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The future of the high-margin animal nutrition industry

What is the next big thing that will ensure high margins while keeping volumes at the low side?

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Svilen Milev | FreeImages.com

What will take the place of feed additives or, in other words, how we will continue this business model that focuses on specific problem-solution applications?

There is profit in high volume and profit in high margin. It is rare to find the combination of high volume and high margin, especially in the animal nutrition business.

In the past two decades, high-margin products sold at comparably low-volume quantities were called additives. They remain so, but competition, oversupply, and often over-promising and under-delivering principles, have diminished the available margins and even shrunk sales volume. This trend, in my opinion, will continue apace, with a few notable exceptions but, in general, mainstream additives will become another commodity.

So, what is the next big thing that will ensure high margins while keeping volumes at the low side to satisfy the needs of this type of business model?

In my opinion, in the next decade – at least – nutrition of young animals will become a major theme. Not that additives or ingredients in general will not be part of this new theme, but the focus will be the animal and not the product or the function of the product. In other terms, we will be discussing more on the use of broiler super pre-starters, or muesli-type calf starters, or piglet all-milk pellets and less on the individual components of each such product.

It is not that we have never addressed this topic as a scientific and commercial community. To the contrary, the effort has always been there. However, it is now the way to approach the problem. So far, we were addressing the same problem as an individual cost-related issue. For example, a broiler that would not eat enough the first four days would end up a bit lighter at the end. In the near future, we will be discussing how introducing a new early feed will make the same bird end up much heavier. Same thing, different perspective – expense versus investment.

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