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RELEASED ON 27/03/13 (DD/MM/YY)
According to Pierre-Alain Ceralli, Firmenich’s vice-president for flavours in China, the country now represents 20% of the total flavour industry’s potential. Furthermore, as China transforms its economy from export-led GDP to a domestic-led economic growth model, the food industry’s opportunities there are massive.
Ceralli, joined by Aldo Uva, the company’s president, is taking a break from the inauguration of Firmenich’s new flavour centre in Shanghai—its second in China and third critical innovation hub worldwide—to talk about the fragrance and flavour company’s approach to this burgeoning new economy
The new building will be used to integrate laboratories cutting across Firmenich’s leading scientific disciplines, including the discovery and development of ingredients, as well as technologies to improve fragrance and flavour performance, perception and delivery.
“As a flavour company, we see very attractive growth potential for Firmenich in China," says Ceralli. Moreover, as China develops, the consumer segmentation becomes more and more important as the results of the economic growth are distributed in very different ways across the country.”
These range from highly sophisticated and top-quality solutions in China’s Tier-I and II cities to mass-market affordability solutions for consumer penetration into the fourth and fifth tiers.
Four pillars
“More important for our business is the consumer shift from Western taste aspirations to Chinese local taste. As a result, Firmenich focuses on four key taste pillars in China,” adds Ceralli.
With the first of these—citrus—the company has orchestrated local sourcing practices to use Chinese fruit. With tea, Firmenich has developed unique molecules to strengthen the authenticity of Chinese tea to respond to consumer demand for what it calls a more natural and authentic tea profile in the beverage industry.
The company claims to have deepened its understanding of Chinese milk to improve taste delivery in the dairy industry—the third pillar—and combined this with unique mouthfeel characteristics.
And Firmenich has worked hand-in-hand with its corporate R&D centre, which is based in Shanghai, to analyse, extract and synthesise new molecules found in local fruits and plants in China, which form the final pillar, says Ceralli.
“In a nutshell, we leverage our global core technology capabilities while translating the final solutions into authentic, relevant and local taste profiles to deliver against our customer and consumer needs,” he adds.
Unconventional clusters
Firmenich claims it has developed an “unconventional” approach to targeting its developing markets, which include China, and according to the company’s president, this cluster-based system has worked well in the two-and-a-half years since it began.
“We have abandoned the usual organisation that is generally used by companies dealing with Asia,” says Uva.
The company’s four emerging-market clusters include Shanghai, which deals only with China, Singapore for its business in Southeast Asia, a group in Dubai to manage India, the Middle East and Africa, and a Japan office that looks after Japan and South Korea.
“So instead of having a global approach to Asia, we have decided to split it into these four groups that are working and dealing with the different territories,” he explains. “In essence, we are approaching Asia, the Middle East and Africa with groups that are fully focused on each different area. This is because we strongly believe that each of the geographies and territories has different dynamics in terms of tonalities, priorities and what is most important in each different location.”
He says this cannot be done from combining an office in Europe with one Asian outpost, which he claims is often the case. “You need to know the territory well, to have people on the ground and know the local taste—the local evolution of food,” he adds. To do this, Firmenich uses a blend of Western managers and local staff, which he says are the future of the company’s operations in China.
Greater expense
This approach, he says, has gone well—and possibly even better than he anticipated. However, there is always risk when moving away from the norm, especially as it can be more expensive.
“You look at the synergies and expertise, but you also look to capitalise on your investment. In theory you are adding to costs because you are duplicating a lot of your funds in all the different regions,” says Uva.
“But through this trade-off we have proved that by investing money we can build synergies, develop insights and create abilities. It can be costly, but the value we can add to our operations and our customers is that much higher.”
China is evolving to become extremely important for flavour companies in terms of clients, products and consumers. No matter who you speak to, there is a land grab going on in the country, and in time we will see which approach this brave new market has worked best.
SOURCE NUTRA Ingredients
According to Pierre-Alain Ceralli, Firmenich’s vice-president for flavours in China, the country now represents 20% of the total flavour industry’s potential. Furthermore, as China transforms its economy from export-led GDP to a domestic-led economic growth model, the food industry’s opportunities there are massive.
Ceralli, joined by Aldo Uva, the company’s president, is taking a break from the inauguration of Firmenich’s new flavour centre in Shanghai—its second in China and third critical innovation hub worldwide—to talk about the fragrance and flavour company’s approach to this burgeoning new economy
The new building will be used to integrate laboratories cutting across Firmenich’s leading scientific disciplines, including the discovery and development of ingredients, as well as technologies to improve fragrance and flavour performance, perception and delivery.
“As a flavour company, we see very attractive growth potential for Firmenich in China," says Ceralli. Moreover, as China develops, the consumer segmentation becomes more and more important as the results of the economic growth are distributed in very different ways across the country.”
These range from highly sophisticated and top-quality solutions in China’s Tier-I and II cities to mass-market affordability solutions for consumer penetration into the fourth and fifth tiers.
Four pillars
“More important for our business is the consumer shift from Western taste aspirations to Chinese local taste. As a result, Firmenich focuses on four key taste pillars in China,” adds Ceralli.
With the first of these—citrus—the company has orchestrated local sourcing practices to use Chinese fruit. With tea, Firmenich has developed unique molecules to strengthen the authenticity of Chinese tea to respond to consumer demand for what it calls a more natural and authentic tea profile in the beverage industry.
The company claims to have deepened its understanding of Chinese milk to improve taste delivery in the dairy industry—the third pillar—and combined this with unique mouthfeel characteristics.
And Firmenich has worked hand-in-hand with its corporate R&D centre, which is based in Shanghai, to analyse, extract and synthesise new molecules found in local fruits and plants in China, which form the final pillar, says Ceralli.
“In a nutshell, we leverage our global core technology capabilities while translating the final solutions into authentic, relevant and local taste profiles to deliver against our customer and consumer needs,” he adds.
Unconventional clusters
Firmenich claims it has developed an “unconventional” approach to targeting its developing markets, which include China, and according to the company’s president, this cluster-based system has worked well in the two-and-a-half years since it began.
“We have abandoned the usual organisation that is generally used by companies dealing with Asia,” says Uva.
The company’s four emerging-market clusters include Shanghai, which deals only with China, Singapore for its business in Southeast Asia, a group in Dubai to manage India, the Middle East and Africa, and a Japan office that looks after Japan and South Korea.
“So instead of having a global approach to Asia, we have decided to split it into these four groups that are working and dealing with the different territories,” he explains. “In essence, we are approaching Asia, the Middle East and Africa with groups that are fully focused on each different area. This is because we strongly believe that each of the geographies and territories has different dynamics in terms of tonalities, priorities and what is most important in each different location.”
He says this cannot be done from combining an office in Europe with one Asian outpost, which he claims is often the case. “You need to know the territory well, to have people on the ground and know the local taste—the local evolution of food,” he adds. To do this, Firmenich uses a blend of Western managers and local staff, which he says are the future of the company’s operations in China.
Greater expense
This approach, he says, has gone well—and possibly even better than he anticipated. However, there is always risk when moving away from the norm, especially as it can be more expensive.
“You look at the synergies and expertise, but you also look to capitalise on your investment. In theory you are adding to costs because you are duplicating a lot of your funds in all the different regions,” says Uva.
“But through this trade-off we have proved that by investing money we can build synergies, develop insights and create abilities. It can be costly, but the value we can add to our operations and our customers is that much higher.”
China is evolving to become extremely important for flavour companies in terms of clients, products and consumers. No matter who you speak to, there is a land grab going on in the country, and in time we will see which approach this brave new market has worked best.
SOURCE NUTRA Ingredients
RELEASED ON 25/03/13 (DD/MM/YY)
Sumitomo Chemical is close to a decision to reduce production of petrochemical derivatives by downsizing or permanently closing production facilities at its Chiba factory. The reduction will represent about 200,000 t/y of ethylene equivalents.
The main ethylene derivatives at the site include low-density polyethylene, linear LDPE and ethylene vinyl-acetate emulsion. Subsidiary Nihon Oxirane produces styrene monomer at the site. "We'll cut production capacities for multiple derivatives," said president Masakazu Tokura.
The cutbacks are part of the program to permanently shut down the 415,000-t/y ethylene plant by fall 2015 during a routine maintenance shutdown. Ethylene production at the site will be integrated into the 768,000-t/y ethylene production at Keiyo Ethylene, a joint venture with Maruzen Petrochemical.
The downsizing is intended to reduce Sumitomo's petrochemical operations in Japan from 600,000 t/y to 400,000 t/y in terms of ethylene production capacity.
SOURCE Japan Chemical Web
Sumitomo Chemical is close to a decision to reduce production of petrochemical derivatives by downsizing or permanently closing production facilities at its Chiba factory. The reduction will represent about 200,000 t/y of ethylene equivalents.
The main ethylene derivatives at the site include low-density polyethylene, linear LDPE and ethylene vinyl-acetate emulsion. Subsidiary Nihon Oxirane produces styrene monomer at the site. "We'll cut production capacities for multiple derivatives," said president Masakazu Tokura.
The cutbacks are part of the program to permanently shut down the 415,000-t/y ethylene plant by fall 2015 during a routine maintenance shutdown. Ethylene production at the site will be integrated into the 768,000-t/y ethylene production at Keiyo Ethylene, a joint venture with Maruzen Petrochemical.
The downsizing is intended to reduce Sumitomo's petrochemical operations in Japan from 600,000 t/y to 400,000 t/y in terms of ethylene production capacity.
SOURCE Japan Chemical Web
by Raghu Das, CEO, IDTechEx
LCD panel makers in Taiwan, Japan and Korea have been suffering. Despite the growing demand for LCDs the high number of panel makers and new competition from China has resulted in tough price competition for panel makers, to the point that many panel makers are no longer profitable. In 2012, Samsung Electronics moved their LCD business units into a separate entity. One report suggests that the Taiwanese have invested $60 Billion in the LCD industry and seen a return of just $40 Billion. Some Japanese makers, despite having superb technology, have seen recent losses in some cases equal cumulative profits of the preceeding 5 to 10 years. Restructuring is therefore afoot. In the last few weeks Samsung purchased a 3% stake in Sharp. Japan Display Inc (JDI), puts together small and mid sized LCD panel manufacture units from Sony, Hitachi and Toshiba, focusing on automotive, cellphone and digital camera displays (not TV). Meanwhile, the Chinese are quickly moving into LCD panel production. For many years the top five in the LCD business, in order, were Samsung, LG Display, Innolux, AUO and Sharp. Now, as evidence of China's progress, in late 2012 Chinese BOE is number 5 for notebooks and monitors and China Star (CSOT) number five for TVs.
All this has driven panel makers to seek differentiation. 3D capability was one - albeit with mixed consumer interest. Now the hot topics are OLED and high resolution LCDs (4K).
OLED TVs pose a tough manufacturing challenge, but then the winners will be the ones to address the tough options. The current approach being taken by some of the leading panel makers are as follows, but the situation is fluid.
The different approaches mean little cross fertilization of know-how or equipment. Certainly the Koreans have appeared to be a long way ahead, at least for smaller sized OLED displays, but for TVs perhaps not as far as one thought. The question is whether Panasonic or Sony have the appetite to make the large investments needed. Investments from Samsung and LG are as follows:
The first OLED TVs are available from LG now - albeit priced at ~ $10,000. Sales will be limited at this price point for the immediate years.
The technically easier differentiation is to move to higher resolution LCD TV - e.g. 4K. Film makers are adopting suitable resolution cameras and so content will be available. Critics say that most cannot see the difference, but in reality consumers like to future proof as they expect a TV to last for many years - many bought HD TVs but still do not watch HD content. The higher resolution will benefit PC monitors and console gaming experiences too. In the short term, therefore, IDTechEx Research expects that 4K LCD TV sales - which will be more readably available - will sell more units than OLED TV.
OLED TV is undoubtedly promising but, as OLEDs for smaller sized displays - it will take longer than originally thought for these to become dominant, given the technical challenges faced. Given that many LCD makers are loosing money, how will they fund investment in new innovation? Indeed, Taiwanese companies are asking the government now for financial help to fund R&D on OLEDs.
Those hoping that OLED TVs would result in new factories and new equipment orders may find the opportunity is not quite as big as they had hoped - with companies expected to repurpose existing aSi TFT plants to IGZO TFT manufacture. This looks good on paper, but switching a factory involves taking an otherwise revenue producing plant offline, and setting up and achieving a satisfactory yield is not trivial, as Sharp has recently found. Panel makers, having typically spent 65% of the cost of LCDs on the materials alone, have ambitions to move up the supply chain, even making materials.
Potential Scenarios for OLED TV
One scenario is that a small number of panel makers may come to dominate OLEDs - which could likely be Samsung and LG, both enjoying strong profits. Another is that the LCD industry repeats itself again with OLEDs - with many panel makers and therefore the inevitable range of profitable and loss making panel makers that go with it. One could postulate that the Taiwanese may not be a major player in OLEDs (and indeed their LCD businesses will see a shakeout); Japan's conglomerates have the potential to be major players but it depends now on their ability to fund it as needed; which leaves the mighty two in Korea. And the Chinese.
For more information attend OLEDs LIVE! - covering the complete value chain of OLEDs for both lighting and displays. It is held in Berlin on April 17-18 and co-located with the IDTechEx Printed Electronics Europe event. Register now for the best rates - see www.IDTechEx.com/oledslive .
About IDTechEx Research
LCD panel makers in Taiwan, Japan and Korea have been suffering. Despite the growing demand for LCDs the high number of panel makers and new competition from China has resulted in tough price competition for panel makers, to the point that many panel makers are no longer profitable. In 2012, Samsung Electronics moved their LCD business units into a separate entity. One report suggests that the Taiwanese have invested $60 Billion in the LCD industry and seen a return of just $40 Billion. Some Japanese makers, despite having superb technology, have seen recent losses in some cases equal cumulative profits of the preceeding 5 to 10 years. Restructuring is therefore afoot. In the last few weeks Samsung purchased a 3% stake in Sharp. Japan Display Inc (JDI), puts together small and mid sized LCD panel manufacture units from Sony, Hitachi and Toshiba, focusing on automotive, cellphone and digital camera displays (not TV). Meanwhile, the Chinese are quickly moving into LCD panel production. For many years the top five in the LCD business, in order, were Samsung, LG Display, Innolux, AUO and Sharp. Now, as evidence of China's progress, in late 2012 Chinese BOE is number 5 for notebooks and monitors and China Star (CSOT) number five for TVs.
All this has driven panel makers to seek differentiation. 3D capability was one - albeit with mixed consumer interest. Now the hot topics are OLED and high resolution LCDs (4K).
OLED TVs pose a tough manufacturing challenge, but then the winners will be the ones to address the tough options. The current approach being taken by some of the leading panel makers are as follows, but the situation is fluid.
- Samsung = RGB and polysilicon TFT backplane - recently announced it is reviewing other options
- LG = white OLED with colour filters and IGZO TFT backplane
- Panasonic = Inkjet printed RGB with CDT/Sumitomo materials + AUO TFT substrate
- Sony = RGB Top emission and gap filters + AUO TFT substrate
The different approaches mean little cross fertilization of know-how or equipment. Certainly the Koreans have appeared to be a long way ahead, at least for smaller sized OLED displays, but for TVs perhaps not as far as one thought. The question is whether Panasonic or Sony have the appetite to make the large investments needed. Investments from Samsung and LG are as follows:
- Samsung invested $4.8 Bn in 2011, $6B in 2012, and will invest $4 Billion in 2013. It has sold more than 100 million OLED displays used in the galaxy S series alone
- LG invested $225 million in 2010, planned investment of approx. $2.8 Bn in 2012, of that $1.9Bn in R&D related to OLED.
The first OLED TVs are available from LG now - albeit priced at ~ $10,000. Sales will be limited at this price point for the immediate years.
The technically easier differentiation is to move to higher resolution LCD TV - e.g. 4K. Film makers are adopting suitable resolution cameras and so content will be available. Critics say that most cannot see the difference, but in reality consumers like to future proof as they expect a TV to last for many years - many bought HD TVs but still do not watch HD content. The higher resolution will benefit PC monitors and console gaming experiences too. In the short term, therefore, IDTechEx Research expects that 4K LCD TV sales - which will be more readably available - will sell more units than OLED TV.
OLED TV is undoubtedly promising but, as OLEDs for smaller sized displays - it will take longer than originally thought for these to become dominant, given the technical challenges faced. Given that many LCD makers are loosing money, how will they fund investment in new innovation? Indeed, Taiwanese companies are asking the government now for financial help to fund R&D on OLEDs.
Those hoping that OLED TVs would result in new factories and new equipment orders may find the opportunity is not quite as big as they had hoped - with companies expected to repurpose existing aSi TFT plants to IGZO TFT manufacture. This looks good on paper, but switching a factory involves taking an otherwise revenue producing plant offline, and setting up and achieving a satisfactory yield is not trivial, as Sharp has recently found. Panel makers, having typically spent 65% of the cost of LCDs on the materials alone, have ambitions to move up the supply chain, even making materials.
Potential Scenarios for OLED TV
One scenario is that a small number of panel makers may come to dominate OLEDs - which could likely be Samsung and LG, both enjoying strong profits. Another is that the LCD industry repeats itself again with OLEDs - with many panel makers and therefore the inevitable range of profitable and loss making panel makers that go with it. One could postulate that the Taiwanese may not be a major player in OLEDs (and indeed their LCD businesses will see a shakeout); Japan's conglomerates have the potential to be major players but it depends now on their ability to fund it as needed; which leaves the mighty two in Korea. And the Chinese.
For more information attend OLEDs LIVE! - covering the complete value chain of OLEDs for both lighting and displays. It is held in Berlin on April 17-18 and co-located with the IDTechEx Printed Electronics Europe event. Register now for the best rates - see www.IDTechEx.com/oledslive .
About IDTechEx Research