Some companies never have news. Some companies seem to always have news. And in the past week, BASF falls into the latter category with 6 new press releases on their global site in a matter of 5 days – and that doesn’t include other press releases on their country-specific sites.
Ok, but is it interesting news? Is it innovative? Is it signifying change? We think so and that’s why today we are covering the what and why of BASF’s latest news like how they are entering the natural flavors and fragrances market with their acquisition of Isobionics, why they are selling off its ultrafiltration membrane business to DuPont, or how they are expanding production capacity for Neopentylglycol – an organic chemical compound used in the production of polyester and alkyd resins for various coatings and plastics. Not to mention what their Agricultural Solutions group is doing to reach their goal of a 50% increase in sales by 2030 – hint: it involves a launch of over 30 new products by 2028.
So let’s jump in.
First, flavors and fragrances
On Thursday, BASF said they are acquiring aroma biotech innovation leader Isobionics to enter natural flavors and fragrances (F&F) ingredients market. They are also partnering with Conagen, a leader in biotechnology research and their market entrance starts with biotech-based natural vanillin, valencene and nootkatone.
“BASF intends to advance the technology for biotech-based aroma ingredients by combining its own R&D excellence and broad market access with the know-how and expertise of Isobionics and Conagen,” according to the BASF press release.
A bit of background – Isobionics is a biotech-based aroma ingredients company, located in Geleen, the Netherlands. The company develops and produces natural ingredients for the F&F market with a focus on citrus oil components such as nootkatone and valencene. Isobionics, with all its employees, will become part of BASF’s Aroma Ingredients business.
Besides acquiring Isobionics, BASF signed a cooperation agreement with Conagen, a research leader in the field of biotechnology. Through this partnership, BASF will be able to serve the market with natural vanillin, one of the aroma ingredients with the highest market demand, according to the release.
The natural vanillin that BASF initially markets is based on ferulic acid sourced from rice and therefore named Natural Vanillin F. With its clean vanillin character, Natural Vanillin F is ideal for all flavor applications, such as chocolate, strawberry and caramel, while maintaining an “all-natural” labeling, according to the release.
Conagen has strong R&D and commercialization capabilities for fermented ingredients. And BASF’s Nutrition & Health division recently established a global business unit dedicated to the research and production of enzymes, which can be used as natural processing aids or ingredients for a large variety of applications in food, feed and technical industries.
Reaction from the stakeholders
“Reflecting the potential of changing consumer habits and the scarcity of natural ingredients, the strengthening of our biotechnology footprint is at the heart of BASF’s strategy,” says Melanie Maas-Brunner, who leads BASF’s Nutrition & Health division.
“The Flavor & Fragrance industry is experiencing an increasing need for natural ingredients,” says Julia Raquet, who heads BASF’s Aroma Ingredients business. “But fluctuating product quality, availability and sustainability are constant challenges for our customers. By entering the market with biotechnology-based aroma ingredients, we intend to provide our customers with high-quality products to respond to the current market challenges.”
“BASF is known for its high-quality standards, traceability and excellent regulatory know-how,” says Toine Janssen, founder of Isobionics. “By combining our biotech-based product portfolio and strong development pipeline with BASF’s expertise and its global market reach, we can provide the natural aroma ingredients market with even more innovations – and boost our growth.”
Neopentylglycol is an organic chemical compound used in the production of polyester and alkyd resins for various coatings and plastics and with BASF increasing the capacity of its neopentyl glycol (NPG) plant at the Verbund site in Ludwigshafen, Germany, by 10,000 metric tons per year, it increases capacity worldwide to 215,000 metric tons per year.
In addition, BASF is currently expanding its NPG capacity at the Nanjing site by a further 40,000 tons available from 2020, as announced in December 2017. With NPG production facilities in Europe, Asia and North America, BASF is one of the world’s leading NPG manufacturers. “The production expansion in Ludwigshafen underlines our clear commitment to continuously support the growth of our European customers,” says Michael Britt, Senior Vice President of Acids and Diols in BASF’s Intermediates division.
Due to its high chemical and thermal stability, NPG has proven itself in many applications, especially in the production of polyester and alkyd resins for various coatings and plastics. An essential field of application is powder coatings, which prove particularly successful in the construction industry as well as in the coating of household appliances.
Selling off ultrafiltration membrane business
Also last week, BASF and DuPont Safety & Construction (DuPont) announced that the companies have signed an agreement where BASF will sell its ultrafiltration membrane business to DuPont. The divesture includes the shares of inge GmbH, the business’ international sales force, its headquarters and production site in Greifenberg, Germany, and certain intellectual property currently owned by BASF SE. Financial details of the transaction are not being disclosed.
“The inge team has done a great job in developing the ultrafiltration membrane technology into a well-established player in the market. However, synergies with BASF are very limited,” said Anup Kothari, President, Performance Chemicals, BASF. “For the ultrafiltration membrane business, becoming part of DuPont, a strategic buyer, provides strong value creation potential and will enable it to reach the next level of growth.”
“As a global leader in innovative water solutions, we are continually looking for ways to help our customers solve water challenges around the world,” said Rose Lee, President, DuPont Safety & Construction. “This technology in combination with inge’s expert team further broadens our portfolio and enhances our ability to design tailored, integrated solutions for drinking water, industrial and waste water treatment applications globally.”
Pending approval by the relevant authorities, closing is anticipated by the end of 2019.
On Friday, there was news that BASF Agricultural Solutions is targeting increased market share and growth of one percentage point above the agricultural market. By 2030, the division aims for a 50% increase in sales. It will contribute significantly to BASF Group’s target of €22 billion in sales by 2025 with Accelerator products that make a substantial sustainability contribution in the value chain. EBITDA before special items of BASF Agricultural Solutions is targeted to grow by on average 5% per year.
It is also planning a launch of over 30 new products by 2028 with peak sales potential of more than €6 billion and an increase sale of products that make a substantial contribution to sustainability, according to their release.
“There is an increasing demand from farmers, regulators and consumers worldwide for BASF to contribute value to society – financially, socially and environmentally. With our innovation-driven strategy in agriculture, we are stepping up to this challenge by focusing on our customers’ and societal needs. We believe in finding the right balance for success – for farmers, for agriculture and for future generations,” said Saori Dubourg, Member of the Board of Executive Directors, at the Capital Markets Day at BASF’s Agricultural Innovation Center in Ghent, Belgium.
An increase in R&D budget to approximately €900 million in 2019 is supporting BASF’s innovation pipeline for agriculture. By 2028, BASF will launch over 30 new products with peak sales potential of more than €6 billion. This includes eight active ingredients, as well as unique traits and high-performing seeds in hybrid wheat, soybean, canola, cotton and vegetables. BASF is actively steering its offer for farmers and the agricultural industry towards sustainable solutions by integrating sustainability into all business and portfolio decisions. “Sustainability criteria are firmly embedded in our entire R&D process to identify and further develop those compounds that benefit both farmers and the environment,” said Peter Eckes, President Bioscience Research at BASF.
BASF will create new revenue streams from digital solutions in agriculture. Based on its pioneering digital expertise in agriculture as well as a strong commitment to partnerships, the company will provide digital solutions that add value to the way farmers use BASF products, the way they manage their farms, as well as the way they access and buy products or services. In addition, BASF will apply precision technologies and digitalization to seize future innovation opportunities in agriculture. This includes new, outcome-based business models.
The entrance into the natural flavors and fragrances market is perhaps the most interesting of the news from BASF last week, at least for our readers, as it is such a growing market. We’ll be keeping an eye on this area in particular as we see lots of potential there for BASF and others.