April 20, 2015

Choice Genetics: Pooling resources for growth


Being part of Groupe Grimaud - a multi-species genetics company - enhances Choice Genetics' value to its customers.


By Ngai Meng CHAN 


In 2008, Groupe Grimaud was already into broiler, layer and duck genetics when it added swine to its multi-species interests with the acquisition of Newsham Choice Genetics. Newsham was then the largest privately-owned swine genetics company in the United States. Three years later, in 2011, Groupe Grimaud bought France's Pen Ar Lan.


In 2013, Newsham and Pen Ar Lan were merged under the new name, Choice Genetics.


Born out of necessity


The M&As (mergers and acquisitions) were in line with the company's belief that consolidation in the swine genetics industry is the order of the day. In the past, says Choice Genetics CEO Pieter Seghers, a local swine genetics company could flourish. "Nowadays a swine genetics company needs to be large in order to survive for the long haul," he tells FEED Business Worldwide.


Size matters, he explains. This is because in a swine genetics operation, there is a need to gradually write off the high fixed costs of maintaining pure line populations, not to mention the enormous R&D investments to ensure faster genetic progress.


"In our opinion, more consolidation in the swine genetics business is to come," comments Seghers.


Being part of Groupe Grimaud, Choice Genetics also enjoys ready access to its parent company's global network, resulting in faster market development, especially in Asia.


Beyond M&As, pooling as a resource management strategy runs deep in the Groupe Grimaud bloodline. For example, Choice Genetics considers R&D its engine of growth, says Seghers. And collective R&D is one advantage the company has over those of mono-species genetics companies.


"Groupe Grimaud R&D teams of the different species meet regularly to exchange methodology ideas, tools and R&D strategies. We also have multi-species R&D task forces working on transversal topics including genomics, R&D-related ITs, and imaging," says Seghers.


The merger of Newsham and Pen Ar Lan has in fact "given our customers access to a larger gene pool of specialised lines". The first step Choice Genetics did after the merger was to thoroughly analyse and compare the gene pools, and identify synergies in both the maternal and paternal lines.


"We have of course aligned the R&D strategies and methodologies of both entities, resulting in one global R&D team, and currently two R&D centres - one in the US and the other in France," Seghers points out.


A balanced approach to selection


While cost-effective production remains a priority, the increasing emphasis on animal welfare in the livestock industry means that farms now have to meet welfare requirements more than ever.


"Market differences aside, in general we can say customers worldwide look for a genetic programme that allows for the cost-effective production of quality pork and also takes into account animal welfare in pig production," Seghers says.


In fact, customers are starting to realise that excessive focus on genetic progress for specific traits (e.g. sow prolificacy) has a negative impact on other important traits like animal behaviour and robustness, he adds.


"Low sow mortality, piglet survivability, good group behaviour are just some positive welfare traits which are becoming more and more important to customers," says Seghers. "While keeping a close focus on the economics of course, customers appreciate our balanced approach in also considering traits related to animal well-being, 'labour-friendly' animals and meat quality."


Serving different markets


Extending its "balanced" approach to markets worldwide by having access to a broad portfolio of gene pools, selected in different environments, allows Choice Genetics to combine lines in order to offer products that take into account specific market requirements.


Very broadly speaking, says Seghers, Choice Genetics has a product range for different types of customers.


For example, its markets are segmented based on farm size - i.e., family farms in France and Germany versus larger farm systems in the US, Brazil and China.


Market segmentation is also done based on the level of integration - i.e., specialised farms in farrowing or finishing versus fully integrated systems "from gate to plate".


For consumers, products are also differentiated between commodity and niche products. One example of niche products are those based on meat quality geared for the Japanese consumer.


The company's markets are also segmented based on production under different climates and environments.


Advances in selection technology are helping Choice Genetics to better meet the needs of its target markets. In 2013, the company added Computed Tomography (CT) scanning to its selection technology, which is 99% accurate in estimating carcass composition.
CT scanning of pig
"This has allowed us to speed up genetic progress for traits like yield, primal cuts, fat/meat ratio and feed efficiency, resulting in more margin for our customers," says Seghers. "Applying CT scanning extensively has allowed Choice Genetics to steer paternal lines genetically in the direction of the very specific needs of larger pork value chains."


"Without any doubt it has allowed Choice Genetics to differentiate its products from those of the competition. The use of CT has allowed us to focus on true lean and fat accretion instead of guessing or estimating it. We now know how much muscle will be gained by each generation and have the ability to direct where the gain will occur," Seghers adds.


He also says that the company selects new traits taken for granted by the competition but are in fact becoming more and more important to producers.


According to Seghers, the company's key markets are in Europe, the Americas and Asia.

In Europe, they include France, Germany, Poland, Ukraine, Spain, Italy and the UK. Choice Genetics cooperates with large integrators in these countries to direct its breeding programmes towards their specific needs.


"Choice Genetics also produces and distribute boar semen in certain markets like Poland. In other markets, semen of our lines is distributed in partnership with AI centres, for instance in the US, Mexico and France."


On market growth, "we see the strongest potential in the Americas and Asia (the company has operations in Japan, Vietnam and China)", he says. "In Europe, we see steady growth in our target markets of France, Poland, Germany and Spain and growth opportunities in Central European countries."


"We have had for a long time subsidiaries in France, Germany, Poland, the US, Canada, Brazil and Vietnam," he points out. "We work on promising partnerships in Central Europe to grow our business in that market."


Choice Genetics is also working with Chinese customers to develop or modify existing product lines to meet the specific meat needs in China, the world's largest pig producer.


"We have made rapid progress in the Chinese market since 2013 with unique partnerships and cooperation. We will establish our subsidiary Choice Genetics China and our third R&D centre in 2015," Seghers reveals.


One may ask: China is a vast country, with swine production spread across many provinces. How would Choice Genetics reach out to the swine producers throughout the country?


Seghers's reply: "The question has its own answer. The vast geography and needs across China cannot be addressed in one simple plan to reach producers. No company can nor should attempt such an undertaking. We have worked for several years to segment the marketplace to determine the best fit for our programme offerings."


Summing up Choice Genetics' global marketing strategy, he says: "Wherever we are, we deliver value from a global leader with local relevance."
Choice Genetics' nucleus farm in China
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