Five things every investor should know about everyday decarbonisation and Itaconix

Edison Research client Itaconix is a business on a mission to improve climate change by decarbonising the home and personal care products we use every day – from dishwasher detergents to hair care. 

But pursuing this purpose with plant-based alternatives has hurdles in meeting the needs of every consumer. Some buy based on sustainability, while others want the very best performance or the lowest cost.  

Is this a mission Itaconix can deliver on? Here are five things we think every investor should know:

#1: We’re already seeing an impact

Itaconix has had significant success selling new, sustainable ingredients to the makers of dishwasher pods and tablets. Major brands, including Clorox and Colgate-Palmolive, have formulated their products using Itaconix’s ingredients. Given penetration in other segments, the company says 130 brands are already customers and that most supermarkets in North America now carry Itaconix-formulated products. The business is currently expanding in the EU and UK.

#2: Itaconix has a playbook for growth

Itaconix is now applying the system of market development that worked for dishwasher pods and tablets to all its targeted product segments. This process starts with an opportunity defined by a pressing market need and an Itaconix solution for innovative brands in the space, which are hungry for breakthroughs to improve product performance and lower their carbon footprint at no additional cost to the consumer. Once these benefits have created a competitive advantage for early adopter brands, the business believes others will find it difficult to resist the pull. Itaconix expects the process to work slowly at first, but it anticipates that it will then very rapidly pull in the big names. 

#3: There’s no shortage of market potential

Given Itaconix is targeting the next generation of laundry detergents, nappies/diapers, hygiene products, air fresheners, hair care, underarm deodorants and air fresheners, it has a large potential footprint. The company estimates its total addressable market to be at least $2.3bn. In comparison, the company reported unaudited 2021 revenue of $2.6m, suggesting there is ample room to grow. 

#4: Management calculates that scaling will generate margin 

Itaconix’s primary research and development phase is complete. It has patented plant-based technologies that it believes can improve the performance of fast-moving consumer goods (FMCGs) while simultaneously helping decarbonise these everyday products without additional cost to the consumer. According to the company, it has existing capacity for over $10m in revenue from its current production facility and additional expansion requires less than £2m of capital. Meanwhile, management also expects other operating costs to grow far more slowly than revenue. 

#5: Itaconix has a clear sense of its future

There seems little doubt that more and more FMCG ingredients will become carbon neutral. Itaconix wants to be seen as a leader in this age of plant-based ingredients and expects to maintain gross margins of up to 40%. According to CEO John Shaw: ‘We want to be a catalyst to help all of humanity see a relatively painless route to Net Zero 2050. Decarbonising the everyday can be done without impact to the quality of our lifestyles.’

Thank you for reading about Itaconix. If you would like more information, please visit the company’s website.

Itaconix is a client of Edison Research.

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