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INTERVIEW: DSM Animal Nutrition and Health Reorganises into 3 Business Lines

Source: Feedindo Logo Final

14 January 2022 - On 13 January 2022, in line with its ‘We Make It Possible’ initiative, DSM reorganised its Animal Nutrition and Health business into three business lines, which the company claims will help “tangibly address the industry’s biggest challenges to make animal farming more sustainable.”

The new reorganisation announcement lists the following three business lines:

The ‘Essential Products’ division (vitamins, premixes and carotenoids), which remains a core business parameter for DSM.

The ‘Performance Solutions + Biomin’ business line, which combines Biomin’s expertise in mycotoxins and DSM’s more advanced performance, health and nutrition solutions, including feed enzymes, eubiotics, mycotoxin risk management and differentiated special nutrients.

And a newly created division called ‘Precision Services’, which uses data analysis, diagnostic tools, and offers bespoke solutions to tackle animal production challenges. This line includes DSM’s Sustell sustainability service, and Verax, a precision nutrition service.

The reorganisation announcement did not specifically mention Romer Labs or DSM’s Veramaris algal oil joint venture with Evonik, but no change in the status of either venture is expected.

It is also worth noting that the announcement follows an earlier DSM Nutritional Products’ February 2020 initiative called ‘Fit for Growth’. For Animal Nutrition at the time, DSM divided operations into two business lines named ‘Core Products & Premix Solutions’ and ‘Specialty Solutions’.

DSM describes the new 13 January 2022 reorganisation as symbolic of the company’s “ongoing commitment to leading an achievable worldwide transformation in sustainable animal protein production.”

With this in mind, we asked DSM what changes can be expected within the reorganisation and what it means in terms of the future of DSM Animal Nutrition and Health.

Christie Chavis
VP of Performance Solutions + Biomin
DSM Animal Nutrition and Health

Christie Chavis, VP of Performance Solutions + Biomin, DSM Animal Nutrition and Health, firstly discussed the rationale behind the refresh and business lines creation, highlighting the need for continuous innovation as a key driver.

“Our offering needs to advance in tandem with the growing challenges of our customers and farming, which is why we have created three business lines. Transitioning into these three business lines allows us to fully leverage our expertise in each of these offerings and bring a uniquely broad and powerful set of tools to the feed and animal protein producers,” she said.

Asked whether the COVID-19 pandemic-related global supply chain disruption or the challenge of integrating Biomin and Romer Labs into DSM were also decisive factors, Chavis pointed out that many organisations faced disruption over the past few years due to COVID-19, but this ultimately only marginally impacted the Biomin and Romer Labs integration, if at all.

“There was no single factor behind our split into three different business lines,” Chavis said. “Instead, this was influenced by our aims of increasing efficiency and adding value for our customers. Splitting into three business lines supports our strategic initiative, ‘We Make It Possible’. It allows us to hone our focus on key areas of expertise and broaden the solutions set available to producers.”

We asked DSM how the split between ‘Essential Products’, ‘Performance Solutions + Biomin’, and ‘Precision Services’ will help the company better deal with market volatility seen in ‘Essential Products’, or to a lesser extent with ‘Performance Solutions + Biomin’.

Jan Vanbrabant
Chief Customer Officer
DSM Animal Nutrition and Health

Jan Vanbrabant, Chief Customer Officer, DSM Animal Nutrition and Health, acknowledged that vitamins can at times be victim to price fluctuations – which could often be attributed to supply-side issues rather than demand-side ones. However, according to Vanbrabant, having a separate business line to focus on the ‘Essential Products’ allows his company to provide greater value to customers.

“We can do this by using our full value proposition and offering alternative solutions through more efficient production methods to maintain better animal health and nutrition,” he commented, giving vitamin D3 metabolites, and the fact that DSM delivers two-thirds of its Essential Products in tailored premix solutions, as examples.

Commenting specifically on ‘Performance Solutions + Biomin’, Chavis added: “Using our expertise in these specialised areas means that if prices were to change or become unaffordable, we would have multiple alternatives, ensuring no loss or disruption to the customer, farmer, and the animals.”

In the new set-up, Biomin will be part of the ‘Performance Solutions’ business line. However, we asked what will become of Biomin’s own premix operations, which would at first view seem to be more of a fit for the ‘Essential Products’ line.

Answering that question, Vanbrabant pointed out that DSM has 55 premix and feed additive production units worldwide, and that the expertise of Biomin in this area will help to further enhance the variety of tailored premix solutions.

“Furthermore, the premix production capabilities in Austria complements DSM’s geographic coverage in Central Europe as well as ensuring there is sufficient supply of ‘Essential Products’ to meet the growing demands of the industry,” he said.

The creation of the ‘Precision Services’ business line also marks a clear forward step in DSM’s digital transformation model to respond more accurately to nutritional, health and environmental issues.

Vanbrabant argued that DSM sees plenty of potential here given the “rapid advance of enabling technologies, the ever-present need for producers to improve efficiency and growing calls for greater sustainability and transparency from a variety of different stakeholders.”

“We already see that animal protein producers have a growing interest in accurately measuring and reducing their environmental footprints. Interestingly, the use cases for these insights are multiple. Some of our clients are interested in pursuing certification of new labelling claims while others use the calculated footprint in order to demonstrate their progress on emissions to banks and financial institutions,” Vanbrabant said.

“Having the knowledge [provided by precision nutrition and analytical tools] upfront enables producers to take preventive action that reduces risk in their operations, makes better use of natural resources and reduces the need for antimicrobials,” he added. “I fully expect that sustainable animal protein production will continue to develop and be enhanced through the use of interconnected data that improves decision making and efficiency going forward.”

From an operational and manufacturing standpoint, DSM Animal Nutrition and Health will pursue investments and expansions in line with the ‘We Make It Possible’ campaign.

Without disclosing specifics, Chavis said: “We will continue innovating with new technologies and products for a large campaign, including next-gen phytase, glycans and an extended range of services to our customers.”

“The new face of DSM Animal Nutrition and Health will enable our customers to see how we can partner with them to achieve the ambitions of the We Make It Possible strategic initiative,” she added.

And now that the three business lines have been created, we asked DSM if the market can expect any factory consolidation or restructurings.

Again, DSM did not provide specifics, but Vanbrabant commented: “We're always looking for ways to run at our most optimal and efficient level and ensuring we can adapt when needed. At the same time, it has to be said that the Biomin acquisition was primarily done with focus on growth, and less on finding synergies.”

As for the DSM Animal Nutrition and Health product portfolio, the company sees the three business lines as a means to increase efficiencies.

Chavis argued: “As we harmonise the various product offerings, our customers are receiving the best and most appropriate products they require. This harmonisation will ensure that our customers have the widest selection of the most powerful proprietary technologies to support animal nutrition and health in the market, with access to key products they rely on. It's an exciting new frontier for us, with novel strategy combinations applied to a unique and diverse range of customer challenges.”

In spite of the reorganisation rationale outlined by DSM, rumours about the future cannot be excluded. Investors, when seeing the 13 January 2022 press announcement, may speculate that DSM Animal Nutrition and Health is reorganising to create three interlinked but ultimately independent business units, therefore maybe opening the door to other opportunities.

DSM did not wish to comment on such speculation, but Chavis stressed how committed her company is to finding solutions to the customers’ challenges and supporting the end goal of providing sustainable animal protein.

“The introduction of this new three-pillar offering reconfirms our mission in the DSM Animal Nutrition and Health business group to innovate and deliver products that improve animal health, animal welfare, farmers’ livelihoods and our environment for current and future generations,” she stated.