30 March 2021 – Efficiency and quality are always top of mind for companies in today’s feed additives world. As the number of independent toll manufacturers is declining, however, contract development and manufacturing organization (CDMO) Erbo Spraytec AG’s mission is to provide both at the same time – a mission it has furthered with a €4 million investment at its headquarters in Buetzberg, Switzerland.
With over 40 years in the space, Swiss company Erbo Spraytec AG develops and manufactures customized private label microencapsulation and coating solutions for feed additives, converting active ingredients into free-flowing and dust-free powders with specific product properties, such as defined protection and release profiles. To help customers around the world further realize their objectives when it comes to targeted release or similar challenges, Erbo Spraytec AG partners with them to formulate additives aligned to specific market and customer requirements.
Feedinfo spoke to CEO Dr. Raetus Boehlen, R&D Manager and Vice President Dr. Rolf Tona, and Head of Purchasing, Sales and Marketing Dr. Dietmar Ranz to understand why the investment will foster growth and innovation opportunities, as well as what the future looks like for the company.
[Feedinfo] For those who aren’t familiar with Erbo Spraytec, can you start by giving an overview of your existing capabilities?
[Erbo Spraytec AG] Erbo Spraytec AG is a true “hidden champion” with leadership in the space of feed additive manufacturing. On top of our principal activities in toll manufacturing, we offer the following range of services to our global customer base: research & development, raw material sourcing and quality control.
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In terms of our equipment, Erbo Spraytec AG runs two large scale fluidized bed multiprocessor production plants of different technology, which complement one another. One production facility is a spray cooling tower where hot melts are atomized in cold air to fat-based powders. The other production facility is a spray granulation tower where aqueous slurries are atomized in hot air to virtually dust-free granules of a defined particle size distribution. These include a variety of extra technical features resulting in a multiplicity of particle options. This offering of diverse technologies is unique in the CDMO market. |
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Blending, sieving, customized packaging, warehousing and logistic services complete our offering. Our customers pick the desired pieces of our service portfolio to create their tailor-made supply.
[Feedinfo] You recently invested in improving your R&D capabilities. What did this entail?
[Erbo Spraytec AG] The investment went toward a brand-new multi-functional building that enlarged R&D space, R&D capabilities, and laboratory capabilities while also creating more space for new technologies and applications. We added an open innovation workspace to work with our customers and leading research institutes to create even better products and solutions. Furthermore, a modern cafeteria and new social rooms were built.
This investment is a commitment to Erbo’s headquarters in Switzerland and its independent way of thinking. We will continue business as an independent CDMO delivering unique and tailored solutions to customers.
[Feedinfo] How did this investment boost Erbo Spraytec AG’s capabilities?
[Erbo Spraytec AG] Our innovation team is growing significantly and works on different new techniques to enlarge our portfolio of services and to fulfill our customers’ future needs. This tailor-made pilot equipment needs space and a flexible workspace. The new R&D facilities help us work on different tasks in parallel to speed up development projects even more.
[Feedinfo] Why did you prioritize these particular capabilities, and why did you invest when you did?
[Erbo Spraytec AG] Indeed, the investment for enlarging the production capacities was discussed in the same context. Finally, it came down to a decision over our future focus between commodity-style or specialty-style feed additives. As Erbo Spraytec is considered one of the leading CDMO’s for specialty feed additives globally, the final prioritization for enlarging R&D capabilities was self-evident.
When it comes to timing: on the one hand, Erbo Spraytec faced growing demand through many customers’ R&D projects. On the other hand, we are launching more and more projects internally to present them in the future to our partners. Thus, this investment was simply the next logical step.
[Feedinfo] Erbo also helps customers on the research front, particularly when it comes to adapting products for targeted release in the gut, or even the design of manufacturing processes. Can you give any examples of tangible results you have achieved for customers through this role?
[Erbo Spraytec AG] As a CDMO we are legally and ethically bound to discretion which does not allow the publication of concrete customer specific examples or results. However, without getting into specifics, we have worked with phytogenic substances with different protection and release profiles for more than two decades. Today, moving more and more into an AGP-free world, this experience helps our customers keep ahead of the competition.
Next, in a project in another part of the market, we helped a customer create a free flowing, easy usable particle out of a highly hygroscopic and irritating raw material.
Speaking more generally, we have developed various types of protected solutions for the monogastrics market with our customers, to make sure that active ingredients pass the acid stomach safely and that targeted release will take place in the upper or lower intestine as appropriate. Moreover, Erbo is also a specialist in ruminant applications to help our customers’ active ingredients bypass the rumen and have the desired release in the intestine where absorption takes place.
[Feedinfo] Erbo is investing 6-7% of its annual turnover into R&D and technologies to be ahead of the market. Why is this so important to you and how have these investments helped prepare you for changes in the feed additives market?
[Erbo Spraytec AG] Our R&D is constantly exploring product improvements and new technologies which will help our customers succeed. For this reason, the number of our R&D staff was tripled at Erbo Spraytec AG within the last five years. First, because we were able to collect many new customer projects that need to be handled in parallel. Second, because R&D is strategically important for securing the future growth of the company.
For example, looking back 30 years, Erbo held a patent on rumen bypass fat and was developing rumen-protected nutrients like rumen-protected methionine and rumen-protected choline. In those days, these products, called “coating specialties,” were unique and innovative, and had attractive margins. Today, a lot of companies globally are manufacturing rumen-protected methionine or choline, and the same products nowadays are considered as “coating commodities,” while margins declined. Without the prolific work of our R&D and the necessary adaptations in our product portfolio, we would not have been able to keep pace with changes in the feed additive market. This is why R&D is important to us.
R&D also allows us to ensure our technology and capabilities remain ahead of the curve. Our highly skilled R&D team is the key today and for the future. We have to be one of the first resources for researchers and we need to offer a modern workplace.
[Feedinfo] A significant focus for Erbo is on coating and encapsulation, with applications in, for example, shelf-life extension of probiotic bacteria and rumen bypass / intestinal release formulation. How have you seen demand for these services evolve as the industry has changed its thinking about animal nutrition and health? What do you expect going forward?
[Erbo Spraytec AG] The maximum tolerated daily dosage of many ingredients are constantly reduced by authorities. Thus, the stability and bioavailability of the additives are more and more in the focus. Our customers are well aware of this and have started to change their mindsets. They are more open to accepting costs for formulation technology (investment) to achieve the best possible results in the animals with the permitted dosage and to get the return on this investment later on (in terms of reduced mortality, healthier animals, etc.). This approach is – and will be – crucial for the industry in the future and to regain consumer acceptance in terms of animal welfare and sustainability.
[Feedinfo] In a world of increasing global mergers, can you talk about why maintaining independence is important to you and what it means for the business, the industry, and the customer?
[Erbo Spraytec AG] We are a classical Swiss small and medium-sized business (SMB). As for other SMBs, the following characteristics are true for us: short decision-making processes, fast responsiveness to changing markets, reinvention, pronounced customer focus, and innovative products and services. Furthermore, our employees appreciate the familiar atmosphere, flat hierarchies, and high individual creative freedom. This is why we see a high degree of commitment among our employees.
We see clear advantages for our business and for our customers in the above listed SMB characteristics.
On top of all this, independent CDMOs do not have a conflict of interest with their customers and can guarantee confidentiality. So, we view independence as a guarantee for our existing and our future business model.
[Feedinfo] What is in the future for your services range? What do your five-year and ten-year roadmaps look like?
[Erbo Spraytec AG] We will focus on technology and product quality for the benefits of our customers. That means we will invest in new equipment and new facilities to expand our production capacity, and we will invest in our laboratory with state-of-the-art technology and highly qualified staff meeting future customers quality standards.
Recently, we started exploring the expansion of our technology park, too, for pioneering and synergistic additional technologies, although it is too early to talk about details. Nevertheless, our customers may eagerly anticipate the upcoming new technologies, whether for new or for second-generation products.
[Feedinfo] What do you think the biggest challenges for the industry will be in the future, and how are you prepared to help meet and/or overcome them?
[Erbo Spraytec AG] The future challenges for the feed industry are diverse: Climate change, ban of AGP, alternative proteins, animal welfare, and reduction of the carbon footprint are just a few of them. We believe that phytogenic feed additives and their optimal galenic applications may provide solutions to – or even help overcome – some of these challenges.
Erbo Spraytec AG was involved since the very first beginning, about 20 years ago, when phytogenic additives were in its infancy as alternatives for AGP in Europe. In fact, phytogenic additives are a core strength of Erbo Spraytec. We offer scientific consultancy to our customers in the field of phytogenic actives and combinations thereof, addressing common problems in animal nutrition such as increasing performance, health and wellbeing in farm animals. Our approach is consistent and transparent along the whole supply chain.
Furthermore, the COVID-19 crisis revealed supply chain issues all over the world. Nowadays, customers are looking for reliable suppliers who respect the adherence of delivery dates and product consistency. We may see a trend for “local sourcing” as one of the COVID-19 future consequences. The industry must also be more transparent to gain consumer trust in the future.
Private label products, manufactured at Erbo Spraytec AG, are distributed globally, in Europe but also in Asia, and North and South America. These feed additives may help make the animal nutrition world greener, safer, healthier, more efficient or more profitable for our customers. This is a great accomplishment.
Published in association with Erbo Spraytec AG
