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Prinova takes on Asia’s value-added business
Source：FoodPacific Manufacturing Journal
Date Published：1/14/2020 06:01:50 PM
Prinova has made a name for itself in the manufacturing of nutrient premixes and the distribution of food, beverage and nutritional ingredients, with its brand strongest in Europe and the United States. The company is also prepared to make it in the APAC market.
“We have roughly USD800 million in sales,” said Prinova group managing director, Nic Dam. “In Europe and the United States, we are well-known, however, it is a different story in Asia where Prinova is recognised for sourcing, more than its value-added business.”
(Photo source: Prinova)
The company is looking to increase its stakes in infant nutrition and sports & lifestyle nutrition markets in particular. “One of Prinova’s key strengths is working with brands on sports nutrition based products which have now crossed over to the general wellbeing/lifestyle market. We have a wealth of experience in working with customers on products such as pre, intra and post workout, meal replacement, supplements, energy boost etc., and in a range of delivery formats from bars, to powders, to RTD beverages, to gummies and tablets. I think what we do very well is taking the knowledge base we have developed in the US and European markets and sharing this expertise in new and emerging markets to help customers understand important trends and how they can be targeted in order to help create a successful new product launch”.
Within the infant nutrition industry, Prinova recognises the challenge of providing the correct nutrients which are needed, when they are needed. Nic highlighted that “Prinova has applied its knowledge of infant nutrition to the development of nutrient premixes customized to the needs of both children and mothers during the first 1,000 days”.
According to Nic, development in infant nutrition takes time because “rightly so, companies are extremely sensitive” about it. In contrast, lifestyle nutrition tends to move much faster and with greater innovation. “Clients demand that we come to them with new products because they can launch a new product in three or six months. So, we approach these markets very, very differently.”
Story of expansion
The company started in 1978 as a family-owned food broker in the United States.
The business expanded in the 90s as it developed ingredient sourcing expertise from China.
By 2002, Prinova had gone more global through a key acquisition in Europe.
“By combining the two businesses, we increased our volumes and market share, which is key in our business as the larger volumes lead to deeper market information, enabling us to take better decisions and help guide our customers in what can often be very volatile markets.”
In 2010, the company ventured into blending products in addition to simply selling these as single ingredients. “Some clients said they wanted to do more with us, so the next step for us, the natural step, was to blend these products”.
“Our Chinese business operation is split in two, procurement and manufacturing. On the procurement side we have a team of experts, some of which have been with the business for over 30 years, sourcing around 2,000 different ingredients. These products are used in two ways, either within our distribution platform, where we ship to clients around the world and/or import to one of over 35 of our warehousing facilities or they go on to be used within our Premix business. One of our Premix facilities is based in Changzhou, China, and the others are in the US and Europe”.
In 2017, Prinova acquired Lycored’s premix factories in China and the UK, which were supplying leading international food companies with vitamins, minerals and other nutrients for product fortification. These premixes are used within the cereal, beverage, dairy, infant formulation, and other premix categories.
Within the APAC region Prinova is most active in China, which is currently the company’s biggest market for premix sales. It is also doing well in Indonesia, Malaysia, Australia and New Zealand.
“We are discovering that the clients we deal with want to buy more from us. So how do you give them better service? You have to be very fast and you have to come to them with new ideas continuously. Everyone is busier so if you can get one supplier to supply you more things in more locations, it just makes the client so much more efficient as well. What we’re also seeing is that larger clients tend to centralise their buying. So, we are structuring our organisation to be able to do a better job for our clients.”
Quicker, more informed decisions
Prinova maintains a close relationship with clients.
“We don’t work with agents very much. We go direct because people want responses very fast. People also want to talk to someone who can make a decision. The more layers you have in between, the slower the process or the more likely information is going to come out different in the end. That’s why we like to be as close as we can to our customers,” Nic said.
“In the ingredients distribution business, for let’s say North American and European clients, it’s important for them to have someone in the middle to take care of the quality risk. Sometimes suppliers in volatile markets might not always honour the original contract, and so on”. Within the APAC region Prinova’s strongest target market is within Australia and New Zealand where they have recently opened office and established warehousing.
Quality across locations
According to Nic, consumers are still wary and concerned about buying products from China, especially those for infant nutrition. The melamine scandal in 2008 still resonates.
“What we say to them is that the raw materials for most of these products are actually sourced in China anyway, but then you put some international quality systems around them. It takes slightly more convincing, and we invite prospective clients to come and inspect our facilities.”
Nic said: “It helps that we have a name that’s recognised in many parts of the world. Adding to that, we recently were acquired by Nagase, a company that’s 10 times our size with even more structure than us. That gives our clients a higher level of confidence.”
“I think our geographical footprint is very impressive and is becoming even more impressive now that we’re owned by Nagase. We can service clients throughout most parts of the world. We can help clients with innovation and cost reduction because we’re strong in raw materials and value-added services such as nutrient premixes. It’s a fantastic value proposition for them.”
Prinova is confident that business will remain brisk, and it looks forward to more ventures. “We haven’t made in-roads to South America just yet and there are many more product categories for us to develop. There are many things for us to explore. That’s the fun part of this business, right? We are not limited to a small area and we embrace change.”
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