DSM Integrated Annual Report 2020

Nutrition strategy

Nutrition & Health builds on our unique ‘global products, local solutions’ business model. Our Nutrition & Health strategy focuses on strengthening and expanding this business model by further building our global products portfolio and advancing our solution-selling capabilities in our end-market-focused segments. In addition, developments in biosciences and the broad adoption of digital ways of life are opening new opportunities to add a third area of innovation-based growth to our business model in Precision & Personalization, a rapidly emerging market, in both Human and Animal Nutrition & Health. Overall, Nutrition & Health aims to mid-single-digit organic sales growth, an Adjusted EBITDA margin greater than 20%, and a high-single digit Adjusted EBITDA growth percentage.

Our business model for growth: global products, local solutions, Precision & Personalization

business model for growth (graphic)

The basis: our unique and successful business model — global products, local solutions

With this business model, we have successfully built a unique, broad, highly integrated and profitable growth business that covers the food & beverages, specialty nutrition, animal feed and personal care end-markets. Our results are testament to the strength and uniqueness of this business model, delivering 6% organic growth and an increase in Adjusted EBITDA margin from 17% to 21% during the period 2015–2020.

Our global product portfolio, which includes vitamins, nutritional lipids, carotenoids, minerals, eubiotics, enzymes and yeasts, as well as texturants, flavors and cultures, has expanded through innovation and acquisitions. Most recent additions have been human milk oligosaccharides (HMOs) through the Glycom acquisition and mycotoxin absorbers and eubiotics through the acquisition of Erber Group. Bovaer® and our partnerships Avansya and Veramaris have been added through our own innovation efforts.

Our end-market focus across all regions allows us to better understand market needs, enable solution selling, and open up innovation headroom — for example, more relevant solutions supporting early life nutrition and dietary supplements in Human Nutrition & Health and supporting species such as poultry and swine in Animal Nutrition & Health. These capabilities are complemented by a diverse and significant premix footprint, with superior formulations and delivery systems, meeting local needs for our customers.

Expanding our business model: Precision & Personalization

Consumer and customer-driven ‘Precision & Personalization’ in the domains of both Human Nutrition & Health and Animal Nutrition & Health is where we will expand our business model. Developments in data science & bioscience are opening up exciting new opportunities to address challenges in health and nutrition. Rapid advances in computational biology, gene technology, Artificial Intelligence and diagnostics are transforming our ability to understand and influence the interplay between health, nutrition and the environment in both human and animal biology at an individual level.

We see ‘Precision’ as a rapidly emerging market in its own right, enabling our customers to meet consumer demand for better health through improved diets and at the same time to produce food more sustainably, particularly in the animal space. We are well positioned to take a leading role in this development. We are an established authority in the field of nutritional science and biotechnology, and through our trusted company brand we have access to customers for and with whom we are already developing emerging Precision & Personalization solutions. This development also involves a natural evolution from delivering customized premixes to enabling the creation of personalized nutritional mixes. Building on these unique strengths, we will seek to work with an ecosystem of partners to create the appropriate digital solutions and interfaces. Offering leading solutions in this space allows us to leverage our unique nutritional science capabilities and multiply the relevance of our ingredients through unprecedented precision. A good example is our new US-based personalized nutrition venture, Hologram Sciences, Inc., which brings together all the necessary capabilities to develop end-to-end turnkey personalized nutrition solutions that are commercially validated with consumers.

Our focus in Animal Nutrition & Health

Operating in alignment with the UN’s Sustainable Development Goals 2 (Zero Hunger), 3 (Good Health and Well-Being), 12 (Responsible Consumption and Production), 13 (Climate Action), and 14 (Life Below Water), we have identified six sustainability platforms that address the major challenges facing the animal farming industry today. Our ambition is to lead a robust and achievable transformation worldwide, delivering innovative and sustainable solutions that will deliver significant value for our customers and at the same time for our company. These are:

  • Improving the lifetime performance of farm animals
  • Making efficient use of natural resources
  • Reducing emissions from livestock
  • Helping tackle antimicrobial resistance
  • Reducing reliance on marine resources
  • Improving the nutritional quality of meat, milk, fish and eggs, while reducing food loss and waste

With examples such as algal-based omega-3 for fish feed (Veramaris®), methane-reducing feed additives for cows (Bovaer®), mycotoxin risk management and our eubiotics portfolio, we are in the front line to address these challenges.

In addition, we continue to build specialist competences to pursue new health solutions and support additional species, improve the end-to-end experience for the customer, and invest in our direct business-to-farmer and overall go-to-market capabilities.

Our focus in Human Nutrition & Health

In Human Nutrition & Health, we will continue to develop from the role of ingredient supplier to that of a fully integrated provider of solutions. We combine our products with third-party ingredients to create specialty solutions for our customers that deliver specific health benefit claims, allowing our customers to focus fully on the branding and commercialization of their products. Key focus areas are:

Preventive health and immunity. COVID-19 has alerted the world to the importance of preventive health and especially immunity. Micronutrients — such as vitamins C and D, omega-3s and probiotics, where we have leading positions — play a key role in supporting immunity. We are building on this consumer need by launching market-ready solutions such as AMPLI D. Furthermore, we are continuing to invest in the business-to-consumer market to ensure the growth of our i-Health business.

Human milk oligosaccharides (HMOs). We are building an exciting innovation roadmap for next-generation HMOs to meet currently unmet needs in early life nutrition, dietary supplements, medical nutrition (e.g., to combat irritable bowel syndrome), and food & beverages. HMOs also have interesting potential applications in pet foods, and these are being explored within the framework of our Animal Nutrition & Health business.

Personalized nutrition: Personalized nutrition is developing rapidly and has the potential to become very significant. We have the building-blocks needed to provide science-based personalized nutrition. With the creation of the wholly owned venture Hologram Sciences, Inc., we aim to develop, and validate with consumers, integrated personalized nutrition solutions for our customers. The stand-alone set-up is designed to ensure agility and speed, while the arm’s-length link to DSM allows to leverage DSM’s access to market. Hologram Sciences, Inc. will work closely with leading start-ups in which we have already invested, such as Mixfit, Tespo and AVA.

In addition, we are continuing our long-term commitment to champion efforts to increase the availability of micronutrient-rich food in countries with very low-income populations through various partnerships, such as with WFP, UNICEF and Africa Improved Foods (AIF).

We are also championing the purpose behind our products, which help address some of world’s greatest nutritional challenges. Furthermore, we continue to sharpen our focus on customer-centricity and commercial excellence.

Our focus in Food & Beverages

The Food & Beverage market is subject to rapid change, driven by evolving consumer needs. The challenge for our customers, the food & beverage producers, is to anticipate these changes and respond by developing and delivering on-trend, differentiating products faster than their competitors. Our customers are therefore seeking:

  • Products that deliver specific taste and texture attributes
  • Products that deliver improved nutritional value and the associated health benefits
  • Approaches that deliver more resource-efficient and sustainable food production

In the Food & Beverage market, we are uniquely positioned to offer solutions that address health, taste and texture in an integrated way, with our:

  • Unique and extensive portfolio of global products, ranging from dairy cultures and enzymes for applications across dairy, baking and beverages; coatings and preservation systems; yeast extracts and process flavors and texturizing hydrocolloids; to our vitamins, minerals and nutritional lipids
  • Deep expertise in application in our core end-market segments

To strengthen this unique proposition in food & beverages, we will continue to:

  • Deepen our integrated application know-how
  • Broaden our global product portfolio
  • Combine ingredient and application innovation
  • Maximize opportunities for inorganic growth

An example of our ingredient and application innovation is CanolaPRO™, a sustainable plant-based protein source. This is a new building-block in our solutions offering for meat alternatives and dairy alternatives. Avansya, our partnership with Cargill to bring zero-calorie, cost-effective, non-artificial sweeteners to market at scale, is another such example of product innovation.

Biosciences are any of the sciences that deal with living organisms.
Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA is the sum of operating profit plus depreciation and amortization. Adjusted EBITDA is the EBITDA adjusted for material items of profit or loss coming from acquisitions/divestments, restructuring and other circumstances that management deem it necessary to adjust in order to provide clear reporting on the development of the business.
The general term ‘Eubiotics’, is related to the Greek term ‘Eubiosis’ and relates to feed ingredients that support an optimal balance of microbiota in the gastrointestinal tract of livestock animals. They promote efficient gut performance so as to produce well-nourished animals that get the most from their feed, while at the same time sustaining their health and welfare and protecting the environment.
Organic sales growth
Organic sales growth is the total impact of volume and price/mix. Impact of acquisitions and divestments as well as currency impact are excluded.
United Nations World Food Programme