Dostofarm GmbH, a German supplier of natural oregano oil premixes and feed supplements, is planning to complete further factory extensions, especially for dry products, this year.
Faced with its fair share of challenges; those that are specific to a company dealing in natural oregano oil extracted from the oregano plant, further compressed by being based in cost-pressured Germany, the company nevertheless continues to expect some further organic growth in its core business and core markets.
“While growing, it is as important to us to secure the existing business and to strengthen our existing partnerships,” said Thomas Logemann, CEO of Dostofarm.
Logemann also pointed out that a diversification of his business will also be key to ensuring future growth in a challenging market.
“We also have several exciting projects ongoing for further expansion into new fields of application and use of natural solutions. Together with our network of global partners, we will continue to grow and diversify our business in the next few years,” he commented.
Today, Dostofarm supplies customers in over 50 countries worldwide. Besides the headquarters in Westerstede, Dostofarm has a sales office in North America and another one in Bangkok, Thailand for the Asia-Pacific region.
Its flagship product line produced in Westerstede is DOSTO Oregano. It is a line with over 10 different products, tailored for different applications and species, based on oregano oil from 100% contracted cultivation. The company claims that its natural oregano oil products are considered as appetite stimulating feed additives with gut health benefits.
In November 2020, Dostofarm completed the conversion of a warehouse into a new liquid production plant at its main site in Westerstede. The project also consisted of another warehouse, which provides more space for storage, picking and outgoing goods.
According to Logemann, both expansions have helped Dostofarm significantly increase its capacity and flexibility.
In terms of the innovation pipeline, the company has recently launched a new line for products combining natural essential oils and plant extracts with respiratory system benefits, and for use in poultry, swine and ruminants.
More recently, Dostofarm completed a new bottling plant, which has been running since early summer 2022.
“We are now in the process of establishing a new fully automated bagging and palletizing line for our dry products. This project is planned to be finished mid-2023 and will give us more capacity and flexibility for our dry products as well,” Logemann said.
The company’s expansion plans, however, have not gone as smoothly as wished, delayed by Covid-19 complications.
“The bottling plant and the bagging and palletizing line have indeed been significantly delayed by the global shortage and supply chain issues for certain electronical parts, chips etc. and were originally supposed to be finalised about one year earlier,” Logemann disclosed.
Looking more at the raw material supply challenges for oregano oil, Logemann stressed that for Dostofarm’s own contracted cultivation of oregano oil, it has been able to “secure supply with its key active ingredient without any problems in the last few years. The same applies to the other active ingredients we are working with.”
“Certainly, supply chains, especially in global container traffic, have been challenging. Lead times are becoming longer and longer and less predictable,” he added. “Also, the Ukraine conflict has affected our business massively. First of all our activities in Eastern Europe, but also the secondary effects of the conflict on markets and supply chains.”
The Dostofarm CEO acknowledged that his company has seen significant price increases for almost all raw materials as well as transport costs, but stressed that now, more than ever, having “long-standing relationships with most key suppliers is a great asset these days to at least secure supply, and also to minimise the cost increases.”
And with skyrocketing energy costs for the German manufacturing sector expected to continue; and recent predictions by Allianz Trade showing that the German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia's invasion of Ukraine, Dostofarm will also have to remedy this situation.
Logemann said: “The increase in energy cost of course affects our production cost for natural essential oils, which are distilled with steam.”
“We are taking several actions to compensate this and to reduce the energy use in our production. However, the options are limited, and a certain cost increase is unavoidable,” he added.
Citing other issues his firm is monitoring, the Dostofarm CEO went on to say: “Next to that, we do of course always see effects of animal diseases like avian influenza and African swine fever.”
“However, with our strong business model and with our diversified distribution network, we have been able to work through these challenges relatively well so far, and our outlook for the near future is quite positive.”
