Business performance
Sustainable Food Solutions
Through our Sustainable Food Solutions business, Corbion provides value-adding natural ingredient solutions to the world’s leading food manufacturers. We partner with our customers to create delicious foods of consistent quality that meet the demands of today’s consumers, while giving our customers what they need to achieve sustainable business success. In 2022, adaptability and agility once again proved to be keys to success, as supply chain disruptions, raw material shortages, pricing volatility, and labor scarcity continued to burden businesses throughout the value chain. Our team moved swiftly to create and deploy new solutions and technologies to help alleviate the impacts our customers were facing. We leveraged our core competencies in applied science and technical service to lower risk for our customers, helping them rapidly adopt and incorporate new technologies, often in record time, in their finished goods.
In the bakery segment, our solutions enabled customers to quickly and successfully reformulate their consumer products in response to breakdowns as they occurred at various points along the supply chain, whether caused by logistical disruptions, global conflicts, or the impact of climate change on agricultural crops. For instance, we expedited the development and commercialization of our Pristine® line, a functional blend that helped bakers maintain quality while reducing or eliminating gluten in formulations when gluten became scarce partially caused by the Ukraine/Russia conflict. Similarly, we also launched Vantage 2060, a functional blend that enabled bakers to reduce soy oil and/or emulsifiers in formulations when we experienced shortages in the soy oil market. In addition to helping customers mitigate risk, we provided solutions enabling them to respond to the trend toward products with familiar ingredient labels, as consumers increasingly associate these products with better health, a more resilient body, and stronger immunity.
Corbion’s functional systems and preservation technologies continued their growth trajectory in this market environment. Uncertainty in the global economy is causing consumers to purchase at both ends of the food spectrum: they affordably indulge in premium food products while balancing their overall food spend with more cost-effective options. In the bakery space, Corbion helped develop premium, indulgent baked items while working with customers to cost-optimize formulations and mitigate rising raw material expenses. Drawing on our expertise in antimicrobials, spoilage organisms, and applications, we delivered innovative, natural mold inhibitors that further extend freshness and reduce product waste using ingredients that feel familiar and comfortable to consumers. In the dairy market we leveraged our blending proficiency and advanced knowledge of stabilization technologies to introduce Corbion SMART™ Solutions, a portfolio of convenient, customizable stabilizers. In addition, efforts are underway to develop new functional systems that further build on our applications, enzymes, and industry knowledge.
The consumer trend favoring products made with natural, familiar ingredients gained additional traction during the pandemic and triggered consumers to seek out safe, healthier options for themselves, their families, and the planet.
Accordingly, we continued to focus on natural preservation, expanding efforts beyond meat into additional applications, including dips, sauces, and chilled foods. Our early successes in this area include sales of natural mold inhibitors for culinary sauces and dressings, as well as ready-to-eat deli salads. Consumer shopping patterns shifted post-Covid, and while stocking up is no longer a strong trend, other behavior changes have become more persistent: fewer retail visits, more online purchasing, and food deliveries more frequently left on the doorstep. All create steep challenges for manufacturers as they work to ensure their products stay safe and fresh. Greater market demand for nature-based solutions contributed to global supply chain issues for all players in this market. Even so, our Verdad® Vinegars and Verdad® Avanta preservation solutions grew during this time as Corbion was able to meet the growing demand. Our diversified supplier base and global production footprint enabled us to move quickly and gain market share by keeping our customers’ production running. Our ongoing commitment to R&D and natural preservation led us to introduce our Origin® line of naturally-derived antioxidant solutions, which offer benefits that include improved processing, better visual appeal, ingredient transparency, and sustainable sourcing. These solutions allow meat and savory food producers to better satisfy both their business needs and consumers’ demands.
To support these growth trends, we invested to expand our capacity for producing natural ferments at our Peoria, US plant.
Lactic Acid & Specialties
In 2022, we saw substantial further increases in raw material costs of our products and continued supply chain challenges, requiring our utmost attention to adjusting our prices and managing the supply chain to avoid disruptions of supply to our customers.
Biochemicals
In the home and personal care market, we continue to see strong developments in hygiene and cleaning products. The Covid-19 pandemic has influenced the market, resulting in brand owners reformulating in favor of safe, natural preservative products over traditional preservatives that have come under regulatory pressure from a safety perspective. These trends were accelerated by the proven efficacy lactic acid has against all kinds of corona viruses and other microorganisms. We have seen that our PURAC® Sanilac solution helps brand owners meet the market’s urgent need for effective sanitizing and preservation solutions.
In the electronics industry, the semiconductor business is driving growth in our PURASOLV® esters portfolio. This market continues to grow with the further rise in data processing, connectivity, Internet-of-Things, continuing to drive demand for chips and memory, pushing the trend toward ever-higher performance at nano scale. By focusing on leadership in product quality and consistency, Corbion’s strategy aligns with the need for continuous improvement in the semiconductor material industry.
Pharmaceutical segments continue to grow due to the increasing number of patients suffering from kidney and other chronic diseases. Requirements for these markets are continuing to be ever more stringent, requiring a high level of attention. Our PURASAL® pharma lines are produced according to the strictest cGMP guidelines and comply with the highest quality standards. Corbion enables its customers to continue meeting increasingly rigorous standards by delivering proven, consistent product quality. In 2022, we continued to see growth in this market.
The agrochemicals market benefited in 2022 from high crop prices, driving demand for measures that support crop yield and production, such as environmentally friendly crop protection. Our PURASOLV® product line is included in various new crop protection formulations that supported business growth in 2022. In line with our strategy, we continue to focus on helping customers create environmentally-friendly crop protection products including biopesticides, using our PURASOLV® green solvents, which are well aligned with industry trends.
Biomaterials
In the orthopedic segment of the healthcare market, a continued recovery of the business has been observed bringing it back to pre-pandemic levels. Besides the recovery of the running business, development projects for customers have progressed resulting in increasing sales. New developments resulted in many enquiries for our resorbable polymers and our FiberLive® material throughout the year.
In the area of controlled drug delivery, we continue to see strong demand and further interest in our products, leading to a growing pipeline of projects. We keep working closely together with our pharmaceutical customers to improve the quality of life of patients worldwide and increase the number of patient-friendly and cost-effective treatment solutions available to them. Several customers have shown progression in their innovation and are proceeding with registration and commercialization in their respective geographical markets.
CM Biomaterials, our joint venture with the French company MedinCell, focuses on new cost-effective long acting injectables for therapeutics to improve global health. MedinCell saw its pipeline progressing, clearly shown by the initiation of Phase-3 clinical studies for two of their projects. The JV's lead partner Teva Pharmaceuticals refiled their first product based on the MedinCell technology at the FDA, at the same time announcing a planned launch of this product in the US market in the course of the first half of 2023.
In addition, a range of applications based on major active pharmaceutical ingredients and our PURASORB® polymers are currently advancing through different phases of (clinical) testing, covering both the use of existing controlled-release technologies (e.g. long-acting injectables) and enabling innovative dosage forms, in different clinical indications and delivery routes, contributing to 2022 sales and projected to grow during the Advance 2025 strategy period.
TotalEnergies Corbion joint venture
The TotalEnergies Corbion joint venture saw lower than expected volumes sold in 2022. Market disruptions have led to lower demand from existing market players. This impacted sales and dampened the volume growth seen in previous years. From a business development perspective, we are continuing to expand our horizons and progress into new markets and applications and building a strong pipeline for future growth.
The design of the new PLA plant in France is in the development phase. Together with our partner TotalEnergies, Corbion is optimizing the design and preparing for the Final Investment Decision (FID). We expect to progress further towards an FID in the second half of 2023, when we expect also a normalization of the CapEx levels and engineering costs compared to the highly inflated cost levels experienced in 2022. The new PLA plant will be supplied initially from the current lactic acid plant network.
Algae Ingredients
In 2022, we experienced more than significant growth in the algae-based omega-3 business in aquaculture and continued the expansion into new categories, including pet food and other omega-3 applications. This further drove its mission to unleash the power of algae fermentation to provide nutritional ingredients while preserving the world’s limited resources.
Aquaculture plays a prominent role in addressing food security while contributing to ocean protection and economic prosperity. Growing aquaculture and meeting the goals in the Ocean Action Agenda, a project to fast-track solutions to the most pressing challenges facing the oceans, will depend on the ability to reduce its impact on the ecosystem, and a key element will be the sustainability of feed.
Corbion partnered with Nofima, a leading food research institute in Norway, and other forward-thinking organizations across the value chain to form the Millennial Salmon project. The goal of this four-year project is to create the most sustainably farmed salmon using circular economy novel ingredients and with a low carbon footprint while addressing the initiative’s “millennial principles of life” – living healthy, leading a purposeful life, trusting peers, and considering their societal and environmental impacts.
Building from our AlgaPrime™ DHA LCA (Life Cycle Assessment) study, peer-reviewed and published in 2021, we keep investing to evolve our portfolio, focusing on comparing AlgaPrime DHA solutions to traditional sources of fish oil on an omega-3 basis to keep the carbon footprint lower. Measuring what matters and the results of the low carbon footprint of AlgaPrime DHA are critical for customers working to meet carbon reduction goals for their operations and customers.
In June 2022, we reached EBITDA break-even by leveraging Corbion’s unique expertise in large-scale industrial fermentation to supply algae with sustainable omega-3 at scale. Continuous investments in our production plant in Brazil increase our capacity and facilitate further growth in this business.
Incubator
After realizing EBITDA break-even in June 2022, the algae-based omega-3 DHA business has matured to such level as to allow it to be carved out from the Incubator as to be positioned as a business unit: Algae Ingredients. Other initiatives were added to the Incubator portfolio, which now comprises: Algae portfolio extension, Biopolymers, Natural preservation, Circular raw materials, and Net zero. Algae portfolio extension aims to further explore the algae platform for other products like lipids and proteins; Biopolymers builds on the co-polymer activities and (medical) polymer expertise to improve the performance and extend the application range of polylactic acid; Natural preservation aims to discover and develop novel antimicrobials with emphasis on natural mold inhibition; Circular raw materials explores feedstock flexibility options including non-food feedstocks; Net zero investigates new technologies with emphasis on renewable energies and electrification to meet our long-term sustainability targets.
Open Innovation
Innovation with outside parties providing technology or business opportunities, also known as open innovation, can accelerate growth by feeding the front-end of the innovation funnel and boosting the innovation hit rate. For Corbion, innovation includes open innovation, which is a business model that feeds the business units and Incubator with transformational innovation, converting breakthrough ideas into new products and business. It involves scouting and vetting selected external partners in focused domains of interest, chosen for their potential to grow the business in the long run, including beyond the Advance 2025 strategic period.
Innovation is critical to accelerate access to technical and application competencies that enable our growth. At the same time we feel it is our responsibility to provide young entrepreneurs with an opportunity to test and grow their ideas, adding to the credibility and impact of their ventures. Similarly, innovation is essential in the transition toward a world in which our planet’s natural boundaries are respected.
Our investments in and deal flow analysis of the European Circular Bioeconomy Fund (ECBF), the first venture fund exclusively focused on the circular bioeconomy in Europe, and Shift III, an impact investment fund targeting companies that can have an impact on climate change, circularity, biodiversity, waste reduction, or water with a disruptive technology, have both been instrumental to identifying some innovation leads that are being pursued.