The real value of innovation in the additives business

We may know the monetary return on an additive investment. But what about the value of real innovation versus products that are mere copies?

By Ioannis Mavromichalis


The need for driving innovation

If we were to accept that additives add value into existing feeds, then we must ensure this value is true, measurable, profitable, and above all sustainable for all parts of the production chain. To do that, those who are responsible for the development of additives must remain ahead of their times, predicting changes in the feed business, not only to remain relevant, but also because our times are characterized by such high uncertainty. For example, not many years ago, cereals were so expensive that energy-yielding enzymes were the talk of the day, whereas now it is antibiotic reduction strategies that concerns additive developers more than ever. It is, perhaps, of no small consequence that we have allowed big politics have a say on how we feed our animals.


On the other hand, innovation is a word often used, but rarely explained. We mostly associate innovation with something that comes out of nothing, but that is rarely the case and concerns things such as penicillin or electricity. In our industry, innovation is the culmination of a long process where real problems are taken through a critical process that includes research and development, before any viable solution can be marketed. In certain cases, this can be a laborious case, such as when the first commercial vitamins were developed, but it can also be a simpler process, such as when an additive can be made more potent, safer, or even less expensive.


Where real innovation comes from

Modern feeds are almost invariably made with at least a limited number of additives. This is a reality from which we cannot escape. The real dilemma is first which additives we really need for any particular feed, and secondly which brand offers the best value. The second question is more difficult and confusing. Here, we must understand that there are those who innovate and those who copy innovators. The first invest a lot of money, labor, and effort to bring an innovation in the market and as such they need to enjoy higher margins to recuperate their costs, but in return they have an inherent long-term interest in keeping their product in the market. Thus, they do invest and depend on quality and service. In contrast, those who copy innovations are usually looking for a rapid return on investment. As such, they depend on low initial investments, and enjoy profits through high volume sales enabled by super-low margins. What they know, however, is that they have a limited time to reap any profits before others do the same. As such, quality and service are seldom their primary focus as their time-frame is limited and their concern is the next additive to copy and sell. As such, we can safely say that the inherent value of additives is the quality aspect they have (or not). Whether such quality is of importance to buyers is another discussion because intermediary entities have different business interests than end users (animal producers).


Where to look for innovation

For now, let us focus on the value of innovation for innovators. For them, it is a matter of life or death, that is for their companies! If they do not stay ahead of the game, by constantly innovating, and instead rest on their laurels, they will soon be out of business by copiers who usually require two to three years before they convert an innovative additive into a commodity. Examples abound, the more recent one being butyric acid that is on the verge of becoming a commodity now that many have found a way to offer it in a protected form. As such, far-seeing chemistry industries are looking into other, new organic acids! Thus, in fear of repeating the obvious, for innovators, the real value of innovation is their own business model continuity. As such, they have a real interest in bringing true, real, and effective value in the market through their products. And, this is why their margins are not converted into yachts and villas, but are invested back into their own businesses in improving quality and continuing innovation!


For animal and (or) feed producers, the real value of innovation is again the quality of the products they buy. Here, we must assume that we only concern ourselves with additives that actually work. The fake ones soon disappear by themselves. So, between an original and perhaps (more) expensive additive, such as a new antioxidant for example, versus a (cheaper) good copy that both claim and may actually do the same job, the only real difference can be quality. And, to continue with the same example, quality goes beyond the antioxidant capacity of those products. A product made quickly by a manufacturer who sees no long future in this particular business may not include all precautions required to ensure the best quality. Such an example can be contaminants that must be removed before the final product is marketed. And, if such things have already happened in the human medicine industry, with cancer causing contaminants in such plain medicines as anti-pressure drugs, one can only wonder about additives destined for animals with much shorter life-spans.


This is why I have always advocated the need to support original innovators. Not only because we must reward and allow them to continue the innovation process, but also because they must afford to ensure quality remains high. And, from my point of view, this is the real value of innovation: quality that ensures long-term and sustainable profitability for all.