Our ambition is to be the leading innovator in offering conscious choices for our customers through sustainable ingredient solutions uniquely tailored to create customer value. In order to accomplish this ambition, Corbion identified several initiatives to realize additional growth, on top of continuation of current business.
In our Food business we see a trend of customers reducing their in-house R&D capabilities. At the same time, they are expected to meet swift changes in demand that require adaptation of product formulations and their innovation rates to go up. This creates opportunities for Corbion to enhance our value as a supplier and to partner beyond the mere supply of ingredients. We can thus become a provider of solutions and demonstrate our capabilities to our customers keeping them competitive in the markets they operate in (solutions model).
In Bakery, we will expand the market penetration of our already strong business in North America, by focusing on segments that have higher growth rates than average such as sweet goods, tortillas, and foodservice. Additionally, we will leverage our bakery knowledge and expertise and expand this business geographically, first by going into Latin America.
In Meat, we aim to extend our current position as a leader in preservation to a wider range of solutions to increase our relevance to our customers in that industry. We will do this by gradually extending our toolbox with broader antimicrobial and antioxidant solutions. This will be done organically, potentially accelerated by acquisitions that enhance the product portfolio, formulation know how, and manufacturing assets with a first focus on North America.
We will continue to selectively focus on other segments of the food industry where we have unique products and/or capabilities, such as acid sanding (confectionery), antimicrobial expertise (salad dressings), and fortification knowledge (beverages).
In Biochemicals, we will continue to support industries with our lactic acid and lactic acid derivatives, specifically when we can bring unique products and functionalities to the finished products. We will further leverage SENTIALL®, a versatile co-polymer platform that delivers specific, high-value functionalities such as adhesion or controlled release in a range of industries and applications. We will continue to deliver growth with ongoing projects in Medical Biomaterials, including enforced materials through FiberLive® and controlled drug release through our MedinCell joint venture, boosted by new innovations such as the resorbable polymer applications.
Corbion's portfolio comprises various initiatives that are expected to make a meaningful contribution to our sales levels in the near future. Examples include PLA (through our joint venture with Total) and our Algae Ingredients platform that offers a range of oils and fats, of which an essential Omega-3 oil is being commercialized under the name of AlgaPrime™ DHA. In addition, our strategic innovation portfolio will continue to focus on programs to develop and commercialize biobased organic acids, such as FDCA and the development of gypsum-free lactic acid, and the use of alternative feedstocks in our production processes.
* This annual report is based on the Creating Sustainable Growth 2018-2021 strategy and related business segmentation. On 9 March 2020, Corbion will announce its updated strategy for 2020-2025, including a revised business segmentation.
Application research, technology, and science
We live in a rapidly changing world, where critical success factors include agility to respond to change, strong collaborative networks, and (open) innovation. Increasingly, business development is executed with partners in the value chain that rely on their suppliers for innovation and provision of R&D services. In addition, there is a strong desire in multiple markets to provide scientific evidence for functionality claims. Similarly, increased awareness in society and the marketplace of the burden we place on our planet has fueled the demand for science-based proof and solutions to reduce the environmental impact of manufacturing and use of products.
Both the trend for collaborative innovation and the need for evidence of functionality and sustainability provide an opportunity for Corbion. In order to best capitalize on these opportunities Corbion’s R&D application development will have an increased focus on market needs, co-development with customers, and sales support with the aim of bringing agility and launching solutions earlier to the market. A Technology Transfer Group has been created, combining experts from R&D, Innovation Platforms, and Operations to improve technology transfer from R&D to Operations. Our Application Research, Technology and Science leadership team ensures we have the right capabilities to meet the needs of Corbion's running and future business.
In our strategy for 2018-2021 the projected R&D spend is at 4% of net sales.
Investments over strategy period
Having established a leading global position in lactic acid and lactic acid derivatives, it is of strategic importance that we maintain a differentiated position. Increased demand for lactic acid, driven largely by its central role in PLA production, will lead us to building a new lactic acid plant that uses our gypsum-free production technology. Our Algae Ingredients business will also require further investment and we continue to improve existing as well as develop new products with this platform. Other technology investments have enabled us to enhance our readiness to use next-generation feedstocks such as second-generation sugars from agricultural residues as soon as they become available.
In Ingredient Solutions, we will strengthen our workforce capabilities to advance key strategic initiatives, such as continuing to develop and implement our solutions model in Food, expanding our Bakery operations in Latin America, and delivering on our Medical Biomaterials and our Biochemicals initiatives. The strategy period also includes a major multi-year investment in a new Enterprise Resource Planning platform (SAP S/4HANA) which, in concert with the execution of various Excellence Programs, will help drive progress toward our strategic objectives.