KEY INTERVIEW: Jungbunzlauer CEO – Remain Focused, and Organic Growth Will Follow in Today’s Competitive Market

10 Aug 2015 --- The last decades have brought stiff competition on to the global ingredients market in the form of Chinese competitors that threaten to undercut traditional specialists on both price and quality. However, one company has stood firm and maintained organic growth of 8% year on year, while embracing new trends and taking on new global regions. Tom Knutzen, chief executive of Jungbunzlauer, told FoodIngredientsFirst how this family owned company has weathered the storm and adapted to fulfil the needs of its customers at ground level.

Knutzen joined Jungbunzlauer in 2012 after five years leading Danish food ingredients supplier Danisco, before it was taken over by DuPont. Knutzen wanted to continue in the food ingredients sector and joined Jungbunzlauer, a very different kind of company, with a rich history, based in Basel, Switzerland. In 2014, turnover was €650m, with 60% coming from the European market and 30% from the Americas, which matches where the company has production plants. Local production for local customers is something that Jungbunzlauer emphasises.

With production plants in Austria, Germany, France and further afield in Canada, Jungbunzlauer is perfectly placed to cater to all its customers’ needs – while in Europe, crops are required to be non-GM, in North America GM crops are grown so the company’s plant in Canada can provide for the North American market. Where non-GM crops are sought in North America, they can be imported from Europe as required.

Knutzen has continued the successful strategy employed by Jungbunzlauer to be very focussed on strategic organic growth that optimises process technology and to be an efficient and sustainable competitor to the Chinese counterpart.

While Jungbunzlauer services the four customer segments - Health & Personal Care, Detergents, Industrial Applications and Food & Beverage – it is Food & Beverage that takes the lion’s share of the revenue. Some 50% of the business supplies the food & beverage industry with very focussed products that are produced by Jungbunzlauer in a vertical operation from corn, to fermented glucose to final product.

“We deal with the fundamental building blocks within the organic acids and make the derivatives – special slats and specialties - to make the applications that will act as a carrier for our customer’s needs,” explains Knutzen. Furthermore, we manufacture xanthan gum and erythritol.

With some 70% of its food & beverage business going directly to the food producers themselves, Knutzen is acutely aware of the latest trends and consumer demands. There are three main areas that Knutzen says Jungbunzlauer is focussing on currently – health, mineral fortification and sustainability.

“Food producers are looking to create value from the healthier aspects of food. With our base offering quality, reliability and a stable supply chain, we can offer customers the three most popular requirements today – lower calorie products, low sodium, and low fat options, in the form of a xantham gum stabiliser/texturizer and the low calorie sweetener erythritol.”

The food industry is no stranger to this area of healthy eating and is perfecting the offering. Mineral fortification, on the other hand is different.

“Mineral fortification, such as bone health, is extremely important currently, right from infant nutrition, all the way to the needs of an aging population. In the middle of this is the market for exercise nutrition,” explains Knutzen. “What is becoming increasingly important is the way that you deliver mineral fortification to for instance bone health. It is common in recovery drinks for exercise, but you also need to ensure the bioavailability of the mineral.”

“In foodstuff, for example, the mouthfeel is affected by the addition of minerals. This where we excel. By providing an organic acid such as citric acid as carrier we provide the special salt, or mineral, it can be more successful.

“This is a growing area of interest, especially in the mineral fortification of dairy products, as well as many other new applications aimed at children and adults,” says Knutzen.

As this market increases, Knutzen is keen to showcase the special salts as the building block to many sophisticated products and speciality ingredients to meet growing consumer demand. As Knutzen explains, if you get the basics right, innovation will follow:

“One of the things that characterises us and our strategy over time, is the ability to combine the strength of the basic and novelty of the new trends.”

The final trend that Jungbunzlauer is embracing is the increasingly sophisticated supply chain, with ease of production, transparency and to ensure the quality of all ingredients supplied globally. This is tied in with an increased focus on cost, not just raw ingredients cost, but also that of logistics, which has incurred a lot of change. The company and client are looking at ways to work together to ensure an efficient supply chain, with as little waste as possible.

“This is where sustainability comes in for us,” says Knutzen. “Our vertically integrated production ensures that there is no waste in the system. All our products are produced with minimal carbon footprint and no waste, which optimises business strategy with a direct link from nature to the final ingredient.”

“We increasingly compete with a huge body of product that is derived from the chemical and petrochemical industry. Some customers are turning away from products derived in the chemical industry and there are some ingredients, particularly in the food packaging arena, that we can make from naturally derived products. The business is smaller, but growing and the potential for this emerging bio-based economy is huge,” predicts Knutzen.

He is, of course, referring to citric acid esters being used as biodegradable plasticizer for PVC, which provides the right softness without the use of phthalates. There is a long term driver for this kind of product, which will only grow, thinks Knutzen, despite its price premium. The price and regulatory demands will determine how mainstream the application becomes, but the trend is there and demand is growing.

“There is an underlying demand among consumers and the food industry for more sustainable solutions to the long term replacement of the petrochemical industry and at Jungbunzlauer we’re well-placed to create an offering to the food industry.”

For now, Knutzen feels that these three key areas will provide enough growth to ensure that Jungbunzlauer remains successful and competitive in a growing market.

“For now,” he says, “our existing product portfolio provides more than enough growth opportunities so there are no plans to extend the product portfolio. However, our new application center, due to open in Germany early 2016, will provide for better facilities and more staff.”

“The state-of-the-art center will allow us to work even closer with customers throughout the company on new projects and on specific product development.”

“As our knowledge of harsh chemicals expands and labelling regulations, particularly in the field of detergents, become more stringent, we will see the market move towards ingredients of a more organic nature. Working with customers in our new application center will allow us to develop products using for instance lactic acid which is more safe to work with and less strict for labelling purposes,” explains Knutzen. “This is just one area that we can focus on in the new centre.

“We invest in the knowledge, so that we can take it to the customer and they can develop new products that hopefully will cater to their ongoing needs,” concludes Knutzen.

By Kelly Worgan