Darling Ingredients International

Led by CEO Randall Stuewe, Texas-based Darling Ingredients International was a rendering firm with $3.7 billion in 2017 revenues. Since 2003, Darling had transformed from U.S. focused into a global player in the processing of biological waste from meat and foodservice firms into oils, fats, and proteins that were sold for use in feed, food, fuel, and other products. It had also entered a 50-50 joint venture, called Diamond Green Diesel (DGD), with oil refiner Valero to produce renewable green diesel. Darling supplied the oils and fats that DGD converted into renewable diesel products sold to oil companies. In the U.S., regulatory mandates and incentives supported the market for renewable diesel, which cost more to produce than conventional fuels. For Darling, the renewable diesel JV was proving to be a lucrative outlet for the company’s oils and fats and as a valuable hedge for its traditional business. In 2018, Stuewe and his Valero partners were considering a substantial expansion of DGD. This case invites students to consider the long-term competitive advantages of DGD’s renewable diesel product, the strategic questions for a business (at least in 2018) dependent on favorable regulations, and the tradeoffs involved in moving too aggressively, or not aggressively enough, to claim a place in the carbon-friendly fuel market.