10 December 2021 – Nutreco has received the green light from competition authorities for its acquisition of Danish farm minerals and piglet feed producer Nutrimin A/S. The deal combines the portfolios of Nutrimin and Nutreco's animal nutrition division Trouw Nutrition. It also opens up new opportunities for Trouw Nutrition in the Danish market, and, for Nutrimin, a partner who can support the next stage of its development.
Feedinfo was able to discuss the rationale behind the deal with Richard Maatman, Managing Director Europe, Central-Asia & Middle East, Trouw Nutrition, and Torben Nielsen, co-owner and Chief Operating Officer, Nutrimin. The latter had already given us an overview of some market difficulties encountered earlier this year.
Nielsen gave a recap and some further explanation as to why it was necessary to seek external support.
“Our production capacity was fully used by the turn of the year 2019-2020, which meant that we had an awful Christmas, having a real hard time to supply our customers in time with the product that they ordered. We reached our capacity limit sooner than what we anticipated. That's when we sat down asked ourselves where to go from here,” he said.
“One of the options was to look at an expansion of the factory. So, we started drawing up an extension to the factory to double our capacity. That work was finished in summer 2020. During this time, the COVID-19 pandemic spread got us a bit worried. At the same time African Swine Fever (ASF) was spreading in Germany. We decided to postpone the investment. This gave us more time to reflect on the plan,” he added.
“We came to the conclusion that building the extension to the factory by ourselves wasn’t perhaps the best idea,” Nielsen went on to say, disclosing that in the longer-term Nutrimin was contemplating selling the business and was concerned that a new owner may not approve of an expansion as such.
“That is when the idea came up that we should put the business up for sale instead of carrying out the expansion alone and double our production capacity of 75,000 tonnes/year,” Nielsen commented.
From Trouw Nutrition’s perspective, the company had known Nutrimin already for several years as the Danish firm is one of its vitamin premix customers, and views the company as a respected player in the market.
“The Danish swine sector is a big market and world-famous for its expertise in terms of technical performance, genetics… At Trouw Nutrition we had been looking at Denmark for quite a while and we wanted to build a stronger presence there. Looking at our market share in Denmark, it was lower than what we wanted. We have distributors but we would like to have a stronger presence there and be more connected with the Danish farms. So, we had been looking at Denmark for a while,” Maatman said.
“Also, if you look at the Danish premix market it is pretty consolidated and mainly dominated by three cooperatives. So, when we heard that Nutrimin needed investors, we reached out and opened the dialogue because it was a unique opportunity to enter this first very important market. And we also believe that there's a good cultural fit between both companies,” he added.
When we last interviewed Torben Nielsen in March 2021, Nutrimin was running at about 95% of its production capacity at its factory in Silkeborg and, due to the aforementioned reasons, a €5 million plant expansion plan was put on hold. We asked Maatman for an update on the project now that Trouw Nutrition is at the helm.
“We are currently undertaking a European manufacturing footprint study. In addition to Nutrimin, we have 10 other factories in Europe. We are running this optimisation project as we speak,” he explained.
“In short, we will connect Nutrimin to the Trouw Nutrition manufacturing network and explore synergies. One of the advantages of being part of this network will be that we can allocate volumes to different sites,” he added.
“We will also build on Nutrimin’s success story and its brands,” he went on to say. “I do not see any reason to change that. Also, via Nutrimin, we can introduce new products and services to the new customer base in in Denmark and beyond.”
Adding on to this, Nielsen said: “We’ll have the possibility to sell more to your existing customers without having to run things through our own factory. Trouw Nutrition has products that make sense for us to introduce in the Danish market. For instance, we will be focussing on introducing creep feeding solutions for piglets.”
Maatman also confirmed that in terms of Nutrimin staff, Trouw Nutrition does not expect any redundancies as a consequence of the acquisition.
“The worst outcome is status quo, but I think in reality it's going to be more people working for Nutrimin. If there's a factory expansion taking place, then there will be more people. Only Ttime will only tell, but it's definitely not going to run with less tonnage as than it does today,” Nielsen commented. “If we want to build, sell more specialised products, or move more volumes, we have to do it with more manpower.”
One immediate concern for both companies is the ongoing African Swine Fever (ASF) situation in northern Europe as we have been reminded recently with new cases in impacting Germany farms in November
“The ASF situation hasn’t really changed for us except that it's moved up a couple of 100 km closer to our border. The threat is still there, it's not going away,” Nielsen said. “I'm just as scared today as I as I was one year ago.”
“ASF is difficult to stop in wild boars. However, Denmark’s situation is better than in other countries and farmers are fully aware of how important it is to prevent ASF from spreading to their herds. Denmark’s farm management and biosecurity measures are also renowned,” added Maatman.
Despite this, both Trouw Nutrition and Nutrimin remain buoyant about the possibilities ahead for the combined business in Denmark.
“The main aim is to further build on Nutrimin’s success story and develop customer intimacy. We want to add to the building of the portfolio and to what we can offer to our customers. We see an opportunity to introduce some new products into the Danish market,” said Maatman. “We can go into Denmark despite Nutrimin’s full capacity because we can move from volumes from other factories while also being able to further expand in the country.”
Commenting on the supply chain disruption in Europe, he added: “Everybody is affected, but as a global player we can spread risk, move volumes, and secure the supply chain more easily compared to a medium-sized player. Nutrimin will benefit from these procurement benefits being connected to the Trouw Nutrition network. This will be a matter of months.”
Torben Nielsen agreed: “The procurement side is already something we're looking heavily at now because the availability of raw materials is really tricky at the moment. Being part of a of a bigger group already, we can see that there are advantages on that side. We are already working on a database.”
“I think the creep feeding solutions will be another short-term priority. And then of course, we will be looking at Trouw Nutrition’s portfolio and familiarising ourselves with their products,” he added.
