February 20, 2013
Kemin: Science meets vision
An eFeedLink Exclusive
Founded in 1961, Kemn's vision is to touch half the of world's people with its products, services and molecules. Co-founder R.W. Nelson shares with FEED Business Worldwide Kemin's strategies and aspirations.
by Geraldine EE
Can you tell us more about Kemin's vision?
Our business is the food business - we look at animal feed as food. We consider anything that we contribute to the food business as part of the things that we do, even though we manufacture ingredients, not complete food products for animals or human per se. We touch over a billion people with our molecules every day, based on a mathematical formula that we follow. The formula examines for every tonne of feed, how many animals were fed with the tonne of feed; what the animal is; and how much protein a person consumes.
How has the competitive environment changed?
When we started this business in Des Moines, Iowa in 1961, there were a thousand feed mills here manufacturing feed. Today, there are 100-150 companies that make feed and they are not necessarily big corporations. A lot of mergers have occurred and a lot of companies have gone out of business.
Today, in the United States, there are probably 10 to 12 players that dominate the full-line animal feed business, and that does not include feedlots, major corporations, integrators, or players that produce maybe 10-15 tonnes. So the landscape has changed dramatically.
Which trends are altering the landscape of Kemin's business environment?
In the future, active ingredients will be accessible to everyone. Beyond that, sustained release technology which delivers the active ingredients at the target organ at the right time will be essential. That is why Kemin acquired a factory in Italy which specialises in this area in 2010.
When Kemin's new Des Moines R&D facility is completed sometime in 2013, will you introduce new product lines or new applications for existing additives?
Absolutely, that is part of the things that we do. Kemin is a science-based company and our tagline "inspired molecular solutions" says it all. We have a scientific group, exploratory researchers and a group of chemists. That is all they work on, new molecules and new programmes, as far as our animal feed business, or agriculture is concerned. R&D takes up 6.5% of sales turnover.
How do you balance between being marketing-focussed and technology-focussed?
We like the perception that everything we do is good science, plus good marketing. That is critical to our integrity. For example, we do not bring anything to the market unless we understand how it works at the cell level. Our approach to research is "Here is the data, here is what we found and this is scientifically sound." So we really are selling through our science.
With the manufacturers, we talk to the technical people, "Here is the research and here is the trial that we have done, here is how to use the product and here is how it is going to add value to your business." Along with the company's interest, we have to hear from our customers, and that is really critical too. It is not strictly marketing, but marketing is very important in a business. We have products that we have to market, but we try to maintain a balance.
What is Kemin's sales and distribution strategy?
We do sell our products to veterinarians, who use the products, so you can call them the "consumers". However, fundamentally, our business is still 99% business-to-business (B2B). We do research as far as B2B is concerned, because our customers' customers have to make a profit on what we do. Our customers, who are feed manufacturers, are our channels to sell our products to the final consumers.
Who are your top three markets?
The United States and Europe, but China is coming strong. Our first international operation is in Europe and the next largest expansion is into Asia. Today, China is manufacturing almost as much feed as is produced here in the United States, so it is going to be a major market. The rest of Asia is very important too and we have been present in Asia since the 1980s.
Singapore is our headquarters for Asia and from Singapore, we service Thailand, Japan, Korea, the Philippines, Australia and New Zealand. We have been present in Vietnam since 1985 and over time, we have grown our sales team to ensure better market coverage.
From an animal standpoint, however, India is much bigger, so we started manufacturing and research operations in India. Those are going to be our prime markets. Kemin will continue to focus on China and India but at the same time, look at opportunities in Africa.
Is Myanmar becoming important?
Myanmar is an important market. It is part of our Asian territory and fits into our mid-Pacific market, which we service from Singapore. Culturally, we can do business there, what we need to do is import our ideas into that market.
In fact, some of our customers have already started manufacturing operations there and have asked if we sell to Myanmar, so we say, "Sure, no problem." Politically, for years, Myanmar is listed as one of the countries which the US does not do business with, with the exception of food and feed products. Hence, even though we are a US company, we are allowed to export food and feed into Myanmar.
Is Myanmar ready to do business with the world?
Currently, food and food production are issues in Myanmar. If citizens in Myanmar are having trouble obtaining food even if they have the money to buy it, political unrest could develop. Historically, one of the reasons for the downfall of the Russian regime was inadequate food for the population.
So food is a very huge political issue for people who are trying to manage politics in the country. And I am sure the government in Myanmar would know that if there is huge dissatisfaction as far as basic needs are concerned, they would face big political problems.
Have the needs of Kemin's Asian customers changed?
Our customers continue to integrate their businesses and consolidation continues to take place in the market place. With faster feed turnover, our customers have changed their requirement from the need for feed preservation to increased plant efficiency and Kemin responded accordingly through our products & services.
Besides Asia, where else are Kemin's business prospects growing rapidly?
We have a strong presence in Russia and have started to be more active in the Middle East.
As Kemin's founder, how do you see your company evolving?
Kemin is a privately-held and family-owned company, currently in its second generation. We have had a lot of opportunities to sell the company, but we want to maintain it as a family company, at least for my lifetime, at least for Chris' and my daughter's lifetime, till the third generation.
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