Focus on food quality set to drive growth

Alltech optimistic as China's middle-income earners develop taste and ability to pay for premium products

Editor's Note: The Chinese government has adopted a series of measures to boost economic growth, including stimulating consumption, further opening up to foreign investment, supporting private enterprises and encouraging technology innovation. China Daily asked senior executives of well-known multinational companies to share their views on the country's economic development and their companies' business strategies in China.

What business opportunities do you see as China continues to pursue higher-quality growth, which is increasingly driven by services and consumption?

As many Chinese people move into urban areas and become middle-income earners, they not only have greater discretionary income but also an interest in upgrading their spending to premium products. Within the agri-food sector, continued urbanization of the population and the demand for "greener", more sustainable products as well as nutritive functional foods will drive growth. The consumer wants to receive the best value for money, which we see being defined as the best quality even if it costs a little more. This trend needs to be supported by continued building of trust and transparency, and the businesses that can succeed in that will be the most successful for the future.

China has rolled out a series of measures to stimulate consumer spending and boost economic growth. What opportunities are there for your business?

We have the capabilities to put our expertise to work for our customers by developing yeast-based nutritional technologies that enable agricultural producers to raise healthier animals and crops more sustainably and provide consumers with safe and nutritious produce, meat, milk and eggs.

With a network and team spread across the world, we have the unique opportunity to see trends that are changing consumer behavior in many key markets. The demands follow similar patterns and relate to transparency in the food chain, product quality and potential health benefits of food. However, the consumer space within China is one of the fastest changing and presents unique challenges and opportunities.

Chinese middle-income earners have developed a taste and ability to pay for premium foods. Our customers in the agri-food sector are diversifying their product offerings to satisfy these consumers' interests, and e-commerce is becoming an increasingly significant channel for the distribution of these high-quality foods. Alltech is supporting both large and small producers of premium foods in their efforts to ensure food safety and improve meat quality and nutritional value.

Overall Chinese economic growth has slowed, but the topline numbers remain relatively robust. In what areas do you plan to increase investment or employment?

In such a fast-growing market that has sustained extraordinary numbers for a prolonged period of time, while serving a very different society today than decades ago, we should expect periods of evolution in the economy. While some sectors may be struggling to adapt, there is still strong demand in the "quality" sector. Change can be difficult, but the direction is clear, and many companies are responding to these new opportunities. I believe we are one of those businesses. We aim to use our global expertise to provide our Chinese customers insights into what the consumer of tomorrow may want. Convenience foods and functional foods and drinks - consumable products with added nutritional value - have been areas of growth in the Chinese marketplace.

Alltech is investing in working with customers and consumers to develop programs that enhance the quality of milk used in functional yogurt drinks, for example. As one of the world's leading producers of organic trace minerals, we can also support our customers in the development of selenium-enriched meat and eggs that deliver greater nutritional value to consumers.

How does your company plan to take advantage of the technology transformation opportunities in China over the next decade?

Technologies do not move incrementally but exponentially. We are on the brink of significant breakthroughs in technologies in general. Additionally, this is a unique period where the costs to deploy those technologies will be minimal compared to the benefit they bring.

Within the agri-food sector, one of the more significant challenges we've observed is the gap between programmers of new technologies and agricultural producers. Because they are not well-connected, the emerging technologies are sometimes not aligned to the needs of farmers, ranchers or producers. We feel we can play a role in bridging that gap through The Pearse Lyons Accelerator, which is now entering its fourth year. China will play an even more significant role in the growth of our innovation programs moving forward, as we know the market tends to be an early adopter.

New technologies and human innovation are at the heart of our Planet of Plenty vision. We need to create a global community that enables ideas and innovation to flourish. Together, we can provide nutritious food for all, while reducing our reliance on natural resources and preserving our planet for the future. If you want to play a role in shaping the future, now is the time to work within the agri-food sector, as there is no industry with greater potential to have a positive impact on our planet.

How has your company adjusted to the uncertainties brought by trade frictions between China and the United States?

Alltech just celebrated its 25th year in China, and we have always pursued an "In China, For China" strategy. Since we first entered the market, we have developed supply chains, worked with local suppliers and developed our own high-quality processes and materials in China for the Chinese agriculture sector. The trade uncertainties have not changed our strategy. We are wellplaced with a manufacturing facility in China and have the ability to export from China to countries not impacted by current trade tensions.

We carry out the most comprehensive survey of global feed production. Since the beginning of our annual Global Feed Survey, China has consistently topped the list as the world's largest producer of animal feed. Therefore, it's critical to our business that we have a strong presence in China, working closely with the country's agri-food sector. What we do in China will impact the entire global food system, so we are committed to staying and developing our business within China.

China has adopted policies to further open the economy to foreign investment, transform financial services and promote private enterprises. How are you planning to take advantage of these policies?

We are encouraged by these policies. Having built our business within China over the past 25 years, and having sold into China before that, we have confidence in the economy and the ability of the government and industry to work together.

We continue to look for partners to develop next generation agriculture technology, and the current economic direction set by the government is conducive to that goal. For example, China-based Alesca Life was selected to be part of The Pearse Lyons Accelerator, an elite accelerator funded by Alltech for late-stage agriculture startups. It is now a regional company with offices in Asia and the Middle East. We are eager to identify additional innovators throughout China so that together we can work toward a Planet of Plenty by developing next generation solutions for agriculture, the least digitized sector. We showcased stories like Alesca Life as part of our 25th anniversary celebration last month in Beijing, and we are looking forward to ongoing, inclusive dialogue on developing strategies to address the opportunities presented by these new policies.

(China Daily Global 10/24/2019 page9)