opportunities for finnish companies in the bio-based chemical and materials market

OTSIKKOALAOTSIKKO, KUUKAUSI VUOSI

OPPORTUNITIES FOR FINNISH COMPANIES IN THE BIO-BASED CHEMICAL AND MATERIAL MARKETS

Team Finland Future Watch Report, October 20162

Bioeconomy has been lifted out as one of the cornerstones for future economic growth in Finland. There is strong knowhow around bio-based solutions in Finland, but in order to succeed in the global market, knowhow about global business within the segment is absolutely necessary.

To help Finnish companies in finding out new opportunities and to give solutions to bypassing existing hurdles, Tekes and Team Finland have funded this report focusing on existing solutions to common market barriers.

The report describes 10 cases which provide solutions to the most common barriers that companies face. It is our hope that the solutions collected here will provide practical help for deserved business growth for promising companies in promising sectors.

Introduction


INDEX

Introduction

1. Secure cash flow

2. Find partners with the best fit

3. Choose the right technology and

business model

4. Know your market

Summary


Too many development projects are cancelled because of poor cash flow management”


M&G CHEMICALS – CUTTING PREMIUMBe aware of new disruptive technologies, and ensure cash flow when dealing with novel processes with high technical risk”

M&G plans to cut production costs of bio-PET plastic by developing new bio-based route to its precursor MEG. Catalytic conversion of sugars to MEG is a disruptive technology with high risk. M&G seek to secure cash flow and minimise risks by starting first plant with integrated cellulosic ethanol production.

Ethylene oxide MEGBiomass Ethanol Ethylene

Ethanol

MEGBiomass

MPG

Commercial

bio-based route

Bio-based route under development

Securing cash flow


FKUR – ADDING VALUEIncrease revenue by entering supporting businesses such as distribution”

FKuR adds value to bioplastics in its chosen role in the value chain: blending different bioplastics and additives together in a process called compounding. In addition, FKuR secures steady cash flow by distributing original bioplastic granules.

Securing cash flow

Clients

Braskem’s Green PE

Toyota’s GLOBIO

Evonik’s Terra

Braskem´s Green PEToyota´s GLOBIOEvonik´s Vestamid Terra

FKuR own brands:Bio-Flex® (PLA and co-polyester blends), Biograde® (cellulose acetate blends), Fibrolon® (wood plastic composite), Terralene® (bio-PE)

FKur


Many good ideas don´t make it for the lack of right partners”


SOLVAY- BYPASS SALEIdentify and convince key decision makers in bio-based value chains, the rest will follow”

Solvay and AkzoNobel teamed up to approach Kukdo (epoxy resin producer) with ready supply and off-take agreements to complete the value chain for bio-based epichlorohydrin (ECH).

Find partners

Fossil ECH producer 1

Fossil ECH producer 2

GlycerolSolvay

Epoxy resin producer 1


Kukdo


AkzoNobel

x t fossil ECH

x t bio-ECH Coatings

3rd party calculation of

“Chain of Custody”

x t fossil ECH


BIOAMBER – EXCLUSIVE PARTNERSHIPSDevelop a solid strategy and business model prior to commercial production”

BioAmber outsourced a major part of market and technology development by building a network of exclusive partnerships not just one partner. Development costs are compensated by e.g. direct investments and royalties per net sales.

Find partners

2010

• BioAmber signs exclusive license agreements with Cargill and Celexion, and non-exclusive license agreement with DuPont

• Agreement on exclusive use of ARD demo facility, and start of 3 kt/a toll manufacturing

• Exclusive Asian distribution rights to Mitsui

2011

• 70/30 JV with Mitsui to build a 30kt plant in Canada• Exclusive supply agreement with Mitsubishi Chemical and

PTTMCC• Joint Development Agreement with LANXESS for succinic acid

based plasticizers

2012 • Exclusive supply agreement to the Faurecia-Mitsubishi partnership for automotive plastics

2013• 50/50 JV with NatureWorks to commercialise

PBS/PLA blends• Distribution agreements with Brenntag and IMCD

2014 • 15 year take-or-pay agreement with Vinmar for 100kt bio-BDO planned to start in 2018

2015 • Start of 30 kt/a succinic acid plant in Sarnia, Canada

2016• Cellulosic sugars off-take agreement with Comet Biorefining,

including some exclusive rights in the fields of succinic acid, BDO and THF


GFBIOCHEMICALS – LEVULINIC ACIDReach for the best resources – be it people, assets or IP”

GFBiochemicals secured a leading position in a developing levulinic acid market by hiring key experts from another developer, DSM, and acquiring downstream developer Segetis to improve access to market

Find partners

Focused and dedicated to market levulinic acid since 2008*2008FOUNDATION

2009FACILITYLease Caserta plant

2013NEW FUNDSNew investor and rebranding Green Future to GFBiochemicals

2014ORGANISATIONKey personnel from global leaders

2015PLANT START-UPStart-up of the levulinic acid plant in Caserta

2016GFBIOCHEMICALS AMERICASAcquisition of Segetis assets, IP and trademarks

2017CAPACITYCapacity increase

2020EXPANSIONNew world-scale facility


Don´t try to do everything, instead focus on your strengths. Choosing the right technology and business model is the key for sustained success ”


BEOLOGIC – EXPLOITING BARRIERSTurn market barriers into key differentiators and competitive advantage”

The major hurdle for natural fibre and wood plastic composites is the limited compatibility with existing processing equipment. Beologic turned this market barrier to a key differentiator and competitive advantage.

For most technology providers, support and services are a necessary evil standing in the way of wonderful technical innovations. Beologic saw the opportunity of being both a technology provider and the one providing the services and support. This is a “judo” move: use the market barrier’s strength (technical difficulties) against it.

Choose right business model


Do your homework! Too often companies trip over not knowing the market they are entering”


TERRAVERDAE BIOWORKS – MICROBEADSKeep yourself updated on the changes in the business environment and prepare for them. They might just create your market”

TerraVerdae BioWorks gained first-mover advantage in biodegradable microbead (used in cosmetics e.g. in exfoliators) production by following regulatory initiatives and technology development.

Know your market


INGREDIENT BRANDING – CLEVER MARKETING What is the market looking for? The best way to sell your product might be to do it together with another brand”

Know your market

Improve quality of the host brand• The foundation of ingredient branding is that ingredients can

produce improved quality meaningful to the consumer

Create a point of differentiation• This is a key e.g. in defending or increasing market share.

Depending on the markets, the ingredient manufacturer should offer exclusivity to the host products to enable point of differentiation

Provide an alternative market strategy • Ingredient branding could provide a lower risk marketing strategy

than conventional campaigns e.g. increased advertising

1.

2.

3.

Brands across industries have increased their marketing power and commercial success by branding their consumer products together with ingredient brands such as “Intel Inside®” and “Gore-Tex ®” .


SENSOR FILLED 3D PRINTED HAIRLook out for disruptive technologies that could change the whole industry creating vast amount of opportunities”

3D printed hair could take the automatic sorting to the next level or replace gears in motors. Disruptive technologies can change the whole industry.

Know your market


ECONOMIC SAVINGS FROM FIBRE COMPOSITESCombining new technologies to reach costs savings opens up new markets”

Significant savings on labour costs and construction time could be reached with a new carbon fibre reinforced aluminium composite. It could also offer vast market expansion for aluminium. A bio-metal composite fibre would add to the potential.

Know your market


There is a abundance of challenges that bio-based material businesses are facing globally, but there is also abundance of existing solutions that can be applied across sectors”


CHAPTER HEADING

Shield yourself from obvious cash flow risks by producing commodities, leveraging your know-how or expanding to supporting businesses.

When finding partners for your business look for the best, look globally and look further in the value chain than you first thought – and think of what your value chain should look like

Develop a solid strategy and business model prior to commercial production – and stick to it unless conditions change

Turn market barriers into competitive advantage – if things are difficult for all, become a solution provider. Find your role and reinforce it. Make a virtue out of necessity

Prepare for changes like disruptive technologies or regulation in the business environment well ahead of the mainstream

Innovative marketing strategies could expand your business through your customers’ support. Think what benefits your product brings for the whole value chain

Dare to see the potential in combining your technology with a potentially competing one into a composite/hybrid, don’t be afraid to see the larger potential in joint solutions throughout the value chain..

SUMMARY – RULES OF THUMB

Summary


AUTHORS

Dr. Petri Vasara, Vice President, Global Practice HeadHenna Poikolainen, Senior ConsultantJuulia Kuhlman , Senior Consultant

Pöyry Management Consulting OyJaakonkatu 3, P.O. Box 4FI-01621 Vantaa, FinlandTel. +358 10 33 22611

20

Tuula SavolaOhjelmapäällikköTekes

Puh: 029 50 55667GSM : 050 5577 [email protected]

mailto:[email protected]

opportunities for finnish companies in the bio-based chemical and materials market

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