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With a string of acquisitions in strategic locations across the globe over the last few years and a raft of dossiers for new products currently under review by the European Union, Lallemand’s Animal Nutrition division believes it is well-placed to take full advantage of the projected expansion in the probiotic field.
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Doubling Lallemand’s presence in North America by 2014, significantly developing its presence in the key South American and Asian markets, as well as penetrating the relatively untapped monogastric and aquaculture probiotic feed sectors are goals where work is already well under way, said Dr Raoul.
He said: “It is realistic to think the probiotic market is going to double very soon. Lallemand has enjoyed that same volume of growth over the last three years and we don’t see that trend changing in the future. While it is difficult to predict the effect of the current economic crisis on our industry, we are not in a zero-sum game business. On the contrary, there is market to create and the longer term view is that this segment of the feed additive industry will enjoy very significant growth.”
Lallemand Animal Nutrition began its activities just over 20 years ago as part of the group that specialises in the bakery, brewing, bio-ingredients and pharmaceutical fields. The company currently has 15 yeast and three bacteria production plants around the world. It is one of the world’s top three yeast and bacteria producers - but the only one that is a primary manufacturer of both, said Lallemand. It also produces microbial-based silage inoculants.
Probiotics in animal nutrition can be broadly defined as micro-organisms that are applied as feed additives and lead to beneficial effects for the host animals due to an improvement of the intestinal microbial balance.
While probiotics may not have always enjoyed universal acceptance in the feed additive industry, Dr Raoul is convinced such attitudes are no longer generally held – pointing out that probiotics are subject to the same rigorous scrutiny as other feed additives from the European Union in terms of efficacy, safety and quality.
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Dr Pascal Raoul
Lallemand General Manager for Animal Nutrition
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Although the use of probiotics in animal nutrition had been steadily increasing for many years, it was the European Union ban on antibiotic growth promoters (AGP) in 2006 that triggered the rapid development the sector is presently experiencing.
But Dr Raoul explained probiotics have more to offer than being just a replacement for AGPs, contending the ban merely opened further the “window of opportunity” that already existed.
He said: “At Lallemand, we do not consider probiotics as a replacement strategy for AGP’s. Probiotics participate in a natural way to promote the right balance of the intestinal - and rumen - flora in farming animals. They also help to improve the digestibility of forages, which AGP’s do not provide, contribute positively to the immune system and they may play a role in stress reduction in animals.”
"It is too early to say if Brazil will become our headquarters in South America or whether we will make further acquisitions in other countries."
- Dr Pascal Raoul,
Lallemand General Manager for Animal Nutrition
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He said the sector is increasingly able to demonstrate tangible benefits which are being recognised by meat producers. The proof of this is that take up of probiotics is rising even in countries and regions where AGP use is still permitted – with the United States a major example of this trend, he added.
"In the US poultry industry, around 60% of broilers are being produced without AGPs - driven by a proactive movement not to over-use antibiotics. The implementation of ‘prudent use guidelines’ for antibiotics in many countries that still authorise their use is further proof of this.
“There is also a realisation from meat producers that consumers are increasingly demanding natural solutions and favouring products that use replacement options like probiotics.”
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GOING FOR GROWTH
Lallemand has ambitious but realistic plans for growth over the next five years, said Dr Raoul.
The company has developed a comprehensive expansion strategy in response to the increasing importance of the global animal nutrition probiotic market, which, according to company estimates, presently accounts for up to US$600 million a year but has huge potential to increase, he said.
In the past three years, one way in which Lallemand has been extending its global reach is through takeovers - both as a way to enter new markets in the countries where the firms operate but also to serve as potential launch-pads for expansion into thriving or emerging markets in their proximity.
The acquisition of Vitec Nutrition in New Zealand last September is a valuable asset in itself that will give the group traction in the country’s animal nutrition market, commented Dr Raoul. But Lallemand is also well aware that it could function as a platform to develop further in Asia.
This most recent buyout came shortly after South Africa’s Vitam International was integrated into the group earlier in 2006 , as well as Austrian Metall-und-Farben and Brazilian company Katec Agroteknika the year after. Again, while all are important companies in their own right, they may also be valuable bases in regions where tremendous growth is already happening or where it may happen in future, said Dr Raoul.
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He added: “It is too early to say if Brazil will become our headquarters in South America or whether we will make further acquisitions in other countries. But the Brazilian acquisition is a major step in establishing a presence in the region where we are still marginal players. It is also important to stress that acquisitions are not just linked to commercial expansion, we are also interested in companies for their ability in terms of research or manufacturing capabilities.”
Dr Raoul also confirmed that acquisitions would play an important role in expansion in Asia and the Pacific Rim over the next five years and beyond.
The Lallemand General Manager further revealed plans to double its North American operations by 2014 through organic growth and takeovers. The region has been pin-pointed as one of its top priorities over the next two years - along with Asia and South America - in terms of organisational spread. |
"Regarding North America, we already have acquisition targets in mind. We know that we can’t just think incrementally, but have to think bigger."
- Dr Pascal Raoul
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“Regarding North America, we already have acquisition targets in mind. We know that we can’t just think incrementally, but have to think bigger. The potential in the US allows you to do that as its regulation process is very different to that in Europe. It is possible to gain market access much more quickly – as long as your products are on the US Food and Drug Administration’s Generally Recognised as Safe (GRAS) list.
“However, we will not lose focus and will sustain organic growth with a product like Levucell SC enjoying market leadership in North America.”
A separate but complementary part of Lallemand’s growth strategy is to develop feed additives for species where probiotics have not yet had been widely utilised. Dr Raoul explained that up until now probiotics have enjoyed most growth in the ruminant sector, but believes other species would provide exciting opportunities in future.
“We are convinced there is great growth potential in probiotics for monogastric species. The industry is coming to a point of scientific maturity where we can demonstrate in a much more consistent and convincing way the efficacy of products for swine and poultry,” he said.
As an important part of this vision, Lallemand currently has a poultry dossier under review by the European Food Safety Authority (EFSA), which is centred on improving performance in layers. Once approved, the company plans to use it as a strong tool in penetrating major poultry markets such as Brazil and China.
"Realising significant growth in monogastrics - and in particular the poultry sector – is our number one priority."
- Dr Pascal Raoul
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Dr Raoul said: “Realising significant growth in monogastrics - and in particular the poultry sector – is our number one priority. Clearly, it is an important market and one that has been fairly low down on the adoption curve for probiotics. Poultry is an extremely cost sensitive industry, so we must get our strategy exactly right. But while the risks may be high, so are the prospective rewards.”
Lallemand said it will also be targeting the largely untapped aquaculture sector. The two aquaculture dossiers it currently has under review by European authorities are testament to this ambition, confirmed Dr Raoul. |
The company has one dossier for all fish species and the other for shrimp under assessment. It estimates approval may be granted by the summer, with products brought to market by the end of 2009. The company envisages using products realised from the fish dossier to expand its share in established aquaculture markets - such as the salmon and anchovy sectors in Chile and Argentina.
He added: “We could be the first company in Europe to have probiotic approval in aquaculture and that will open a market that we are not currently playing in. The probiotic additive for shrimp could be a major tool for expansion in South East Asia.”
Dr Raoul stressed that while the European dossiers have been “a major investment for Lallemand over the last several years” the process of gaining EU approval is a worthwhile and highly valuable one in terms of the “leverage” it lends the product across the globe.
“There is high level of requirement to get authorisation for a European dossier, which necessitates the production of very thorough documentation in terms of efficacy, safety and quality,” he said.
“The European standard is seen by many authorities across the world as the global benchmark and many countries will look at whether your product is authorised there. Regulatory affairs have to be seen as a strategic asset which not only help you develop brand equity for your products but also push you internally to get to the right standards.”
SAFETY AND TRACEABILITY
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Lallemand’s culture of achieving the highest standards extends to its philosophy on the safety and traceability of its products, said Dr Raoul.
He said: “We have dedicated manufacturing sites for the production of probiotics and their derivatives – which brings an insurance of traceability for our customers and the authorities.”
The company’s 18 production sites in Canada, the US, South Africa and a number of countries in Europe meet the registration and certification regimes both in their geographical locations and in the markets they serve, explained Dr Raoul. Lallemand owns over 95% of its supply chain and where manufacturing partnerships are in place it imposes “the same elaborate production guidelines and quality requirements that we would impose on ourselves”, he said.
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"We could be the first company in Europe to have probiotic approval in aquaculture and that will open a market that we are not currently playing in."
- Dr Pascal Raoul |
For animal nutrition, Lallemand has decided to support the FAMI-QS certification scheme - and its plants in Montreal (Canada), Milwaukee (US), Grenaa (Denmark), Vienna (Austria) and Aurillac (France) are all FAMI-QS approved. This, said Dr Raoul, is the highest number of plants cultivating micro-organisms approved under such a quality scheme.
FLEXIBLE APPROACH TO R&D
Lallemand’s R&D strategy is an essential tool in the underpinning of both its past performance and future aspirations in terms of consolidation, expansion and product differentiation, said Dr Raoul.
The division spends 10% of its turnover on R&D and has evolved a flexible and far-reaching programme that allows it to maximise both the talents inside the entire group, as well as forming partnerships with leading research institutes around the world.
Dr Raoul said: “An innovation pipeline is absolutely vital to the long term prosperity of the company but I think answers to market needs and challenges will not come any longer from a single internal source.”
"An innovation pipeline is absolutely vital to the long term prosperity of the company but I think answers to market needs and challenges will not come any longer from a single internal source."
- Dr Pascal Raoul
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Another valuable source of R&D comes from working within consortium of companies – with the ProBioMaS project in France a prime example. Here, Lallemand is collaborating with the University of South Brittany, a feed company and an equipment manufacturer on a programme to improve the quality of liquid feeding in swine production.
Lallemand is also approached on a regular basis by companies and research institutes with proposals to develop products, facilitate their authorisation and then use its marketing skills to launch the product, said Dr Raoul.
He added: “Our know-how is in developing, producing and marketing live organisms that can apply to farming in a broad sense, impact performance, wellness, food safety, and profitability. Lallemand’s capacity to scale up for global supply is a rare ability – especially for bacteria. We are always interested in companies approaching us for products that are in scope.” |
LOOKING TO THE FUTURE
While Lallemand has a dynamic global expansion programme, it is also determined that its growth must be sustainable and allow it to adhere to its central principles, affirms Dr Raoul.
“The challenge is to support the geographical expansion, while preserving our core values,” he said.
A further fundamental constituent for the company’s continued success is the ability to differentiate its products, he added.
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“It is vital for us to differentiate from the other companies or products out there. We do this by supplying products that are specifically designed for animal health applications or silage applications. We also differentiate through the quality of the scientific documentation that we provide to our customers.
“It is not enough to establish product leadership in the market place. We are constantly involved with field work with our customers to best position the products in their conditions of use.
“As with every product, probiotics deliver value to when they are used properly, and incorporated into feed stuff where the conditions allow these live products to express their potential.” |
"The challenge is to support the geographical expansion, while preserving our core values."
- Dr Pascal Raoul
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