The Chr. Hansen business model builds on the Company’s unique solutions and strong innovation platform, a centralized and scalable production setup, and strong customer relationships.
Chr. Hansen holds leadership positions in attractive niche markets, supported by a number of global trends that offer attractive growth opportunities based on:
- A growing world population and rapid urbanization, both of which drive growth in industrially produced food & beverages
- Increased consumer awareness of food composition and increased transparency driving demand for innovation to meet consumer demand for healthy and nutritious, yet safe, tasty and affordable food with clean labels
- Increasing health care costs and focus on well-being driving demand for natural solutions to support human health
- Concerns about the adverse impact of excessive use of antibiotics and chemicals in the agricultural sector driving the need both to reduce and replace use of antibiotics as a productivity enhancer in livestock production and to substitute current chemical solutions in plant production
- A continued need for process optimization and yield improvements in production processes driving dairies around the world to convert from bulk starter to DVS® cultures and driving demand for solutions to reduce food waste
Chr. Hansen’s solutions offer an attractive cost-to-value ratio for customers, supporting their need for both process optimization and product innovation. Solutions are often customized to meet customer demands, such as local taste preferences and specific production setups at dairies and other food & beverage manufacturing facilities.
A strong innovation platform
The majority of Chr. Hansen’s innovations derive from a strong bioscience technology platform based on in-depth scientific knowledge and competencies.
In-house access to more than 25,000 bacterial samples enables extensive screening and selection of the best available combinations of strains for new, improved solutions.
Know-how in fundamental bioprocess engineering is used to develop products that optimize customers’ production efficiency, with higher yields and improved stability.
Scientific knowledge of bacterial strain properties and technical application knowledge are used to develop healthy and tasty new product solutions.
Chr. Hansen differentiates itself as a provider of some of the best-documented probiotic bacterial strains, such as BB-12®, LA-5® and L. CASEI 431®. In September 2016, Chr. Hansen announced the acquisition of LGG®, the world’s best-documented strain, to further complement its range of probiotic strains.
In addition, Chr. Hansen’s formulation expertise helps customers combine probiotics with other ingredients and deliver them in innovative dosage forms with documented stability.
In Natural Colors, Chr. Hansen combines an understanding of formulation techniques with technical insight into customers’ processes and products to develop new natural color solutions, such as coloring foodstuffs.
Approximately 450 employees are dedicated to research & development and technical application activities. Chr. Hansen also actively partners with universities, researchers and companies on innovative projects in its specialist fields.
In 2015/16, EUR 67 million, or 7.1% of revenue, was spent on research & development activities.
A scalable production platform
Chr. Hansen holds significant competencies in upscaling production of bacterial strains at an industrial level. Production is managed centrally to ensure optimization of production facilities by serving the world from a consolidated production setup. Cultures for Food Cultures & Enzymes are produced at locations in Denmark, France and the US, while enzymes are produced in Denmark and Germany.
Significant investments have been made in recent years to expand the production facilities for cultures, particularly in Denmark.
In 2015/16, a small production unit for culture production in Australia was added as part of the acquisition from Dairy Innovation Australia Ltd.
Production of cultures for Health & Nutrition takes place at facilities in Denmark (human), Germany (animal and plant) and the Czech Republic (animal).
Production for Natural Colors takes place at facilities in Brazil, China, Denmark, Italy, Peru and the US.
In 2015/16, 6.3% of revenue was invested in property, plant and equipment, while approximately 1,300 employees are dedicated to production activities.
Strong customer relationship
Chr. Hansen has strong and long-term strategic relationships with many of its customers, building on more than 140 years of experience.
Chr. Hansen develops and maintains relationships with existing and new customers by providing a superior customer experience that builds on strong customer and consumer insight combined with local technical competencies. In more than 140 countries, Chr. Hansen offers its customers solutions that are adapted to local preferences and can be applied under local conditions. Customer relationships are managed locally through a direct Chr. Hansen presence in key markets, supported by a global network of application and development centers.
Chr. Hansen has a diverse customer base, serving large multinationals, regional and local customers, from farmers and dairies to other food & beverage manufacturers and pharmaceutical companies.
In 2015/16, the top 25 customers accounted for approximately 31% of revenue. Sales & marketing expenses amounted to 11.9% of revenue. Approximately 700 employees are dedicated to sales & marketing activities.
Risk related to the business model and operations
The most significant risks related to the business model, business operations and execution of the Nature’s No. 1 strategy are described in the section on risk management, including progress on mitigation initiatives.