February 23, 2012
Executive Talk: Addcon - Broadening horizons through Green Chemistry
An eFeedLink Exclusive
Coming from silage, Addcon has branched into other areas of the agribusiness industry including feed acidifiers, but its brand strategy remains grounded on the same technology and the principle of Green Chemistry.
To gain a better understanding about the company's business philosophy and their thoughts on what would make a brand successful, we spoke to Bernd Kochannek, CEO, Addcon Group, and Kurt Wegleitner, Chief Sales & Marketing Officer, Addcon Group.
What do you see as the biggest challenge that CEOs of the agribusiness industry face?
With the growing world market for feed and food, I see that the biggest challenge is to match the demands and the supplies.
Meanwhile, a major concern is the cost of transportation - the cost is rising due to more demand. Of course, we are having some problems understanding the driving factors for world food prices, which are vulnerable to speculations.
To have the right people in the team is another big challenge for a growing company. Especially in Europe as there are not so many students in agriculture or in animal nutrition as we would like to have.
What is the reason behind this lack of talent in this agribusiness industry?
I wouldn't say it's a lack of talent. You can find plenty of average people. You can get as many as you like, but the thing is to get the few right people for your team, in terms of attitude and experience.
What is Addcon's brand strategy?
Green Chemistry is the cornerstone of Addcon's brand strategy - this is what we are and this is what we've been doing for the past 60 years. It's our philosophy. We are in the oil drilling, we are de-icing airports throughout Europe, we are a global supplier of the baking industry and we work with the feed industry. Everything is based on the same technology and this is Green Chemistry.
When we first started feed business in Asia three years ago, the focus was on the diformates, the FORMI product types - FORMI, FORMI NDF and Aquaform for the aquaculture industry. These are the products which might have had the best potential for branding. It's a unique technology - we can get the highest amount of active ingredient into dry products with the diformate technology.
We have worked at launching FISHFORM. FISHFORM is a product to improve the quality of fish feed. By spraying FISHFORM on the fish, you need less ice to preserve it, and we can guarantee that you get a higher output as well as higher protein levels of the fish.
The next brand which we are going to launch in Asia is the KOFA brand. There are two products - one is KOFA Grain for grain preservation, and the other is KOFA Feed for feed preservation. That will be the focus for 2012. KOFA Grain has been on the European market for 15 years whereas KOFA Feed is very new. All the tests have been done in Europe last year. Also, all the registration has been filed. This year we are launching the product worldwide.
In your opinion, what would make a brand successful?
We have 60 years of experience in Green Chemistry. This is something that has grown with the company. This is also where our passion is. We like what we do and we know what we do. We think we should stick to that. Everybody who is joining us must stick to that by understanding our technology. Everything that we sell, we are producing on our own, so we really are a producer, not a seller.
How does Addcon position itself compared to its competitors?
I believe we do have a very clear position in the Green Chemistry - we are selling a brand that is produced by ourselves. That is important to us. New products will always fit into this Green Chemistry and European quality. To be successful as a supplier and as a brand, you have to be reliable and trustworthy. I'm not saying that we don't make any mistakes, but we are doing the best we can. We offer high-concentrated products. All those products were tested by independent sources, and we have achieved various quality seals, international and local.
For our silage additives, which we are not marketing in Asia yet - every product we have has this DLG (Deutsche Landwirtschafts-Gessellschaft) approval, which is the highest quality seal you can get. None of our competitors have that, but we go there and have our products tested independently, then we get the quality seal.
Addcon started as a silage additives producer. How has Addcon developed over the years?
Indeed, we have started with silage additives and we have quite a long experience in that - both chemicals silage additives and biologicals. On the line of Green Chemistry again, we are also in the field of making silage inoculants, which are dedicated to improve silage quality by acting as good bacteria, which is needed for fermentation. In this area, we have a very good market share in Europe and our experience spans over 60 years.
When you are talking about silage additives, you are close to fermentation problems and preservation problems. We are producing calcium propionate and this goes to food preservation, and it also goes to feed application to improve feed hygiene or the calcium contents of the feed mix.
In addition, we have extended the product portfolio over time coming from silage towards the application for grain preservation. Adding some acid mixtures might solve the problem of storage and prevent the growth of yeast and moulds in high moisture grain. We have developed a registered formula in the EU. An alternative to the aggressive application of pure propionic acid has been developed. We have invented this product, which has the same effect in a low dose as an aggressive propionic acid without being harmful. That is one step we move from silage additives into other products dedicated into preservation of high moisture grain in Europe.
Five years ago, we bought a company in Norway and extended our product portfolio towards other applications not related to feed. We are in the oil drilling industry and de-icing of runways. It all has to do with the neutralisation from an aggressive acid into a salt, which can be applied in various industries beside feed. We use the same green substance for the de-icing of airports, which should be more environmental-friendly. Coming from silage, we have now expanded into other areas but the technology is still based on the same molecules.
What does progress mean to you (in the organisation and in the field of agribusiness)?
Progress for me means that Addcon is a reliable and trusted partner in the industry. If we have achieved that as a brand, then we have achieved a lot. To reach that, you have to have the right team at hand, right products, and you have to be in constant contact with the industry/market. Once you are there, then you have achieved a lot, and from there you can grow. If you are not known to your partners, then you won't succeed. It has taken three years to engage the Asian industry.
What were the circumstances when Addcon began to look at the aquaculture market?
We must not forget that one of the big aquaculture markets is Norway and this is how aquaculture came into the organisation. When we bought a company in Norway, all of a sudden, when we were thinking of cows and pigs, we had to think about fish too. However, the good thing was, the new company had a team of fish experts. That's when it all started. The aquaculture experience in Addcon is five years but the people there - they have been in the aquaculture industry all their lives.
What were the recent achievements of Addcon in product development?
That would be the KOFA Feed which we are beginning to launch this year, after the huge effort of having it registered in Europe. You can compare European registration for a feed additive to registration of a drug in the US. Before you apply, you have to do all this list of trial works in terms of efficiency, performance, and toxicology. This would take some time. Subsequently, you get all the enquiries from the experts of the European Commission before the registration. Consumers' concerns are such a hot topic in the European community so we have to address that.
What percentage of Addcon's turnover is channelled into R&D?
We are dedicated to our product development and application. In this regard, we spend about 5% of our turnover for research work. We have our own research team, working with our own laboratories in both production sites. Most of our work is done in collaboration with independent universities.
How does Addcon set its standards and expectations for R&D?
We try to extend the product application and make sure that the product is tested in every way - green, biodegradable, and having a proven effect.
Tell us more about your collaboration with Phytobiotics?
In South Africa, we have an entity that is Addcon Africa, which is focused on Addcon's products but would also distribute the products of Phytobiotics. Basically, we are doing a distribution job for them, and in return Phytobiotics France is going to distribute Addcon's products in France.
What are Addcon's plans for overseas markets in 2012 and beyond?
In 2011, we have achieved 50% growth in turnover in Asia. For this year, we have set the target of 35% growth with the existing product portfolio in Asia. In terms of the overseas market, we are targeting America. Above all, Brazil and the US will be of key interest.
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