August 27, 2010

Analysts see bright future for digestive ingredients in Europe's feed market

Growing acceptance of new products such as prebiotics and phytogenics within the market for more mature ingredients like enzymes and probiotics is providing momentum to the European market for digestive ingredients in animal feed, according to Frost & Sullivan.

With reference to digestive ingredients in animal feed, recent research shows that the European market earned revenues of US$455.5 million in 2009 and analysts estimate it to reach US$802.0 million in 2016.

"The future of the European digestive ingredients in animal feed market is bright thanks to the indispensable nature of these products in boosting animal productivity," notes Frost & Sullivan Senior Research Analyst, Dr. Kaushik Ramakrishnan Shankar. "The importance of reducing costs in animal husbandry systems cannot be underestimated and the clear advantage of using these ingredients should be communicated to end users."

This potential of digestive ingredients in animal feed functioning as cost-effective productivity enhancers is set to support market expansion.  However, price pressures remain on most products in the segments across different target species. Yeast products and silage inoculants, for example, have become commoditised with greater negotiating power vested with consumers.

Becoming commoditised, or having a large number of manufacturers in a single segment, causes price pressures. The yeast segment is illustrative of this trend.

"With the maximum activity in terms of suppliers, value-added product manufacturers and traders in this segment, it has become highly competitive," explains Dr. Shankar. "Innovation and sizeable outlays on research and development help distinguish market leaders from their competitors in this segment."

Manufacturers can confront price sensitivity by using various strategies to reduce production costs. In addition, strong distribution partnerships with other companies will enable manufacturers to retain their market share. Innovation in handling industrial compound feed production will propel the market.

"Strategic relationships between manufacturers should be aimed at synergising their strengths and overcoming the weaknesses of the individual companies," remarks Dr. Shankar. "Such alliances have been successful for the largest companies operating in this segment, and could be replicated by other participants."