Special report: Producers boost focus on food value chain

12 April 2013 09:51  [Source: ICB]

With the world's population heading towards 8.3bn by 2030, food production has to increase, not only to meet the extra numbers, but also the growing demands and changing dietary needs of a more affluent middle class.

Not only does more food need to be produced, but it also has to be stored, transported, processed, marketed and distributed, all of which bring opportunities to the chemical industry and the potential to help solve pressing problems along the food supply chain.

Paul Bjacek

"Chemical companies can participate in these growth and margin opportunities with careful screening of trends and [by seeing] how and where their products and technology can apply"

Paul Bjacek
Global chemicals research lead, Accenture

Major players are already shifting their focus towards the food sector as a result of an analysis of the opportunities presented by today's megatrends, such as population growth, food safety, energy efficiency, transport, urbanisation and water scarcity. Many have been building their presence in the fertilizer, food additives, nutrition and processing sectors through mergers and acquisitions (M&A) and investment in research and development and innovation.

There is a huge opportunity for chemical companies, says Paul Bjacek, Accenture's global chemicals research lead, "not only in agriculture, but across the entire chemicals value chain".


Not only is the food value chain huge, but it also offers higher-than-average margins and good growth prospects. Accenture puts the value of chemicals going into the food sector at $55bn-75bn (€43bn-59bn) in the US alone, when looking at the broadest extent from seeds, through fertilizers, crop protection and agricultural plastics, to food additives, packaging and food service items.

Sales growth has been around 5-7%/year over the past decade in the US for chemicals serving the food chain.

Says Bjacek: "Chemical companies can participate in these growth and margin opportunities with careful screening of trends and [by seeing] how and where their products and technology can apply."

Accenture has already seen growing activity in the M&A arena as companies position themselves in the food sector. Over the past five years, global M&A in the agriculture and food sector has been the most active of major downstream chemicals customer industries, with only electronics coming anywhere near in terms of number of deals done.

The activity has spread now to the chemical players - both producers and distributors - with plenty of activity in the fertilizer and nutrition sectors, especially. DSM is a leading example here as it builds a global business based on food and nutrition. In distribution, many leading players are targeting the added value in the food ingredients supply chain, and are building capabilities in technical service in the sector.


In the past 12 months alone, BASF has bought two omega-3 fatty acid specialists, EU distributor Caldic has acquired two food ingredient distributors, DSM had added three business - Ocean Nutrition Canada (also omega-3 products), Tortuga and Fortitech - and FMC has acquired Phytone, a natural food colourants business.

To gauge how widespread the move by chemical producers into the food chain might be, and to establish future intentions, ICIS Chemical Business is today launching an indepth survey of its readers on the theme of chemicals and the food value chain, in association with Accenture. Over the next two weeks, we ask you simply to fill out a short online questionnaire (go to www.icis.com/foodsurvey) on your business activities and plans in this area.

Results will be aggregated anonymously and the results published in an early June issue of the magazine. I'm sure the results will be both interesting and useful, illuminating the current situation and revealing just how many companies are active or will be active in future in this area.

But of course, the findings will only be ­valuable if you and others take the trouble to make your views felt.

By: John Baker
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly