Producer says market fundamentals remain 'very attractive'
Chr. Hansen: Swine and poultry probiotic innovation, adjacent sectors will drive animal nutrition business
We caught up with Christian Barker, EVP of health and nutrition, Chr. Hansen, to hear about the probiotics and natural color producer’s feed additive strategy.
Its 2015-16 interim financial report, released last month, showed relatively slow growth for its livestock targeted portfolio.
“While there is no question about current market difficulties, particularly for EU dairy farmers as milk prices hit historically low levels, the long term growth prospects for feed additives remain strong.
"The global livestock industry still needs to boost efficiency and profitability to address future meat consumption demands and concerns about the use of antibiotic growth promoters means producers are looking for alternative inputs. It is still very much an attractive space,” he said.
Chr. Hansen’s Q1 and Q2 results showed only 2% growth for the health and nutrition division from September 2015 to February 2016.
While its human health business performed well, the environment was more challenging for the animal health division, said Barker.
“A major reason was the loss of the silage inoculants business from a key customer that started to insource such additives. That development did drag down our overall growth rate. The loss translated into around 10 percentage points, but if that is taken out of the equation, the Q1 and Q2 performance would read significantly better,” he explained.
Beef cattle probiotics
Barker said there are a number of upsides for Chr. Hansen’s animal health and nutrition business.
He said the integration of the US microbial technology developer, Nutritional Physiology Company (NPC), it acquired in February is going well.
The deal brings synergies in sales, supply chain, and innovation: “The acquisition gives Chr. Hansen a way into the beef cattle probiotics segment and is an example of how the company plans to enter adjacent sectors so as to further leverage its microbial platform. We also intend to expand NPC’s product offering into markets beyond the US,” he said.
Poultry and swine R&D
And Barker explained how the Danish company is also working on innovation in terms of its poultry and swine portfolio to capitalize on momentum in those segments.
“We expect to launch new probiotic products in those two sectors in the next two years. We are looking to optimize our existing BioPlus swine targeted probiotic so that its current capabilities on feed conversion efficiency and pathogenic E. coli control are further enhanced.
In terms of poultry, we are developing a probiotic that will tackle the parameters that undermine performance in broiler flocks,” said Barker.
He acknowledged the market continues to require further education about the benefits of probiotics, and said dissemination is an important plank in the company’s expansion strategy “It is a category trend that, historically, has had a low penetration level. But we have seen a lift in probiotic usage globally as producers are learning more about which probiotics work and which ones don’t.”
The aquaculture sector, despite the dynamism in that segment, is not a priority for Chr. Hansen’s probiotic portfolio at this point, added Barker.