Corbion advances natural food preservation, plans to exit frozen dough business
09 Mar 2020 --- Corbion is advancing its business strategy over the next five years with a sharpened focus on preserving food and food production, health, sustainability and protecting the environment. These key themes will become even more important in the company’s decision-making processes. Corbion’s growth will be achieved by increased investments in key areas such as natural food preservation and lactic acid, while at the same time reducing the breadth of its business portfolio.
The biobased food ingredients specialist says that 17 percent of its total sales will be classified as non-core and for several of these, such as Corbion’s frozen dough business and its FDCA initiative, it “will look for exit scenarios.”
For others, such as Corbion’s emulsifiers business, the company plans to bring more focus to the portfolio to accelerate growth.
In the preservation segment, the company intends to expand its natural preservation solutions from meat into other markets.
“In the past years, Corbion has built a solid foundation. This strategy builds on those foundations in an evolutionary way,” says Olivier Rigaud, CEO of Corbion. “In food, Corbion has developed increasingly from an ingredients business into a solutions business. We plan to expand on this solutions model with natural food preservation and functional systems as our core capabilities, enabling us to accelerate growth in close adjacencies.”
Corbion is moving away from frozen bakery.“In our incubator where we develop early-stage initiatives, we plan to bring omega 3 DHA to profitability in 2022, while we stay committed to investing in initiatives with a longer time horizon,” he adds.
“Sustainability is at the heart of what we do. We are very well positioned to benefit from the worldwide drive for more sustainable products and solutions. We have aligned our Advance 2025 strategy to the United Nations Sustainable Developments Goals (SDGs) with SDG 2 Zero hunger, SDG 3 Good health and well-being, and SDG 12 Responsible consumption and production being the goals where Corbion can have the most impact.”
Corbion began developing a highly efficient process to produce 2,5-Furandicarboxylic acid (FDCA) as a monomer for the bioplastic, polyethylene furanoate (PEF) some time ago. Derived from sugars using bio-fermentation, FDCA has the potential to replace oil-based terephthalic acid in PET and a wide variety of other plastics.
In Corbion’s lactic acid business, the company aims to capitalize on its market and technology leadership and strengthen this leadership position in an attractive growth market.
Corbion plans to build a new lactic acid plant at the existing Corbion site in Rayong Province in Thailand. As polylactic acid (PLA) is developing better than expected, the urgency behind expanding its lactic acid production capacity has only increased.
Corbion’s business and reporting structure will have three business units from now on:
Sustainable Food Solutions: Supported by an industry that is rapidly moving toward clean label and natural food solutions, Corbion will leverage its strengths in preservation. Sustainable Food Solutions will consist of three segments: Preservation, Functional Systems and Single Ingredients. In the preservation segment, the company intends to expand its (natural) preservation solutions from meat into other markets.
In the Functional systems segment, Corbion will focus on natural and clean label solutions in bakery and other markets. Both segments could be supported by bolt-on mergers and acquisitions, Corbion notes.
Emulsifiers will have a declining strategic fit going forward and will be managed for value. Other non-core activities such as co-packing blending and frozen dough will be exited.
Fish feed applications are part of Corbion's Incubator business unit.Lactic Acid & Specialties: Corbion will capitalize on its global product leadership in lactic acid and lactic acid derivatives. Corbion leads the lactic acid market in technology, production capacity, geographic coverage and breadth of portfolio. Lactic Acid & Specialties will consist of five segments: Lactic acid (including for PLA), lactates, lactate esters, biopolymers and others.
Lactic acid serving the PLA market is already driving substantial investments in Corbion’s lactic acid infrastructure. By 2023 the company expects to open a new lactic acid plant in Thailand, operating at the highest sustainability standards and lowest costs. The additional lactic acid capacity also demonstrates Corbion’s commitment to continue to support future growth of the Total Corbion PLA joint venture.
Incubator: Corbion will develop larger, early-stage investments in the Incubator. Its three main product categories are: Algae-based Omega 3, starting with fish feed applications, algae proteins (in cooperation with Nestlé – a microalgae partnership that promises “next-generation” alternative proteins for plant-based products), and its new co-polymer platform. This platform is a lactic acid-based controlled-release co-polymer technology, expanding on Corbion’s (medical) polymer expertise.
The company will continue to invest greater than 4 percent of sales in R&D to support growth. In the coming years, R&D resources will be intensified in Sustainable Food Solutions and Lactic Acid & Specialties. Next to the omega 3 initiative, annual EBITDA investments for other initiatives in the Incubator are expected to be in the range of 0.5 percent to 1.5 percent of core net sales.
Enhancing food safety and stability
Corbion launched six new ingredients within its Verdad and PuraQ Arome portfolios last December to enhance food safety, stability and flavor profiles across sectors including meat and seafood, bakery, ready-to-eat meals, sauces and dressings. All are marketed as natural alternatives to ingredients like sorbates and benzoates, helping manufacturers to create stable, safe and flavorful products.
Last July, the ingredients giant also said it can meet the “rigorous standards” expected in organic food, offering manufacturers greater supply security. Corbion invested in and developed an organic system plan at the US plant where the company manufactures vinegar- and lactic acid-based ingredient products. The recent organic certification of production facilities at Corbion’s Nebraska-based operations means Corbion is better positioned to help manufacturers meet the growing demand for organic food products.
Corbion’s management team will present its strategy for the period 2020-2025 during its Capital Markets Day for analysts and investors in Amsterdam, the Netherlands, later today.
By Gaynor Selby
