pruning of the portfolio to sharpen its strategic focus. The sales of the Meats and Meals business (2021), the Sweet Ingredients Portfolio (2023), and the Dairy Ireland business (2024) have been instrumental in transforming Kerry into the pure-play T&N company it is today.²

Investment in Organic Growth: R&D and CapEx

Kerry complements its M&A strategy with consistent investment in organic growth drivers. The company invests heavily in its global network of innovation centers and manufacturing facilities. Research and Development is a core priority, viewed as essential for maintaining a competitive edge. In 2022, the company invested €238 million in R&D, powering an innovation pipeline that is critical for co-creation with customers.³⁴

A Balanced Approach: Growth vs. Shareholder Returns

With the major portfolio transformation now largely complete, management has pivoted to a more balanced capital allocation framework that places greater emphasis on direct shareholder returns. This signals confidence in the sustainable cash-generating power of the core business. This balanced approach is evidenced by two key actions:

1. Progressive Dividend: The company continues to prioritize a steadily increasing dividend, as demonstrated by the 10.1% increase for FY 2024.¹
2. Share Buyback Program: In 2025, Kerry initiated a significant €300 million share buyback program. This move is a clear signal that management views the company’s shares as undervalued and is committed to enhancing EPS growth and shareholder value through capital returns.⁸

Debt Management and Capital Structure

Kerry maintains a prudent and efficient capital structure, balancing financial flexibility with a low cost of capital. The company’s Debt-to-Equity ratio stood at a manageable 0.60, with a Net Debt to EBITDA ratio of approximately 2.9x.³⁷ This leverage level provides ample capacity to fund organic investments, pursue targeted bolt-on acquisitions, and continue its program of shareholder returns.

Table 4: Kerry Group – Key M&A and Divestiture History (2021-2024)

Date	Transaction	Target Company / Business Unit	Deal Value	Strategic Rationale
Jun 2021	Acquisition	Niacet Corp.	$1.0B	Strengthens leadership in preservation and food protection technologies.
Jun 2021	Divestiture	Meats and Meals Business	$923M	Sharpens focus on core Taste & Nutrition portfolio.
Jul 2021	Acquisition	Biosearch Life	Undisclosed	Adds biotechnology capabilities for nutraceuticals and functional foods.
Feb 2022	Acquisition	c-LEcta	Undisclosed	Enhances biotechnology platform with fermentation and enzyme engineering expertise.
Jan 2023	Divestiture	Sweet Ingredients Portfolio	€500M	Continues portfolio simplification to focus on core T&N.
Dec 2023	Acquisition	Lactase Enzyme Business (from Chr. Hansen)	€150M	Bolsters enzyme technology portfolio for dairy and other applications.
Dec 2024	Divestiture	Kerry Dairy Ireland (Phase 1)	€500M (Total)	Finalizes transformation into a pure-play Taste & Nutrition company.
Note: Data compiled from sources.2

VII. Recent Developments & Challenges (2022-2024)

The period from 2022 to 2024 was defined by unprecedented macroeconomic volatility, including soaring inflation, significant supply chain disruptions, and fluctuating consumer behavior. Kerry Group’s ability to successfully navigate this challenging environment provides a strong testament to the resilience of its business model and the acumen of its management team.

Navigating Inflation and Commodity Price Volatility

The global economy experienced a surge in inflation in 2022 and early 2023, leading to a sharp rise in input costs for energy, logistics, and agricultural raw materials. Kerry reported that it faced raw material cost inflation of 8% in 2022.⁴¹ The company effectively managed this pressure through a combination of pricing actions passed on to customers and the use of hedging strategies to mitigate the volatility of key commodities.

As inflationary pressures subsided and many input costs began to decline in late 2023 and 2024, Kerry demonstrated its partnership approach with customers by passing back some of these savings. This resulted in negative pricing, which was -1.9% for the full year 2024 and -3.0% in the first half of the year.⁷ Crucially, despite this pricing headwind, the company successfully expanded its EBITDA margins, highlighting the powerful impact of its operational excellence programs and favorable product mix. This ability to protect and enhance profitability in both inflationary and deflationary environments is a key indicator of a high-quality, well-managed business.

Supply Chain Resilience

The 2022-2024 period was marked by persistent global supply chain challenges, from port congestion and manufacturing delays to geopolitical disruptions impacting key shipping routes like the Suez Canal.⁴³ Kerry’s global and complex supply chain was exposed to these pressures. However, the company’s strategic view of its supply chain as a “value-adding function” and a “lifeblood of the company” enabled it to maintain high service levels.⁴⁵ Investments in robust supply chain controls, predictive analytics, and a diversified global manufacturing footprint proved critical in mitigating disruptions and ensuring continuity of supply to its customers.

Foreign Exchange Fluctuations

As a global company reporting in Euros with approximately 55% of its core T&N revenue generated in the Americas, Kerry has significant exposure to foreign exchange rate movements, particularly the EUR/USD exchange rate.⁷ Currency fluctuations can impact reported revenue and profits. For instance, in the first half of 2024, the company reported an unfavorable translation currency impact of 0.9% on its revenue growth.⁴⁰ Kerry employs hedging programs to mitigate this volatility, but it remains a factor in its reported financial results.

Strategic Execution and Management

The most significant development during this period was the execution and completion of the final phase of its portfolio transformation. The divestment of the Dairy Ireland business was a landmark transaction that fundamentally reshaped the company.² On the management front, the appointment of Oliver Kelly as President and CEO of the critical North America region in January 2022 ensured stable and experienced leadership in the company’s largest market.⁴⁶

VIII. Risks & Headwinds

A comprehensive investment analysis requires a balanced assessment of the potential risks and headwinds that could impact the company’s performance and valuation. While Kerry Group possesses a resilient business model, it is not immune to a range of operational, competitive, and financial risks.

Operational Risks

• Supply Chain Disruptions: The global supply chain remains fragile and susceptible to disruptions from geopolitical events, extreme weather, and logistical bottlenecks.⁴³ As a company with a vast global network of suppliers and manufacturing sites, any significant disruption could impact production, increase costs, and affect Kerry’s ability to service its customers. The company mitigates this risk through its diversified manufacturing footprint and strategic focus on supply chain resilience.
• Food Safety and Product Quality: For any company in the food industry, a product quality or safety issue, such as contamination leading to a recall, represents one of the most significant risks. Such an event could lead to severe financial penalties, loss of key customers, and lasting damage to the company’s brand and reputation. Kerry invests heavily in state-of-the-art food safety labs and predictive modeling to mitigate these risks and ensure compliance with global safety regulations.⁴⁷
• Commodity Price Volatility: Although the divestment of the dairy business has significantly reduced Kerry’s direct exposure to commodity price volatility, the company still relies on a wide range of agricultural raw materials. Sudden spikes in the cost of these inputs could pressure margins if they cannot be fully passed on to customers through pricing.⁴¹

Competitive and Market Risks

• Intense Competition: The taste and nutrition industry is highly competitive, with Kerry facing pressure from large, well-capitalized global peers like Givaudan, IFF, and Symrise.¹² This competition can manifest in pricing pressure and an “arms race” in R&D and innovation, requiring continuous investment to maintain a technological edge.
• Shifting Consumer Preferences: While Kerry is currently well-aligned with major consumer trends, these preferences can evolve. A rapid and unforeseen shift away from current trends (e.g., a backlash against processed plant-based foods) could negatively impact demand for certain parts of Kerry’s portfolio. The company’s investment in consumer insights and its broad technology base are key mitigants.³⁵
• Global Trade Tensions and Regulatory Shifts: As a global business, Kerry is exposed to risks from tariffs, trade disputes, and divergent regulatory frameworks between key markets. New regulations concerning ingredients, labeling, or sustainability could increase compliance costs or restrict market access.⁸

Financial Risks

• Currency Fluctuations (FX): With a significant portion of its revenue and earnings generated outside the Eurozone (particularly in US dollars), Kerry’s reported results are subject to volatility from foreign exchange rate movements. A strengthening Euro against the Dollar, for example, would negatively impact reported results.⁴⁰
• Interest Rate Sensitivity: Changes in global interest rates affect the cost of the company’s debt. A sustained period of higher interest rates would increase financing costs and could impact decisions regarding future investments and capital allocation.

IX. Valuation Analysis

The valuation analysis of Kerry Group reveals a compelling disconnect between the company’s fundamental quality and strategic positioning, and its current market price. Across multiple valuation methodologies, Kerry appears undervalued relative to its direct peer group, suggesting significant potential for a re-rating as the market fully appreciates its transformation into a pure-play Taste & Nutrition leader.

Relative Valuation

A comparison of Kerry’s valuation multiples to those of its closest peers is the most direct way to assess its relative value. The analysis consistently shows Kerry trading at a substantial discount.

• Price-to-Earnings (P/E) Ratio: Based on forward earnings estimates, Kerry trades at a P/E multiple of approximately 15.7x.³⁷ This is considerably lower than the peer average of around 22x and represents a significant discount to Givaudan’s forward multiple of over 26x.⁹ While Kerry’s trailing P/E ratio of ~19.4x is slightly above the European Food industry average of ~16.4x, it remains well below its direct, high-quality T&N competitors.⁹
• Enterprise Value to EBITDA (EV/EBITDA) Ratio: This is arguably the most important metric for peer comparison as it is independent of capital structure and accounting differences. Kerry’s trailing EV/EBITDA multiple is approximately 12.5x to 13.0x.⁹ This represents a stark discount of 35-40% to Givaudan, which trades at an EV/EBITDA multiple of over 20.5x.³⁸ Symrise also trades at a premium to Kerry, with a multiple of around 14.5x.³⁶ This gap is the central pillar of the valuation-based investment thesis.

Intrinsic and Analyst-Based Valuation

Valuation methods based on the company’s intrinsic cash-generating ability and the consensus view of market analysts further support the case for undervaluation.

• Discounted Cash Flow (DCF) Analysis: While a full proprietary DCF model is beyond the scope of this report, available third-party DCF analyses indicate significant upside. Models from Simply Wall St, for example, calculate a fair value that is substantially higher than the current share price, suggesting the stock is undervalued by anywhere from 10% to over 50% based on its future cash flow potential.⁹
• Analyst Consensus Price Target: The consensus of 11 sell-side analysts covering Kerry Group points to a 12-month average price target of approximately €105 to €109.⁹ From a recent share price of around €81, this implies a potential upside of 30-34%, indicating a strong “Buy” sentiment among the analyst community.

Sum-of-the-Parts (SOTP) Unlocking

The recent divestitures have effectively been a management-led SOTP exercise. By selling the lower-margin, lower-multiple dairy and consumer foods businesses, management has unlocked the “trapped” value of the core T&N segment. The market, however, has not yet fully re-valued the remaining, higher-quality entity in line with its pure-play peers. The current valuation continues to reflect a “conglomerate discount” that is no longer justified, presenting a clear opportunity for investors. The core thesis is that as Kerry continues to deliver strong results as a focused T&N company, this valuation gap will inevitably narrow.

Table 5: Valuation Summary and Peer Multiples

Valuation Metric	Kerry Group	Givaudan	IFF	Symrise	Peer Average (ex-Kerry)
Share Price (approx.)	€81.20	CHF 3,411	$71.03	€87.26	N/A
Market Cap	€13.3B	CHF 31.5B	$18.4B	€12.2B	N/A
Enterprise Value	€15.3B	CHF 36.0B	$29.0B (est.)	€14.1B	N/A
P/E Ratio (Trailing)	~19.4x	~28.9x	N/A	~25.5x	~27.2x
EV/EBITDA (Trailing)	~12.5x	~20.6x	~14.0x (est.)	~14.5x	~16.5x
Dividend Yield (%)	~1.6%	~2.1%	~2.3%	~1.5%	~2.0%
Analyst Target Upside (%)	~34%	~13%	~27%	~30%	~23%
Note: Data as of early August 2025. Compiled from sources.9 Some figures are estimates based on available data. Peer average is illustrative.

X. Key Questions to Address & Conclusion

This analysis culminates in addressing the five critical questions posed for this investment review. The synthesis of the preceding sections provides clear, data-supported answers that reinforce the positive investment thesis for Kerry Group.

1. How sustainable is Kerry’s competitive moat in an increasingly consolidated industry?

Kerry’s competitive moat is highly sustainable. It is not derived from a single product or technology but from its deeply integrated business model, which is exceptionally difficult for competitors to replicate. The company’s key advantage lies in its ability to combine its broad portfolio of taste and nutrition technologies to provide comprehensive, customized solutions for its clients. This “mastery of complexity” embeds Kerry within its customers’ innovation processes, creating high switching costs and fostering long-term, strategic partnerships. In an industry where consumer demands are increasingly multifaceted—requiring products to be healthy, tasty, clean-label, and sustainable—Kerry’s integrated approach is more relevant and valuable than ever, solidifying its competitive position even against larger peers.

2. What is the long-term growth potential for the global food ingredients market?

The long-term growth potential for the global food ingredients market is robust and resilient. The market is projected to grow at a CAGR of approximately 5-6% through the end of the decade, driven by powerful and durable secular tailwinds. These drivers—including the global consumer shift towards health and wellness, the demand for clean-label and plant-based products, and the increasing need for sustainable food solutions—are non-cyclical in nature. They are structural changes in consumer behavior, not temporary trends. This provides a stable and predictable growth runway for industry leaders like Kerry, largely insulated from the volatility of the broader economy.

3. How effectively has Kerry managed through recent inflationary pressures?

Kerry has managed through the recent, unprecedented inflationary and subsequent deflationary cycle with exceptional effectiveness. During the period of high input cost inflation (2022-2023), the company successfully used its pricing power and hedging strategies to protect its profitability. More impressively, during the deflationary period of 2024, Kerry passed on cost savings to customers (resulting in negative pricing) while simultaneously expanding its EBITDA margins by 120 basis points. This demonstrates a high degree of operational excellence, sophisticated cost management through its “Accelerate” program, and the value-added nature of its product mix, proving its ability to create value throughout the entire commodity cycle.

4. Is the company’s current capital allocation strategy optimal for shareholder value creation?

Yes, Kerry’s capital allocation strategy has entered an optimal phase that is well-aligned with creating shareholder value. Having completed its major portfolio transformation into a pure-play T&N business, the focus has rightly shifted from large-scale M&A to a more balanced approach. The current strategy prioritizes: 1) funding organic growth through R&D and CapEx; 2) pursuing targeted, technology-focused bolt-on acquisitions; and 3) increasing direct returns to shareholders. The combination of a progressive, double-digit growth dividend policy and the recent initiation of a significant €300 million share buyback program signals management’s confidence in future cash flows and a commitment to enhancing shareholder returns.

5. How well-positioned is Kerry for the next economic cycle?

Kerry Group is exceptionally well-positioned for the next economic cycle. Its strategic transformation has resulted in a business that is more focused, more profitable, and less volatile. The company operates in the defensive food and beverage sector, which has low cyclicality. It is squarely aligned with the most durable, long-term consumer growth trends. Its strong balance sheet and robust cash flow generation provide significant financial flexibility. Finally, its current valuation offers a margin of safety and a clear catalyst for re-rating. This combination of a resilient business model, strong secular tailwinds, and an attractive valuation makes Kerry Group a compelling investment for navigating future economic uncertainty and delivering long-term capital appreciation.

Works cited

1. Kerry Group Reports €8bn Revenue In 2024 Results – Checkout Magazine, accessed August 5, 2025, https://www.checkout.ie/supply-chain/kerry-group-reports-e8bn-revenue-in-2024-results-216107
2. Kerry Group completes first phase of €500m Kerry Dairy Ireland sale – FoodBev Media, accessed August 5, 2025, https://www.foodbev.com/news/kerry-group-completes-first-phase-of-500m-kerry-dairy-ireland-sale
3. Food and Beverages Ingredients Market Research Reports, accessed August 5, 2025, https://www.cognitivemarketresearch.com/list/food-%26-beverages/food-and-beverages-ingredients
4. Eight Key Food & Beverage Trends for 2022 | News & Insights – Gray Construction, accessed August 5, 2025, https://www.gray.com/insights/eight-key-food-beverage-trends-for-2021/
5. Global food trends 2025. Consumer food and beverage trends in – Innova Market Insights, accessed August 5, 2025, https://www.innovamarketinsights.com/trends/food-and-beverage-trends-2025/
6. 5 Food and Beverage Trends for 2025 – NetSuite, accessed August 5, 2025, https://www.netsuite.com/portal/resource/articles/business-strategy/food-and-beverage-trends.shtml
7. Kerry Group Reports Marginal Revenue Decline In FY 2024 | ESM Magazine, accessed August 5, 2025, https://www.esmmagazine.com/a-brands/kerry-group-reports-marginal-revenue-decline-in-fy-2024-282851
8. Kerry Group: A Beacon of Resilience in Turbulent Times – How Margin Expansion and Strategic Buybacks Fuel Long-Term Value – AInvest, accessed August 5, 2025, https://www.ainvest.com/news/kerry-group-beacon-resilience-turbulent-times-margin-expansion-strategic-buybacks-fuel-long-term-2507/
9. Kerry Group (ISE:KRZ) Stock Valuation, Peer Comparison & Price Targets – Simply Wall St, accessed August 5, 2025, https://simplywall.st/stocks/ie/food-beverage-tobacco/ise-krz/kerry-group-shares/valuation
10. Givaudan SA (GIVN) – Morningstar, accessed August 5, 2025, https://www.morningstar.com/stocks/xswx/givn/quote
11. Symrise AG (SY1) – Morningstar, accessed August 5, 2025, https://www.morningstar.com/stocks/xetr/sy1/quote
12. Strategic Trends in Edible Flavors and Fragrances Market 2025-2033, accessed August 5, 2025, https://www.marketreportanalytics.com/reports/edible-flavors-and-fragrances-260216
13. Kerry Share Price – LON:KYGA Stock Research – Stockopedia, accessed August 5, 2025, https://www.stockopedia.com/share-prices/kerry-LON:KYGA/
14. Food Ingredients Market Size, Share | Growth Trends 2031, accessed August 5, 2025, https://www.alliedmarketresearch.com/food-ingredients-market-A11028
15. Specialty Food Ingredients Market Size, Demand, Outlook | Industry 2030, accessed August 5, 2025, https://www.mordorintelligence.com/industry-reports/global-specialty-food-ingredients-market-industry
16. Food Ingredients Market Size to Reach USD 561.61 Bn By 2034 – Precedence Research, accessed August 5, 2025, https://www.precedenceresearch.com/food-ingredients-market
17. Food Ingredients Market Size, Share, Industry Analysis 2031, accessed August 5, 2025, https://www.precisionbusinessinsights.com/market-reports/food-ingredients-market
18. Top 7 food and beverage industry trends – NIQ, accessed August 5, 2025, https://nielseniq.com/global/en/insights/analysis/2022/top-7-food-and-beverage-industry-trends-2022/
19. Investor presentation January 2022 – Givaudan, accessed August 5, 2025, https://www.givaudan.com/files/giv-2022-investor-presentation_jan.pdf
20. Investor Presentation – Symrise, accessed August 5, 2025, https://www.symrise.com/fileadmin/symrise/Corporate/Investors/Financial_calendar_and_presentations/220910-Symrise-IR-Presentation-September-2022.pdf
21. Beverage Industry Trends: Innovation, Challenges & Growth | EY – US, accessed August 5, 2025, https://www.ey.com/en_us/insights/consumer-products/beverage-industry-trends-innovation-challenges-and-growth
22. Kerry Group – AnnualReports.com, accessed August 5, 2025, https://www.annualreports.com/Company/kerry-group
23. KRZ Investor Relations – Kerry Group PLC – Alpha Spread, accessed August 5, 2025, https://www.alphaspread.com/security/iseq/krz/investor-relations
24. Kerry Group – Wikipedia, accessed August 5, 2025, https://en.wikipedia.org/wiki/Kerry_Group
25. Kerry – M&A Summary and Business Overview – Mergr, accessed August 5, 2025, https://mergr.com/company/kerry-group
26. Kerry Group Annual Report 2020, accessed August 5, 2025, https://www.annualreports.com/HostedData/AnnualReportArchive/k/LSE_KYGA_2020.pdf
27. Kerry Group Public Limited Company, accessed August 5, 2025, https://directory.hardmantrust.org.uk/index.jsp/browse/V69779/KerryGroupPublicLimitedCompany.pdf
28. Investors | Givaudan, accessed August 5, 2025, https://www.givaudan.com/investors
29. Investors | International Flavors & Fragrances Inc., accessed August 5, 2025, https://ir.iff.com/
30. About Us – IFF Overview, accessed August 5, 2025, https://www.iff.com/about/
31. The most important information for investors – Symrise, accessed August 5, 2025, https://www.symrise.com/investors/
32. ADM – Investor Relations, accessed August 5, 2025, https://www.investors.adm.com/
33. Cargill – AnnualReports.com, accessed August 5, 2025, https://www.annualreports.com/Company/cargill
34. Kerry Ingredients & Flavours: Innovation in Taste and R&D – FoodChain Magazine, accessed August 5, 2025, https://foodchainmagazine.com/kerry-ingredients-flavours-innovation-in-taste-and-rd/
35. Emma Cahill shares how Kerry works with customers to create products that are better for people, better for society, and better for the planet – FoodChain Magazine, accessed August 5, 2025, https://foodchainmagazine.com/emma-cahill-shares-how-kerry-works-with-customers-to-create-products-that-are-better-for-people-better-for-society-and-better-for-the-planet/
36. Symrise (XTRA:SY1) Stock Valuation, Peer Comparison & Price Targets – Simply Wall St, accessed August 5, 2025, https://simplywall.st/stocks/de/materials/etr-sy1/symrise-shares/valuation
37. Kerry Group (ISE:KRZ) Statistics & Valuation Metrics – Stock Analysis, accessed August 5, 2025, https://stockanalysis.com/quote/ise/KRZ/statistics/
38. Givaudan (SWX:GIVN) Statistics & Valuation Metrics – Stock Analysis, accessed August 5, 2025, https://stockanalysis.com/quote/swx/GIVN/statistics/
39. IFF Reports Fourth Quarter and Full Year 2024 Results | International Flavors & Fragrances Inc., accessed August 5, 2025, https://ir.iff.com/news-releases/news-release-details/iff-reports-fourth-quarter-and-full-year-2024-results
40. KERRY GROUP INTERIM MANAGEMENT REPORT 2024 – London Stock Exchange, accessed August 5, 2025, https://www.londonstockexchange.com/news-article/KYGA/kerry-group-interim-management-report-2024/16594241
41. Kerry Group plc: history, ownership, mission, how it works & makes money, accessed August 5, 2025, https://dcfmodeling.com/blogs/history/krzir-history-mission-ownership
42. Kerry Group Stock Price Today | IR: KYGa Live – Investing.com, accessed August 5, 2025, https://www.investing.com/equities/kerry-group
43. Supply Chain Challenges in 2025 & How to Overcome Them – Extensiv, accessed August 5, 2025, https://www.extensiv.com/blog/supply-chain-management/challenges
44. McKinsey Global Supply Chain Leader Survey 2024, accessed August 5, 2025, https://www.mckinsey.com/capabilities/operations/our-insights/supply-chain-risk-survey
45. Supply Chain Management at Kerry – YouTube, accessed August 5, 2025, https://www.youtube.com/watch?v=ptXd7e_QCJw
46. Creagh Native Heading Up Kerry Group USA – Ballinasloe.ie, accessed August 5, 2025, https://www.ballinasloe.ie/news/creagh-native-heading-up-kerry-group-usa
47. Kerry Group: Advancing food safety without compromise through innovation and expertise, accessed August 5, 2025, https://fei-online.com/kerry-group-advancing-food-safety-without-compromise-through-innovation-and-expertise/
48. Kerry Group (LSE:KYGA) Stock Valuation, Peer Comparison & Price Targets – Simply Wall St, accessed August 5, 2025, https://simplywall.st/stocks/gb/food-beverage-tobacco/lse-kyga/kerry-group-shares/valuation
49. Givaudan (OTCPK:GVDB.F) Stock Valuation, Peer Comparison & Price Targets, accessed August 5, 2025, https://simplywall.st/stocks/us/materials/otc-gvdb.f/givaudan/valuation
50. International Flavors & Fragrances (NYSE:IFF) Stock Valuation, Peer Comparison & Price Targets – Simply Wall St, accessed August 5, 2025, https://simplywall.st/stocks/us/materials/nyse-iff/international-flavors-fragrances/valuation