Global Food Industry Trends
In an exclusive Prepared Foods Magazine interview, Mr. Noergaard and Mr. Combs share some of their thoughts on the global food industry and their plans for the future of Chr. Hansen Inc., North America.
Q: Based on your experience, what opportunities are there in the food industry for the most growth in the U.S. and abroad?
Combs: If you look at the opportunities for growth in the food industry, one of the major areas is what I call "designer foods." For example, foods designed to be indulgent. Other types are designed to be healthy foods. Basically, designer foods meet specific needs. I think this is an opportunity that will continue to grow over time on a global basis.
Noergaard: Of course, the opportunities are also in prepared foods. People were cooking much more ten years ago than they do today. The majority of meals today are cooked in the microwave or eaten at restaurants.
Q: What trends, both domestic and global, will contribute the most to changes in the food industry?
Noergaard: One of the things we see is globalization. More companies, including Chr. Hansen, are serving a global market. In addition to more globalization, we also see a huge consolidation of the industry. Recently, it seems that almost every day you hear about another big company getting bigger through acquisitions.
Combs: This forces companies to consolidate their food ingredient suppliers. As these large companies continue to merge, they still need suppliers, but they will deal on a routine basis with only four or five major suppliers. As an ingredient supplier, you need to be on that list if you want to survive.
I think one of the other major trends that will continue to impact the food industry is the area of self-medication. We certainly see this all over the world, especially in the Far East. The challenge for an ingredient company is to make sure that they are developing efficacious ingredients and conducting accurate studies that prove a true health benefit.
Another trend is that we will see more of a merger between true traditional food companies and health companies. I was much more attuned to that at DMV. We were definitely seeing health-related companies moving towards the food area and food companies going into functional foods, which brings in the pharmaceutical end. Somewhere in the middle, these companies are going to meet. Food companies of the future will be a cross between a pharmaceutical company and a food company.
Q: How do you differentiate Chr. Hansen's ingredient line from your competitors?
Noergaard: We are not just a dairy culture company, or just a flavor company or a seasoning company. We are a broader supplier, but not a one-stop shopping center. We focus on knowing our customers' needs and selling our ingredients as a system. We ask, "How can we make their production more efficient?"
Over the last ten years, we have gone from being focused on the dairy industry to using our products for the whole food inudstry. Our customers are consolidating; the only choice we have is to grow.
We draw from our expertise in places such as South America, Europe, Asia and bring ideas to our customers. In some cases, we have brought marketing people from different countries to give others ideas on how to develop their product in a new market.
Combs: One of the things that makes us different is that we really work to satisfy our customers. We try to anticipate in advance what our customers' needs are, providing them the things they have not even expressed yet, but they want. This is what I call 'customer delight,' when you are able to anticipate what the customer wants and bring it to them even before they ask.
Noergaard: Five or ten years ago, we were not expected to brainstorm with our customers' R&D groups. Today, we offer them concepts, ideas, show them how our ingredients can be used, explain to them how we see their market developing. We go beyond supplying the product and price.
Q: What are your short- and long-term goals as you enter into your new positions? And what is your vision for Chr. Hansen?
Noergaard: My focus as CEO of Chr. Hansen Inc., North America, had been mainly to be much more aggressive to make Chr. Hansen grow. I think this has been one of the organization's accomplishments. We have really broadened our product offering through acquisitions, including our big merger with ITC. We have also upgraded and built new plants.
I've always said that the organization needs to change all the time. I will be the only one in the top management board who will have lived in the U.S. If you're going to have a global company, it is important to have somebody with a global perspective. It's my goal then to improve our system to make sure that we are focusing on what's vital for the company.
Combs: If I look at my short-term goals, the first is to continue the program of efficiencies with the merger of ITC. We need to finalize those programs. Second, speeding up the development process and creating a strong sense of urgency in the organization.
Substantial growth will always be a part of my vision for the organization. I expect Chr. Hansen to experience growth that is higher than the industry average. This will come from both organic growth and growth by acquisition and alliance.
In addition to being a company that strives to achieve customer delight, I want us to become an organization that customers feel they cannot do without. We are providing a service to them that includes market intelligence and creative ideas. We hope people will perceive that all of these things combine to form a company that you really have a need to do business with.