The Chr. Hansen business model builds on the Company’s unique solutions and strong innovation platform, a scalable production setup and strong customer relationships. Maintaining market and technology leadership in established markets, and developing new markets in adjacent areas are both clear priorities.
Chr. Hansen holds leadership positions in several attractive niche markets, supported by a number of global trends that offer promising growth opportunities based on:
- A growing population and rapid urbanization, both of which drive growth in industrially produced food & beverages
- Increased consumer awareness of food ingredients 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 the health of humans
- Concerns about the adverse impact of excessive use of certain antibiotics and chemicals in the agricultural sector driving the need to reduce the use of antibiotics as a productivity enhancer in livestock production and to substitute chemical solutions in crop protection
- 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 capabilities.
Access to around 30,000 microbial strains allows for extensive screening and selection of the best available combinations of strains for new, improved products and 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 the key platforms enabling development of healthy and tasty new product solutions.
Chr. Hansen differentiates itself as a provider of some of the most extensively documented probiotic bacterial strains with positive health benefits, such as LGG®, BB-12®, LA-5® and L. casei 431®. The combined number of peer-reviewed papers supporting these claims exceeds 1,450.
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 offormulation techniques with technical insight into customers’processes and products to develop new natural color solutions,such as coloring foodstuffs.
Approximately 520 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 2016/17, EUR 75 million, or 7.0% 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, Germany and the US, while enzymes are produced in Denmark and Germany.
Production of cultures for Health & Nutrition takes place at facilities in Denmark (human), Germany (animal and plant) the Czech Republic (animal), and the US (animal).
In 2016/17, significant investments were made in Denmark to expand the production facilities for food cultures, effectively doubling the capacity of the main facility in Copenhagen. In addition, investments to enhance productivity or capacity were made at several other locations.
Production for Natural Colors takes place at facilities in Brazil, China, Denmark, Italy, Peru and the US.
In 2016/17, 8.6% of revenue was invested in property, plant
and equipment, while approximately 1,440 employees were
dedicated to production activities.
Strong customer relationships
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 2016/17, the top 25 customers accounted for approximately 30% of revenue. Sales & marketing expenses amounted to 12.6% of revenue. Approximately 730 employees were dedicated to sales & marketing activities.
Risks 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. 1TM strategy are described in the section on risk management, including progress on mitigation initiatives.