7th Beyond-Agriculture Seminar, CAC Shanghai, March 2016

How to enter the World Biocide market

如何布局全球非农用消杀市场

Rob Fryatt

Xenex Associates

Expand new areas, Seize new opportunities

ROB FRYATT

Pest Management Mosquito Abatement

Turf & Ornamentals Consumer Pest Control

•Qualified Agronomist with over 20 years international Crop Agrochemical Experience

•Commercial Director of Sorex, a leading and dedicated formulating and distribution company in a defined Beyond-Agriculture sector: Pest Management

•Director of Xenex Associates the leading International Commercial Business consultants to Beyond-Agriculture markets.

•A Client base of Western and Chinese companies that includes many companies

seeking to access The World Biocide Market – the Market called Beyond-Agriculture

BEYOND-AGRICULTURE IN CHINA

PRESENTATION STRUCTURE

Compare and contrast Market Structure in

Agriculture and Beyond-Agriculture

How to understand the differences to assist

building a presence in the World Biocide market:

Products

Channel to Market

Establishing the Partnerships

Personal Views on the opportunities for Chinese

companies

Use Europe as an example where

regulatory challenges are probably the greatest.

COMPARE & CONTRAST THE MARKETS

Size

Structure

Channel

Formulations

Regulatory

Agricultu

re

EUROPE CROP CHEMICAL MARKET

US$ 17.3 Billion (End User level)

Agricultu

re

25% of the global market

11 countries account for 80%

The top 4 account for 50%

The Top 6 are > $US 1.0 billion !

The next 4 are all >US $ 0.5 billion

Source: GfK

EUROPE - BEYOND-AGRICULTURE

MARKET

Total market = $US3.9 Billion at end-user level

Forestry

2%

Industrial

3%

Ornamentals

17% Urban Pest

Control

10%

Public

Health

3%

Consumer

49%

Timber

Treatment

11%

Turf

5%

Source: GfK

B

EUROPE MARKET SIZE

US$ 17.3 Bn

Global Market = 25%

Top 5 Countries= 58%

Territory Size =

1.2 - 3.1 Bn.

Agricultu

re

US$ 3.9 Bn

Global Market = 16%

Top 5 Countries= 67%

Territory Size =

0.3 - 0.9 Bn.

MARKET STRUCTURE

CROP BASED

SAME CHANNEL

MARKETS ARE NATIONAL

CROP PURCHASE

RURAL MARKET

Agricultu

re

SEGMENT BASED

DISTINCT CHANNELS

MANY MARKETS ARE

INTERNATIONAL

SERVICE PURCHASE

URBAN MARKET

MARKET CHANNEL

MANUFACTURER

DISTRIBUTOR

FARMER

Agricultu

re

MANUFACTURER

[FORMULATOR]

DISTRIBUTOR

SERVICE

COMPANY

RETAILER

CONSUMER

FORMULATIONS

DELIVERING A PRESSURIZED

LIQUID APPLIED THROUGH A

SPRAYER

SOME GRANULE

APPLICATION

INCREASING SEED

TREATMENT

Agricultu

re

DIFFERENTIATED

FORMULATIONS

TARGETTED TO

SPECIFIC USE &

PEST HABITAT

FORMULATIONS

Agricultu

re

REGULATORY

PLANT PROTECTION

DIRECTIVE

EC Directorates

Agriculture

Environment

Agricultu

re

BIOCIDAL PRODUCTS

REGULATION

EC Directorates

Sanco (Heath)

Environment

DEVELOPING A PATHWAY

Understanding

the Segments

Identifying the

Opportunities

Establishing the

Partnerships

EUROPE - BEYOND-AGRICULTURE

MARKET

Total market = $US3.9 Billion at end-user level

Forestry

2%

Industrial

3%

Ornamentals

17% Urban Pest

Control

10%

Public

Health

3%

Consumer

49%

Timber

Treatment

11%

Turf

5%

Source: GfK

B

UNDERSTANDING THE SEGMENTS

•Unlike Agriculture each market segment can have a different

Channel to market (distributors, end users)

Product use pattern (annual treatment, regular treatment)

Different value added (Service & Consumer markets)

Formulation and Brand (turf & pest control)

•There is a need to understand the available segments

Pest Management - significant and diverse

Turf Management – small but high value

Consumer – large, but “downstream value”

Ornamentals – Significant, but only in a few countries

UNDERSTANDING THE SEGMENTS

•There is a need to match active ingredients to segment

Insecticide driven -Consumer and Pest Management

Fungicides - Turf, Ornamentals and Timber

Limited Herbicide markets

Significant Rodenticide market in Pest Management

•Segment Dynamic is important

Consumer and Timber Static – Environmental Influence

Pest Management Growth – Heath & Hygiene

Turf, Ornamentals Growth – Lifestyle

Public Heath Static – but significant potential Growth

UNDERSTANDING THE SEGMENTS

•There can be overlap between channels to market

Between Pest Management and Public Health

Between Turf and Ornamentals

Pest Management Formulators often toll for Consumer

•Each Segment has specialist suppliers and users

Active ingredients may be the same

Formulations may be different

Brands will be different

Example: Pest Management……….

PRODUCTS

Active Ingredients

Formulations

Brands

• Fipronil

• Imadacloprid

• Permethrin

• Diflubenzuron

• Hexaflumuron

• Bromadialone

• Emulsion Concentrate

• Suspension concentrate

• Microcapsule

• Gel

• Pasta Bait

• Granular Bait

• Gaucho

• Regent

• Karate

• Premise/Maxforce

• Termidor/Goliath

• Demand

CHANNEL TO MARKET

Manufacturers

Formulators

Distributors

Service Companies

• Syngenta

• Bayer

• BASF

• Liphatech

• Ensystex

• Babolna Bio

• Bayer

• BASF

• Syngenta

• Pelgar International

• I.N.D.I.A.

• Frowein

• Edialux

• Sanitrade

• Killgerm

• Techmo Hygiene

• Anticimex

• Rentokil-Initial

IDENTIFYING THE OPPORTUNITIES

•Match your active ingredient portfolio to the market segments

•Understand the segment dynamics and the value of the

opportunity

•Understand the regulatory position or potential regulatory

opportunity for those active ingredients

•Establish the regulatory costs for both active and formulation

•Understand the competing product ranges of the formulators

and distributors

•Decide if your strategy is single product or a product range

•Identify the potential partners……..,.

ESTABLISHING THE PARTNERSHIPS

•Independent Advice is both available and invaluable

•Building partnerships across cultures requires many skills

European companies need to better understand what

long term partnership means

Asian companies need to look for partners willing to

understand the differences that working with the Asian

culture brings

ESTABLISHING THE PARTNERSHIPS

•European companies can contribute the following skills:

Market understanding

An established customer base

The ability to operate in the national culture (Europe is diverse!)

•Asian companies contribute access to products that may be

in demand but not easily accessible

•Innovation and the promise of innovation is always welcomed

OPPORTUNITIES FOR

CHINESE COMPANIES

• Consumers and Professionals always seek out new products

and key active ingredients have been lost to the market.

• The global R&D companies have captured only 5-10% of the

added value through their brands

• There is significant value added market from formulation,

packaging & brands

• Potential cost advantage for Chinese companies

• Realizing market potential comes from Downstream

Investment in Distribution, Partnerships or Ownership

LONG TERM Consumers and Professionals increasingly value products and

services in these markets as margins and return on investment

continue to grow in real terms

7th Beyond-Agriculture Seminar, CAC Shanghai, March 2016

How to enter the World Biocide market

如何布局全球非农用消杀市场

Rob Fryatt

Xenex Associates

Expand new areas, Seize new opportunities

THANK YOU THANK YOU