These drivers are expected to spur the feed enzyme market in the years to come, continuing a growth trend recently seen at roughly 5-7% year-on-year. Consequently, AB Vista has the ambition to re-enforce its position as an innovation leader in the feed enzyme market, and as a contributor to growth in this market in the future.
Feedinfo News Service spoke to AB Vista’s Managing Director – Richard Cooper – and the company’s Technical Director for the EMEA market – Dr. Rob ten Doeschate – to find out more about future opportunities in feed enzymes and about how growth will be pushed forward by increased usage of phytase.
[Feedinfo News Service] Mr. Cooper, AB Vista values the current global feed enzyme market at USD 725 million and projects a value of over USD 1 billion by 2017. However, estimations from market research companies published in 2012 estimate that the global market for feed enzymes could reach over USD 500 million by 2017. Your estimation is double that amount. Can you explain the reasons why you are so optimistic?
[Richard Cooper] We believe the figure of USD 725 million today is reasonably accurate. We have recently conducted our own in-depth analysis of the feed enzyme market, reviewing enzyme spend and preference at feed company level across all of the major markets. This has enabled us to build a global picture of the feed enzyme market from the ‘bottom-up’, which was subsequently cross referenced with published feed statistics, and wherever possible, quoted sales information from major suppliers. By using this triangulation method, we were able to successfully validate our market review.
We are optimistic about the future of the global feed enzyme market, for four reasons: a) within AB Vista we have seen continual growth in sales of our feed enzyme products, b) we see superdosing of phytase as changing the landscape through increased phytase usage c) the volatility in feed raw material costs means that producers are increasingly looking to invest in new technology solutions, and feed enzymes are one way that feed producers can reduce costs per kilogram of end product, and d) the feed enzyme suppliers are investing significantly in better performing enzymes and new applications which will also fuel growth.
[Feedinfo News Service] In 2010, experts estimated that more than 60% of the world’s production of commercial poultry and swine diets contained phytases. Today, according to your own data, phytase penetration of global monogastric tonnage is higher, with an estimated 85% plus of manufactured pig and poultry feed containing a phytase. Which global regions and animal species contributed most to this growth?
[Richard Cooper] Firstly, we were not convinced 60% phytase penetration of manufactured feed was accurate. We think it was higher in 2010. Secondly, there is no regional bias; penetration has grown in all regions. There is a difference between livestock categories, where global penetration is probably highest in broiler feed and probably lowest in grower-finisher swine feed. Depending on how we define manufactured feed, penetration could even be over 90%.
[Feedinfo News Service] Dr. ten Doeschate, a few years ago Dr. Aaron Cowieson of the University of Sydney in Australia, told us that he saw the lion's share of growth in the phytase market coming through increased inclusion concentrations for current users. He said that increased penetration of feed sectors where phytase is not already staple would contribute relatively less to growth in the market. Is this view still relevant today?
[Rob ten Doeschate] Yes we agree. It’s not about lots of phytase being used in aqua, pet or ruminant diets. It’s about increasing penetration of core pig and poultry segments, and in the future more phytase being used per tonne of feed. As superdosing improves animal performance beyond phosphorus response, inclusion of phytase becomes commercially relevant, even in diets where phosphorus isn’t necessarily limiting. We’ve seen high doses of phytase improve performance in growing and finisher pigs, even though in some of these diets phytases were not usually included to substitute other phosphorus sources.
[Feedinfo News Service] Dr. Cowieson also anticipated that fish and piglets would be the ‘next target markets’ for phytase suppliers as a major driver here is the displacement of animal protein by-products with vegetable protein meals. How have these markets evolved?
Dr. Rob ten Doeschate
Technical Director - EMEA
[Rob ten Doeschate] Superdosing (and related displacement of animal protein) in piglet diets is already commercial practice in a good number of major producers. At AB Vista, we are looking at the aqua sector, and have some very encouraging trial results, but it is not yet a major growth area. To an extent we agree with Dr Cowieson, but as we have developed our knowledge we see that there are also big opportunities in the traditional consumers of phytase, such as broilers, turkeys and even some of the more mature animals. It appears that the anti-nutritional effect of phytate is valid for all animal categories, but yes, the response is probably more spectacular in the sensitive categories of young animals and fish. When you replace animal protein with vegetable protein you inevitably increase phytate intake, the negative effect of which can be reduced by superdosing Quantum Blue.
[Feedinfo News Service] Market research companies also argue that the drivers for growth for enzymes in general are the expansion of application possibilities, rising demand from developing countries, and the environmental clampdown on conventional chemicals and chemical processes. What is your view?
[Rob ten Doeschate] Phytase is already displacing a lot of inorganic phosphate, but this is really only the base of the pyramid. If “the expansion of application possibilities” means superdosing, then these experts are right. One important aspect is the demand from developing countries, where use of enzymes can really help, but only if backed up by good service levels such as nutritional advise, enzyme activity and phytate analysis to enable nutritionists to use the products with confidence. Often you see products being sold with poor back-up and limited service, resulting in lack of value for the customer.
[Feedinfo News Service] Is the superdosing of phytases becoming standard practice within the global feed industry? How does it differ from using higher than normal levels of phytase to release more phosphorous?
[Rob ten Doeschate] Superdosing is becoming standard practice within the phytase industry.Since the first International Phytase Summit in 2010, we have conducted over 40 trials and brought to market the fourth generation Quantum Blue phytase, which is optimised to destroy phytate. We now estimate that over 20% of our global customers are either using superdosed Quantum Blue commercially or testing on a commercial scale. Interestingly, some of the customers who have tried the concept in the field report that they are getting even better responses than what we observed in the scientific trials.
Superdosing is defined in our hands as the use of a phytase to degrade the majority of phytate, without fully taking into account the expected nutrient matrix, such that performance is enhanced to a greater extent than would be expected by the nutrient release alone.The inclusion level of phytase to release phosphorous and other nutrients is limited by substrate concentration and changes in the diet. The fundamental change in thinking with AB Vista’s definition of superdosing is that we are not simply releasing more nutrients by adding more phytase, we are removing phytate and reducing the anti-nutritional effect of phytate. This gives a performance boost instead of a cost saving.
[Feedinfo News Service] Given that the phytase market could increase substantially thanks to superdosing, why does it seem that AB Vista is the only commercial producer placing a lot of focus on this concept?
[Richard Cooper] We have been working on this concept for over four years now, and the recently launched Quantum Blue was designed to maximise phytate destruction. Through Quantum Blue superdosing we have shown an average 4 point improvement in FCR, which could equate on average to a USD 5-10 saving per tonne of feed for producers. We have tested other phytases in this application and results have been highly variable, and can require a much higher FTU dose than Quantum Blue to deliver a similar benefit.
It is critical to recognise that not all phytases are the same.Even small changes in phytase characteristics can influence efficacy in the animal. An understanding of the differences between phytases is important to ensure optimal use in animal diets, even when using higher inclusion levels. It may well be that other companies are less confident than AB Vista because their superdosing trial results have been less successful due to the characteristics of the products they were working with.
[Feedinfo News Service] Today you argue that AB Vista has grown its feed enzyme market share considerably and has become the third largest global feed enzyme supplier. What would you say are the most significant steps that allowed you to achieve this position?
[Richard Cooper] Our growth has three main drivers; product, service, and relationships. Quantum Blue is currently the most advanced and powerful phytase in the market and Econase XT is the only xylanase enzyme with sufficient intrinsic thermo-stability to be added as a liquid into the mixer, differentiating us from the competition. We also have a very strong pipeline of new enzymes, some of which will come to market quite soon.
Our services are designed to support the use of our products, and add value to our customers. They range from enzyme analysis (both in our in house assay service lab, as well as close to the customer using ELISA and Quickstix technology) to analysis of raw materials for quality parameters (Corn and Sorghum Quality Service) and analysis for phytate in both materials and feeds. This allows us to give good application advice, enabling customers to get the maximum value out of our enzymes.
Our investment focuses on research as well as creating an open forum for academic discussion on enzyme development and further opportunities in the market. We aim to revolutionise the way the market uses phytases and support this through leading academic research and discussion. Our customers expect us to be honest and to bring new solutions and ways of thinking. We invest significantly in this broader knowledge base, which goes beyond simple feed enzyme applications. It is this honesty and innovative spirit that helps us build lasting and trusting customer relationships.
[Feedinfo News Service] Your Research Director, Dr. Mike Bedford, previously told Feedinfo News Service that AB Vista was hoping to become, and maintain position, as the market leader for phytase products. Where do you situate AB Vista in today's list of Feed Enzyme suppliers?
[Richard Cooper] In the overall feed enzyme market, we believe we are number three by market share. Based on a portfolio of differentiated and class-leading products supported by unique services, AB Vista is confident of re-enforcing its position as the innovation leader in the feed enzyme market, but we will only succeed if we continue to listen and learn; particularly through close and mutually beneficial relationships with our key customers.