Food Cultures & Enzymes
According to the Company’s own estimates and based on volume, the global market for fermented milk grew by 3-4% in 2015/16. The market for cheese is estimated to have increased by more than 2%.
Chr. Hansen estimates that, based on volume, up to 80% of the fermented milk market (excluding India) and up to 50% of the cheese market had converted from bulk starter to Chr. Hansen’s industrialized DVS® cultures or similar technologies by the end of 2015/16.
The role of beneficial bacteria in humans is increasingly acknowledged across the world, and Chr. Hansen is a global leader in the development and production of probiotics for dietary supplements and infant formula.
Market conditions for human probiotic dietary supplements were favorable in 2015/16. Penetration of probiotic solutions in the dietary supplements market increased, largely due to higher penetration in the US.
With a growing world population, there is a long-term need to increase productivity in the agricultural industry while at the same time reducing and replacing the use of antibiotic growth promoters in the livestock industry. Chr. Hansen’s microbial concepts for animal feed and silage support farmers in addressing these challenges.
In 2015/16, the market for microbial solutions in the agricultural industry was, however, negatively impacted by commodity prices for milk and pork being at extraordinarily low levels, causing farmers to cut down on certain feed additives such as microbial solutions and silage inoculants.
During the year, a number of existing competitors also stepped up their activity levels in part of the market.
Despite the current pressure on the agricultural industry, the long-term growth prospects for microbial solutions for the industry remain very positive.
In recent years, consumer demand for more natural products has increased. Chr. Hansen is well positioned to capture these opportunities by providing improved cost-in-use solutions, addressing the significant potential in emerging markets and developing an enhanced product offering.
The increased consumer demand for natural and clean-label products, combined with stricter regulation of the use of synthetic solutions in food and beverages, especially in the EU, has led to a conversion from synthetic colors to natural solutions.
In 2015/16, the conversion to natural colors continued in Latin America and Asia-Pacific, while the European market experienced increasing penetration of more advanced natural color solutions. Conversion in the US accelerated throughout the year as major US food & beverage manufacturers slowly started to convert to natural ingredients, including colors.
With customers in more than 140 countries and offices in more than 30 countries across the world, Chr. Hansen has organized its sales operations in four regions:
- EMEA (Europe, Middle East and Africa)
- North America
- LATAM (Latin America)
- APAC (Asia-Pacific)
The EMEA region accounted for 46% of revenue, compared to 47% in 2014/15. Chr. Hansen has offices in 17 countries.
During 2015/16, production of milk increased in the region, driven by the abolition of the EU milk quota system in March 2015. The higher availability of milk had a positive impact on production volumes of cheese, leading to higher EU export and inventory levels, whereas growth in fermented milk products was modest in the EU.
The probiotic supplement markets in the region continued to grow in line with previous years, while the market for microbial-based animal health products was negatively impacted by commodity prices for milk and pork remaining at extraordinarily low levels, causing farmers to cut down on certain feed additives such as probiotics and silage inoculants.
The demand for natural ingredients, including natural colors, remained solid during the year, as producers - mainly in the EU - continue to reformulate products to meet consumer demands for simpler products with clean labels.
Revenue increased by 6%, with organic growth of 9%, driven by strong growth in fermented milk, meat, cheese and natural colors. Probiotics showed solid growth, and revenue from enzymes was in line with 2014/15. Revenue from human health and animal health was lower than in 2014/15.
The North America region accounted for 26% of revenue, compared to 25% in 2014/15.
Fermented milk production levels in the US were in line with 2014/15, whereas the growth in cheese production volume continued the trend from 2014/15, which was slightly higher than in previous years.
The market for probiotic dietary supplements showed strong growth, largely due to higher penetration levels, while the market for microbial-based animal health products was negatively impacted by low commodity prices, causing farmers to cut down on certain feed additives such as probiotics and silage inoculants.
Driven by increased consumer demand to replace chemical additives with natural solutions, market growth for natural colors accelerated during 2015/16.
Revenue increased by 17%, with organic growth of 7%. The organic growth was driven by strong growth in meat, cheese, human health and natural colors. Fermented milk showed modest growth, while revenue from enzymes was in line with 2014/15. Revenue from probiotics for fermented milk and animal health was below 2014/15.
The LATAM region accounted for 13% of revenue, compared to 14% in 2014/15. Chr. Hansen has offices in five countries.
While the key markets in the region experienced a continued economic slowdown, the demand for natural ingredients continued to grow, albeit at a slower pace than previously.
Revenue increased by 3%, with organic growth of 17%. The organic growth was driven by strong growth in meat, fermented milk, cheese, enzymes and natural colors. Revenue from probiotics for fermented milk and animal health was below 2014/15.
The APAC region accounted for 15% of revenue, compared to 14% in 2014/15. Chr. Hansen has offices in five countries.
During 2015/16, dairy markets across the region developed positively, particularly the market for fermented milk in China, which has seen strong growth in recent years driven by consumer demand for premium products combined with a high innovation rate from Chinese dairies. India continued to support regional growth through increased industrialization of the dairy industry. Emerging ASEAN economies are also showing solid growth in the fermented milk category.