FEED Business Worldwide - June 2012
Excentials: Thinking globally, acting locally
Established in 2010, Excentials, which is affiliated to the Orffa Group, is living up to the name of its parent company and more, with its eyes set on the global market. To gain insights to the company, we spoke to Dr Eddy Ketels, CEO of Orffa International Holding BV and Arno van der Aa, Business Development Manager of Excentials BV.
What are the synergies that Excentials enjoys from being affiliated with the Orffa brand?
Orffa is one of the leading marketing and sales companies in Europe, with a history of over 45 years and turnover of about €200 million (US$257.4 million). Excentials benefits fully from the critical mass, experience, staff expertise and shared R&D resources of Orffa. Excentials shares the same commitment to product quality and our products come with the same European quality label.
Why did Orffa decide to use the Excentials brand name in new markets outside Europe?
Orffa's products are known in the European market for many decades, but lack uniformity within selected brand names for each product. Outside Europe, name awareness for the branded products still needs to be created.
Firstly, with a full line of Excentials products, customers who experience the quality of one product can be assured that other products in the product line are of similar quality. Secondly, promoting one uniform company name and product line is more effective. It allows us to focus our resources in R&D instead of marketing, which ultimately serves the interests of our customers.
What differentiates Excentials from other feed additives companies?
The business model of Excentials is quite unique. Our production is outsourced to toll manufacturers or exclusively selected partners. That gives us the huge advantage to being able to focus on product innovation and portfolio flexibility. We are not bound by production facilities. Our strength is the ability to develop new concepts and new products to fit specific market needs. This is our core business.
Once we identify a new trend, a problem or an opportunity, we can service our customers by offering the best possible concept or solution. Our competences in innovation, product development and technical differentiation, are supported by investments in our own in-house R&D program and support from our central technical team. This differentiates us from ordinary distributors, agents or resellers in the global animal feed additives industry.
Can you elaborate on Excentials philosophy, which is said to, offer innovative concepts rather than products' ?
We identify challenges, difficulties or opportunities that our customers face and aim to translate these into solutions, while providing input for future strategy and product development. Such solution can be a single product, but it could also be a full concept in animal nutrition. Excentials offers solutions for the environment, animal health, feed safety, food quality, cost-effective performance and animal welfare.
An example is the current promotion of Orffa's "Alternative for Antibiotics Concept in 3 steps", focussing on protein level, gut health and immunity. At this moment it is gaining attention in Europe. In other countries, the use of in-diet antibiotics as growth promoters is also getting more attention. Excentials can support customers within a strategy for AGP (antibiotic growth promoters)-free diets as well.
What are some challenges that Excentials faced in adapting to new markets?
One difficulty is getting our products registered in the different countries, each with its own specific requirements. Waiting for dossiers to be evaluated and approved takes the speed out of commercial product launches.
Secondly, although Excentials has vast experience in European diets and market structure, animal production systems and feed formulation is different in other countries. We have to gain experience and be able to identify decision makers, give full technical support to our customers, and prove our products and concepts work in different circumstances.
For some products we have to evaluate, for instance, whether or not they can be combined with AGPs in the diets. We are also setting up trials in India, Latin America and the United States, as customers appreciate that trials are conducted under [local] circumstances comparable to theirs.
Can you provide some examples of how you have successfully adapted to local markets?
Excentials has extended our European technical staff with two technical support managers in Argentina and India. As mentioned, we are now also investing in local trials in different regions.
Our product portfolio is customised to a region's needs. For instance, liquid vitamin mixtures are only sold in the Middle East. Also, we introduced a [lower dose] micro-encapsulated zinc oxide to replace pharmacological levels of zinc oxide in piglet nutrition in the United States, Latin America and Asia, where high levels of zinc oxide are commonly used. Interestingly, in Europe where high levels of zinc oxide are banned, there is a lot of interest in this product to improve gut health, rather than as a replacement strategy.
You already have offices in India, Jordan, Mexico, Brazil, Argentina and the United States. Where do you intend to expand next?
We have selected countries where we could quickly access the market (India, Mexico, United States, Jordan) since product registrations are generic instead of brand-specific.
In the meantime, we are focussing our resources in setting up distribution networks and registering our flagship products in countries where products need to be registered individually. By end 2012, we will have product registrations and an active commercial network in around 25 countries outside the EU, mainly in the United States, Latin America, Middle East, India and some Southeast Asian countries.
For 2013, our focus is to start commercialisation in Russia and China and to complete our sales structure in Southeast Asia, supported by a local office. Nowadays, only 20% of world feed production is in Europe, meaning that Orffa is missing 80% of its potential business. The potential market for Excentials is four times as big as our home market in feed volume. Hence, capturing even a small percentage of the market would scale up our volumes greatly.
Which region do you consider to be most challenging market?
China is of course one of the largest markets in the world, but a difficult one to enter, due to local habits, geographical size, fragmentation, registrations and strong competition. We believe this market needs careful thought and preparation before we enter and will only enter after we establish other markets.
Outside of Europe, which are your top performing countries and regions?
In terms of sales, that would be India and Middle East. In terms of progress, it would be Latin America. In Latin America we have appointed distributors, started registrations and set up offices in Argentina, Brazil and Mexico. Product registrations were recently approved in Chile, Uruguay and Brazil, so that we can finally commercialise our products after two years of hard work.
How will Europe's economic woes affect Excentials?
We believe the economic crisis is not affecting animal nutrition market that much, as food is a basic requirement for people. However, banks are much stricter nowadays, which does not facilitate international trade as much as we would like. Sometimes this leads to customers having more difficulties in financing their business. Orffa has always paid attention to the financial side of its sales, so this too is not a new challenge for Excentials either.
Europe's feed additive regulations are increasingly stringent. Does this affect Excentials' business strategy?
Product quality is in the mind of all our staff, whether they are in quality control, sales, logistic or other job functions. Hence, we can offer products that comply with the most stringent quality guidelines thinkable. Also, our regulatory affairs and quality control departments are located in our Belgian office close, to Brussels [EU headquarters]. This gives us a close connection, easy access to first-hand information and access to top laboratories and specialists from across Europe. This is our unique selling point.
What are some industry trends in Europe? Do you foresee them becoming worldwide trends?
In northwest Europe, the animal feed industry is increasingly challenged by either governmental regulation or by public pressure to be more sustainable. Issues like campylobacter reduction is now gaining interest in northwest Europe, following implementation guidelines for salmonella reduction. Other trends in Europe include environmental awareness, animal welfare and product and production quality.
Developments in Europe, such as antibiotic reduction, are usually transferred to the rest of the world at a later stage. However, other regions are catching up with Europe at a quicker pace. In the mid-term future, we expect new trends and product innovations in regions such as Southeast Asia or Brazil to catch on in Europe, resulting in a two-way export of knowledge.
What is Excentials' aspiration for the next 10 years?
We hope that Excentials will become a brand in feed additives that is recognised all over the globe and that our innovations will be recognised worldwide for their added value in production. Our objective is that Excentials, together with our European business can create enough critical mass to become a leading, innovative player in the animal feed industry. There is a bright future ahead!
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