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The CEO of DSM, Patrick Niels, has told FoodBev that the customers he has spoken to so far have been “extremely positive” about the company’s proposed joint venture with Cargill, which will aim to bring cost-effective zero-calorie sweeteners to market more quickly.
Named Avansya, after DSM’s existing stevia offering, the venture will make use of a new fermentation facility being built in Nebraska and will be a 50-50 partnership between the two businesses.
From Las Vegas, where he is attending the trade show SupplySide West, Niels told FoodBev that Cargill and DSM are “bringing our competences together”.
The joint venture itself is called Avansya but you’ve pledged to market products under Cargill’s EverSweet brand. What was the rationale there?
The rationale was that both of our companies have established some asset value in creating their brands, and that’s why we felt that we keep the Cargill name – so they’re in the market, a little bit bigger, with their EverSweet brand – but we use the DSM name more as an umbrella brand for the joint venture and for possible further activities we might develop jointly.
Will your customers notice a difference in the way the joint venture will work compared to what they’re used to?
First of all there’s a number of steps to go through to get national approvals in a number of countries for this joint venture. Then we’ll have to take a look and see what and how we can make sure we get the most optimal product to the market and to our customers. We don’t expect the customers to see any difference there, but it’s a little bit too early to say.
What does DSM bring to the table that Cargill doesn’t?
What you see is that we are a strong biotech company so we’ve spent a lot of time already developing a process to make a very nice, clean-tasting, pure product in a robust process and I think that’s extremely appealing to Cargill. We on the other hands are on the verge of investing in large-scale assets which are very capital-intensive, plus we are also on the verge of striving to invest in application knowhow, which is critical for us to help our customers exchange caloric sweeteners for stevia, or alternative high-intensity sweeteners to stevia. Now, with this partnership we actually fill both of our companies’ gaps and create a very strong value proposition, which is amazing because I had a couple of calls with customers this morning already and our customers reacted extremely positively on this: they said that they will now have two partners that together can really offer this solution in a very valuable, effective and efficient way and really drive the penetration of Reb M and Reb D because the strength of both our companies will enable that we make this great-tasting product and manage to do it with a reliable supply, which is now not really the case, in consistent quality – and in the long term, also in an affordable way. All in all, our fermentation process is very sustainable so that whole value proposition together is extremely pleasing for our customers.
How important is the cost-effectiveness of sweeteners nowadays, and how much of an impact do you expect this venture to have?
The industry hasn’t really tested the full price elasticity of course, because there’s always more factors than just price, but we do believe that if you really want a large penetration of the steviol glycosides you need to have a competitive offering. Plant-based has a certain pinch point that you can never touch below. What we see is that, with our fermentative stevia, the upfront investments are large in technology, as well as in assets. The moment they’re there, our raw materials are sugar, and we use energy, and with that we do create this fermentative stevia. So we do believe that affordability is important, but also security of supply and consistency in quality to really let steviol glycosides replace other high-intensity sweeteners on a large scale.
I know DSM has spoken before about the importance of openness and collaboration. Does this take that mantra a step further?
Yeah, this step is a little further than open collaboration. We are really joining in dedicated assets, bringing our competences together. You could say it is an extreme form of sharing, of partnership! In reality, if we had to build up all this competence ourselves, it would have taken us a long time. I think the same counts for Cargill, so that’s a match-made-in-heaven partnership that is really complementary for each of the partners.
Is there room in this new venture, for instance, to explore other natural sweeteners beyond stevia?
That is the scope of today’s joint venture: we have done it very consciously in steviol gylcosides, but what we also create – and both parties realise this fully – we create a tremendous platform where we put biotechnology capabilities, strain improvement, process capabilities, together with application knowhow and end-market knowledge. Throw in also very strong capabilities in fermentative production – within both Cargill and DSM – and you have a great combination, a great platform to [move] beyond steviol glycosides. So that vision, not yet formalised, is something we will be working on after we’ve got this whole joint venture fully on track.
What have you learned about DSM Food Specialties in the 15 months or so since you became president?
Consumer insights are key. What we do, and what we’re capable of at DSM Food Specialties, is really to come in with large innovations based upon our very strong scientific knowledge and capabilities. But for us it is critical to have access to the customer insights, because the bets we make on larger innovations are really big bets. We have to make sure we make the right bets. And for that, we need the consumer and end-market insights. What I’ve learned is that this partnership, for instance, addresses that we get much more insights, with our partner, in the sweetener end-market. I think we need to find other ways to make sure that all the things we do are always based upon true insight about where customer preferences are going.
Patrick Niels was speaking to FoodBev’s Alex Clere.
© FoodBev Media Ltd 2018