‘creating more value together’ -...

‘Creating more value together’ Global Marketing Animal Nutrition, 2 November 2015 Amsterdam

Richard Maatman

28 September 2015

Programme

2

Market Trends & Industry Drivers

How to compete

Where to compete

Where to compete with

1

4

3

2

Our organisation – The Team 5

Strategy based on macro trends & industry drivers

3

The global need for scale

• Worldwide, food production must double by 2050 • With minimum environmental impact

4

Doubling food production

Halving the pressure on the planet

Feeding 9 billion people

in 2050

5

Our mission

6

In a world with limited natural resources and a growing population, there is a rising demand for high quality meat, fish and shrimp. We will be the global leader in providing innovative and sustainable nutritional solutions that best support the performance of animals, fish and shrimp.

Our mission Our vision Our values

Surging demand

7

Growing population

Growing middle

class

Urbanisation Higher animal protein

diets

+

5 0 %

7 0 %

World population in 40 years (mln.)

8

337

577

4054

973

732

448

5231

691

729

1998

Growing demand for animal protein

7 billion people consuming on average 37 kg of meat and 83 kg of dairy….

9 billion people consuming on average

50 kg of meat and

99 kg of dairy….

+ 75% + 53%

Production increase needed by 2050:

9

Resources and emissions related to increased dairy demand

0

500

1000

1500

2000

2500

3000

3500

Feedstuffs Bln kg fresh weight

Land Mln ha

Water Bln L

Manure Bln kg fresh weight

Carbon footprint Bln kg CO2eq

Additional resources

Additional emissions

10

Struggling supply

11

Climate change

Land / water

shortage

Raw material scarcity

War for talent

Trouw Nutrition is at the heart of change

12

Animal nutrition & fish feed producers

Struggling supplies

Raw material markets

Surging demand

Farmers and Integrators

Sustainable animal nutrition and optimum feed efficiency are crucial

Industry drivers reflect macro trends

13

Food safety

and animal

Health & welfare

Raw materials

price increase

and volatility

Professiona-lisation

Animal welfare

Margin pressure

Technology

Professionalization

Biodiversity

Land/water shortage

GMO’s Digitalisation

Antibiotic resistance

Price volatility

Raw material scarcity

Food Safety Globalisation

Manure Management

Efficiency

Animal health

Capital

Health & Wellness

Forces & drivers in the value chain

Premix & specialties

Feed Industry Farmer

MMEA processing industry

Retail & Food service

Crop (macro)

Additives (micro)

MMEA Sales & Marketing

Sustainability

Waste Management

Forces & drivers in the value chain

14

Macro + Few worldwide players, strong concentration + Good market access - Limited knowledge of feed application and farm management

Micro + Few global players: risk of forward integration into innovative specialty products - Many small single technology companies

Bargaining power of suppliers

15

Additives (micro)

Premix & Specialties

Final Feed/ Distribution

Farmer Meat/egg /milk industry

Crop (macro)

Retail

Integrators

New Entrants Hardly new entrants in our value chain, except in the functional feed additive domain

Threat of new entrants & entrance barriers

16

Additives (micro)




Crop (macro)

Retail

Integrators

Farmers + Consolidation and increase in average size + High professionalism + Home mixers have direct access to premix suppliers + Low switching costs from distributors

Bargaining power of buyers

17

Additives (micro)




Crop (macro)

Retail

Integrators + Growth in market share + Highly professional DMU + Strong purchasing power, cost driven + Low costs to switch from supplier

Integrators

Final Feed / Distribution + Threat of backward integration + Strong relation with the end-users + Low switching costs + Cost driven - Local players - Threat of being bypassed

Substitutes In general, limited substitutes available, exception in CMR versus whole milk and in functional feed additives

Threat of substitutes

18

Additives (micro)




Crop (macro)

Retail

Integrators

Industry rivalry + Large number of (local) firms + Slow market growth - Low switching costs for the customer - Low levels of product differentiation + High investment needed in infrastructure

Industry rivalry

19

Additives (micro)




Crop (macro)

Retail

Integrators

Forces in our value chain

20

Threat of new entrants

Industry Rivalry

Power of Suppliers Power of buyers

Threat of substitutes

+

-

+ ++

+

-

-

The essential link

Animal nutrition &

fish feed producers

Struggling supplies

Raw material

markets

Surging demand

Farmers


21

Value chain evolution

Food safety

and animal

Health & welfare



23


Raw materials

price increase

and volatility


Growing Consensus to Ban Antibiotics – Pressure on industry and governments

| 26

Consumer demand: major food industry players are moving away from animals raised on antibiotics: McDonald’s, Tyson Foods, Costco, Chick Fil-A, Chipotle


27


Food safety

and animal

Health & welfare

Raw materials

price increase

and volatility

Professionalisation

28 0%

10%

20%

30%

40%

50%

60%

70%

2007 2008 2009 2010 2013 2014 2015

Share of dairy cows by farm size in China

<20

<100

<500

>500

Advances in livestock production:

• Digitalisation

• Access to information

• Transparency

• Selective breeding

• Robotization

• Climate control systems

• Analytical & diagnostic tools

Source: Schneider (2011), Institute for Agriculture and Trade Policy (2014):

Herdsize EU-27 versus emerging markets

92,0%

108%

78%

24,6% 23%

38%

0,0%

20,0%

40,0%

60,0%

80,0%

100,0%

120,0%

Dairy Pig Poultry

EU-27

Hifeed region, Turkey &Russia


29


Food safety

and animal

Health & welfare

Raw materials

price increase

and volatility


Strategy based on macro trends & industry drivers

30

How to realise a sustainable competitive advantage?

Keywords: differentiation, value creation, end-user relation

● We will invest and develop innovative & branded specialties, complementing feed Industries’

and distributor’s portfolio, to create additional value to end-users

● Through additional models and services and knowledge sharing (e.g. Nutri-Opt), we

differentiate ourselves from our competitors , bring value to our customers and enhance the

“lock-in” of end-users and distribution partners

● By building strong brands for our end-users and engage with them - based on innovative

products, models and services- , we will create a preferred mind position and strengthen the

relationship with our end-users

To be seen as an innovative and strong supplier and an equivalent counterpart for professional

buyers we need to strengthen our global position and identity.

Customers seek solutions for the challenges the industry faces

34

Nee Needs Solutions

Profitable Applicable Sustainable

http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=vYdT0wiUmP5_PM&tbnid=P1Z866XLIP7HiM:&ved=0CAUQjRw&url=http://awards.fwi.co.uk/past-winners/2011-winners/pig-farmer-year/&ei=Yih9UtKFBoeM0AWb1oHQDw&bvm=bv.56146854,d.d2k&psig=AFQjCNGPPKdugG4CNpaJLo58WRPchiH-XA&ust=1384020258517894

• Enables customers to optimise their business by gaining better insights and making better decisions

• Turning science-base expertise into practical, applicable nutritional solutions

• By offering a broad range of innovative products, models and services

• By investing and developing in strong product brands & communication we will strengthen the link to end-user

35

Creating more value together

• Unique, only a few players worldwide can do / claim this.

Our nutritional solutions

36

Models Products

Services

• Animal

• Economical

• Nutritional

• Quality assurance • Precision feeding • Laboratory services • Farm management services • Logistic support • Product support

• Feed additives

• Preventive animal health products

• Young animal feeds

• Premix

• Farm minerals

• Concentrates

People

Brought to you by capable people

Our broad portfolio

37

Animal Health

Young Animal Feed

Feed Additives

Premixes

Farm Minerals

Concentrates

Models Services

Our company positioning

38

R&D and innovative products

Feed-to-food safety

and quality

Sustain-ability

Models & services

mission | vision | values

value proposition


39


Feed-to-food safety

and quality

Sustain-ability

Models & services


value proposition

Enabling our customers to create more value • Optimisie their business by gaining better insights

and making better decisions • turning science-base expertise into practical,

applicable nutrition solutions/right product choice • offering a broad range of innovative products, models

and services

Values Our mission is


40


Feed-to-food safety

and quality

Sustain-ability

Models & services


value proposition “Nutrition based business optimization”

Enabling our customers to create more value • Optimisie their business by gaining better insights

and making better decisions • turning science-base expertise into practical,

applicable nutrition solutions/right product choice • offering a broad range of innovative products, models

and services

End-user centric approach

41

From

• Product communication

• No integration of marketing and sales

• No presence in digital and social media

• No focus on collecting end-user data

• Distributors focus

• Limited marketing-communication

capacity and competences

To

• Sharing relevant content, science marketing

& customer interaction

• Marketing & sales create leads and follow-up

• Prominent presence in digital and social

media

• Commercial use of CRM systems and tools

• Partnerships with selected distributors

• Specialists in content, use of digital and

social media and building customer

databases

Where to compete?

45

Poultry Swine Ruminants

Broilers, the winning species

Value chain evolution Efficiency

• Chain optimization and further integration • Traceability/Transparency

• Reduce Costs • Improve FCR • LifeStart

Food safety, health and welfare Professionalisation

• Reduction of Antibiotic use • Campylobacter & Salmonella contamination

control • Meat quality • Animal welfare (restricted feeding Broiler

breeders, negative growth image)

• Simplification • Precision feeding

0%

10%

20%

30%

40%

50%

60%

70%

Feed Industry Distributors Integrators Farmers

Market vol.

Nutreco SP

↗↗

€5.5m

€3.2m

€4.9m

€8.4m

Total Poultry

46

Layers, the overlooked steady grower


• Home mixer • Traceability/Transparency

• Reduce Costs • Improve FCR • LifeStart • Egg production (500 eggs per cycle)


• Reduction use of Antibiotics • Salmonella contamination control • Animal welfare (Beak trimming, sacrificing

male layer DOC, ban on production in cages)

• Simplification • Internal /external egg quality • Precision feeding

0%

10%

20%

30%

40%

50%

60%

70%

FeedIndustry

Distributors Integrators Farmers

Market vol.

Nutreco SP

€5.5m

€3.2m €4.9m

€8.4m

Total Poultry

47

Mid-large Broiler integrators +25 million chicken/year Home mixing farmers + 400 000 layers

48

• Professional to Highly professional • Have a tendency to do everything

themselves

• Price buyers. Very rational decision making (show me the money!)

• Need for further business optimisation and costs reduction per kg of meat production.

• Not interested in individual products, but are interested in applicable know-how to improve efficiency and profitability

Swine, growing professionals


• Total chain traceability

• Uniformity in batches of pigs • Sow fertility and lactation • Environmental impact of pig production • Cost of production


• Antibiotic reduction • Neonatal piglet mortality • Animal health • Zoonoses (e.g. Salmonella) reduction • Welfare issues (e.g. tail docking, castration,

early weaning, individual housing sows)

• Focus on high quality and quantity, • New production technologies

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


Market vol.

Nutreco SP

↗

↗

€3m €1.7m

€11.7m €12m

49

Swine Integrators + 10k Sows Professional Swine Farmers + 1k Sows

50

• Americas, China, Russia and Europe

• Highly Professional, results oriented

• Demand for technical services and advice

• Total farm solution

• Key Account Management & Value selling

• Long-term focus

Dairy, new global marketplace drives change


• Processing industry will orchestrate the value-chain --> increasing need for partnerships

• Trends for greater accuracy of per cow production – feed, health, fertility – monitoring of animal data

• Focus on young animal investment to increase the production potential of the animal

• Feed efficiency gains desired from reduction in methane emissions


• Movement toward welfare-friendly environment in direct relation to increasing productive capacity of cows

• Lameness remains a key challenge on modern farms both grazing and intensive

• 100+ cow farms – professionalizing over the next 5yrs

• Home mixers – large enough to justify direct supply of inputs from source, cutting out distributor channel

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Market vol.

Nutreco SP↗ ↘

€7.7m

€0.8m

€22.5m

€19.2m Total Ruminants

51

Home mixers and professional farmers + 100 cows

52

● Investing in calves

● Integrated data management (insight), technology and

information driven

● Flexibility to increase/decrease output as market volatility

requires

● Searching for and identifying direct suppliers of credible

knowledge, advice and solutions

● Increasing scale enables to purchase from source

● Direct relationships are cutting out the distributor/feed

Focus on:

● End user engagement.

● Credibility, high quality products, service and knowledge

Europe, Russia, Brazil, North America, China. Highly professional, searching for new technologies and production efficiencies Production trends in this target group:

Beef, increased demand vs supply opportunity


• Processors to become more integrated in their supply chain

• Increased desire to control meat colour and stability – shelf life management

• Feed efficiency gains prominent in the focus on young animal management, greater genetic manipulation and precision feeding to finish animals


• Focus on grass vs grain fed animals – welfare driven by consumer trends

• Consolidation continues in major markets • Increasing global demand leading to pressure

to expand in large scale +1000 animal finishing units

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Market vol.

Nutreco SP€7.7m

€0.8m

€22.5m €19.2m Total Ruminants

53

Large integrators + 1000 animals

54

• North America, Brazil

• Highly professional

• Production trends:

• Expansion of global demand & shortages of quality supply

(environment) lead further investment and consolidation in

large scale feedlot production

• Investing in calves

• Integrated data management (insight), technology and

information driven

• Flexibility to increase/decrease output as market volatility requires

• Recognize the value of a global, well resourced nutritional partner

• Focus on

• End user engagement.

• Credibility, high quality products, service and knowledge

• Nutrition Based Business Optimization Enables customers to optimise their business by gaining better insights and making better decisions

• Broad Portfolio consisting of solutions (products models & Services),

• Focus on integrators and home-mixers

• Engage with these end-users

55

‘Creating more value together’

0%10%20%30%40%50%

Market vol.

Nutreco SP

• Engage when the customer is actually in touch with you: using your product, on the phone with you, on the web, reading your content etc.

56

End-user engagement

• Be relevant at the right time on the right place in a customer journey.

57

End-user engagement

58

End-user engagement • 60% - 70% of research is done online. Are we comfortable in our

position?

59

End-user engagement

Collect the data that will provide you the insights about your audience behavior so you will be able to personalize the content individually. Are we collecting, enriching, monitoring data from farmers and integrators in a professional way? Using CRM?

60

End-user engagement

Are we moving fast enough?

Thank you

81

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