How did the market for biostimulants arise? It all started when consumers from high-income regions or countries made clear their willingness to pay for high-quality fresh fruits and vegetables. Growers from regions with agroclimatic and logistic advantages that allowed them to fill this demand found increasing market acceptance for the added cost of producing fruits and vegetables tailored to meet these preferences.
To produce high quality and bountiful crops year round in order to meet consumer demand, intensive production and management practices are required to maintain the plant at optimal metabolic status, enhance resistance to abiotic stresses, and to push the plant to reach its highest genetic potential in terms of yield and quality.
Biostimulants were found to be an elegant solution with tremendous potential to meet these requirements and were gradually introduced into standard production programs. These new tools helped improve production under stressful conditions and provided a sound return on investment by enhancing growers’ ability to deliver off-season and high-quality produce.
What shaped the biostimulant business model The evolution of the biostimulant sector over the past 20-25 years has shaped a concrete business model and commercial value chain. To better understand how the biostimulant business model has evolved, one must bear in mind the intrinsic characteristics of biostimulants and the markets in which they participate. Among others: i) biostimulants represent a new solution, not a substitute for an existing one, which in turn means an additional cost to farmer – not substitutes or a reduction of others (at least initially); ii) biostimulants have a multisite effect and their performance is dependent on the interaction of plant, environment, product and management practices; iii) given this dependency on external factors, biostimulant results may not always be repeatable; iv) the regulatory treatment of biostimulants does not fall into one clear, existing category; v) barriers to entry tend to be low because of the current regulatory environment; raw material sourcing (many of today’s important players are mainly toll manufacturers which source from a limited number of providers, many of whom do not play directly at the B2C level), and lack of differentiation between technologies used (this is clearly changing now, but was no so clear when the market started); and vi) the mode of action for many biostimulant products is not completely understood (also evolving).
This unique group of characteristics and their interplay has directly impacted the way that each link in the value chain – from manufacturers to distributors – has positioned these products in order to gain the best possible market access. History has shown that the most definitive way to succeed in the market is to gain the best possible access at the distribution and farm level. In the case of biostimulants, however, given that all of the different companies competing in the space were initially approaching the channel and end-user growers with similar solutions, an even more demanding approach was required. Biostimulant suppliers needed to be even more proximate to the distribution channel in order to convince the end user of the value of their solutions (in this way, biostimulant producers can shepherd demand creation) over competitive products and offerings, and to be able to respond quickly to sales opportunities that arose. Companies needed to be close to the grower, crop consultants and/or extension service in order to adapt their product positioning, use rate, timing and other product combinations to enhance performance. It was also incumbent upon the supplier to ensure that any possible differentiation could be detected and effectively communicated to the end user and distributor.
The need for differentiation The intrinsic nature of biostimulants makes it very difficult to achieve competitive IP protection. To date, most companies have relied on trade secret strategies based on active ingredients used, unique formulation properties, technical positioning and go-to-market knowledge (commercial, promotional and technical support activities).
Over time, the biostimulant industry has gradually been gaining consistency. Biostimulant product uses have been increasingly extended into tropical regions, plantation and row crops, and seed treatments.
Moreover, the scientific community has been paying more attention to this technology and data supporting biostimulant efficacy, along with better understanding of modes of action, which both have increased tremendously during the last two decades. As such, the biostimulant market has eclipsed niche status and has graduated to a much broader scope. Today, the category is increasingly considered as “one more tool” for effective and profitable crop management in both conventional and organic systems.
As the market has grown and gained consistency, therefore it has also become more competitive. Its status as a growing and highly profitable market with low barriers to entry has favoured increased competition in several ways. As competition has become more aggressive, one of the only ways for companies to maintain a competitive advantage has been to increase their differentiation within the market.
This is the primary reason why, in the last two decades, we have seen an evolution in the business model applied by many biostimulant companies (see chart 1). Many players with vision and capacity have been shifting their business model toward an increased focus on technological, knowledge and R&D activities to achieve differentiation—while keeping their core strengths.
Most of the tactics outlined above have required investment of additional resources. In addition to internal competitive pressure, external pressures have emerged as well.
When evolving from a niche market to a more consistent, developed and broad market, collateral barriers to entry such as regulatory, socio-economic (circular economy policies) and food chain demands have also been increasing. These pressures are also impacting business strategies and increasing the need to focus resources to cover these new challenges.
The drive toward consolidation The need for financial resources has also highly influenced an accelerating consolidation process, leveraged by a perfect scenario for M&A activity to occur: i) a profitable and growing market; ii) a market currently dominated by a large number of private companies, in many cases SMEs with limited resources for investing in IP or in large and innovative R&D projects surrounding extraction and production technologies; iii) a sector achieving increased recognition as a needed tool in many agricultural management practices; iv) an industry facing the threat of commoditization; v) an industry where commercial focus and market access are key differentiators; vi) an industry facing increasing barriers to entry aiming to standardize, regulate and innovate in the market, causing R&D, knowledge and technological improvement, and IPs focus to the fore of strategic activities; and vii) an industry where rising investment needs for companies that are willing to overcome the barriers to entry will survive and lead the market.
DunhamTrimmer considers M&A activity to be one of the strongest factors influencing future evolution of companies, industry and the biostimulant market itself.
Evolution of the market DunhamTrimmer has been gathering together all its available data to create a report presenting a global detailed perspective of all factors, including the factors mentioned before as well as others affecting the industry, and accompanying this information with complete data on values and growth trends in the global biostimulant market.
At DunhamTrimmer, the first step toward developing a market report for the biostimulant industry was to define the scope of the study. While this might sound simple, consider that despite more than 20 years of business activity, opinion on what does or does not constitute a “biostimulant” varies widely between regions, links in the value chain and individual companies.
The underlying cause for this phenomenon is that this relatively new biostimulant category consists of a broad spectrum of technologies that can be difficult to homogenize, particularly when considering the combination of technical information, label claims, local use patterns and application methods for these products — all said to stimulate plants in some way. Fortunately, industry efforts through organizations such as EBIC are creating a regulatory and standardization environment in the EU that is more likely to influence a future trend towards a more highly homogeneous and controlled market claims.
DunhamTrimmer believes this fundamental aspect of reporting has not been adequately addressed in other studies. It is not uncommon to find market reports on biostimulants that fail to include the rationale or criteria as to how these solutions are classified and segmented. Such ambiguity creates distortions that lead to misrepresentation of the size of the total market and its components, creating undue risk for companies looking to enter or expand their presence in biostimulants.
Market projections for the biostimulant market are very challenging, as over 90 percent of the companies are privately held with no public revenue data available, in many cases.
But since the DunhamTrimmer team’s sole focus is global biological markets serving agriculture, we are actively working with client companies, attending global conferences, gathering data for publication in our 2BMonthly e-newsletter (co-produced with New Ag International), and meeting with diverse sections of the industry.
Around 60 percent of the global biostimulant market is concentrated in nine countries. We identified 20 countries with a market greater than US$20 million at ex-work’s level, which altogether accounts for 80 percent of the global market. Additionally, we identified sub-regions in order to give a more complete assessment of areas where notable biostimulant markets are growing.
Consolidated data for 2019 shows a market of US$2 billion at ex-work basis (excluding biofertilizers – defined as those microbial-based biostimulant solutions for enhancement of nutrient uptake and assimilation efficiency – biofertilizers will be covered separately in another report slated for 2021).
The biostimulants market presents a gradual acceleration across the period considered in this report (moving from an average CAGR of 10.97 percent in 2015-2020 to a 11.56 percent in the 2020-2025 period). The incorporation of this technology continues to grow both within existing markets as well as in many new markets in which the entry of biostimulants has been more recent.
In the markets that have been important for the last two decades, growth continues to accelerate either as the result of an increase in use among existing crops or by increased adoption in new crop types.
In more mature markets, the use of more differentiated products with a higher market value also continues to support growth.
DunhamTrimmer found some markets where growth is below double digits or with slight market deceleration, but in all cases these markets will continue to show significant growth in absolute values they incorporate year after year.
The bottom line is there are tremendous market opportunities for biostimulants in all regions; an impressive growth in absolute terms for the U.S., continued acceleration in already important markets such as Brazil and (to a lesser extent) Mexico, new growth centres in Latin America, a growing understanding of this technology in eastern Europe (East Europe), market acceleration in France and similar possibilities in other European countries, the continued entry of biostimulants in China and India along with immense opportunities for growth in new areas of Asia, and opportunities that can be realized in some markets in sub-Saharan Africa.
The DunhamTrimmer report includes additional information segmented by type of solutions used, application type and crop group type, as well as a three-step segmentation of leading companies (covering the top 55) based on quantitative (turnover) and qualitative (relevance, disrupting technologies, regional presence, etc.) considerations.
Links: www.2bmonthly.com / DunhamTrimmer
Chart 1. Market Competitive Dynamics
Biostimulant Market Entry Strategy
BUSINESS FUNCTION
Strategic Response Toward Differentiation
Local companies in new export markets seek competitive advantage by sourcing and producing biostimulants to leverage market proximity
SOURCING
Gaining direct access to highly competitive sources of raw materials (seaweed has been a clear example)
New entrants secure toll manufacturers to enter market and compete on price
MANUFACTURING
Organic growth through building and expanding manufacturing facilities. Investing in proprietary manufacturing techniques to gain differentiation
Low barriers to entry allow low quality, non-differentiated products (snake oil) to enter the market with little/no R&D investment. Science-based R&D tactics require strong investment and are usually remanded to existing players or large, well-established companies
Research & Development
Investing in R&D at a higher level trying to increase their competitive position and enhance thought leader perception and target more specific and differentiated solution packages
Diversifying portfolio by trying to incorporate and expand new biostimulant substances with greater IP or differentiation characteristics, such as microorganisms
Diversifying portfolio to collateral biological or collateral ag industries searching for synergies
Companies from leading countries of manufacturing try to emulate commercial and promotional activities of leading companies
B2B companies sourcing to manufacturers try going direct to distribution channel and growers, seeking higher profit opportunities
Existing distributors try to enter the market as biostimulant manufacturers or sell direct, to leverage market access and negotiating power by demanding private labels or more competitive terms
COMMERCIALIZATION
Companies leverage strong corporate brand recognition when possible
Enhancing control across the value chain by placing more people in field or increasing presence at distribution level
Acquiring local companies to gain faster and stronger market access in key regions and countries
Focus commercial development on newer markets that for reasons of size, distance, culture or other factors may have been more challenging in the past and remain out of reach of many competitors
B2B: Business-to-Business, i.e., manufacturers to distributors / B2C: Business-to-Consumer, i.e., manufacturer to distributor or grower end-user
New Ag International SEPT/OCT 2020
U.S.-based BioConsortia has appointed Dr. Damian Curtis as director of synthetic biology and genomics.
With experience in genetic engineering and 15 years of industrial experience with Bayer, AgraQuest and Exelixis, Curtis will lead the company’s new gene-editing and synthetic biology platform.
Curtis most recently managed the microbial genetics functions in Biologics R&D at Bayer CropScience, where he also supported global projects including the Poncho/VOTiVO 2.0 product, stated BioConsortia in its July 17 news release.
As leader of the in-house gene editing and synthetic biology platform, Curtis will improve the genetics of BioConsortia’s spore-forming microbial leads in order to enhance performance of the naturally occurring nitrogen fixation bacteria, the statement said.
“Our confidence with nitrogen-fixation bacteria comes from having shown we can develop superior products for biopesticides, nematicides, andbiostimulants. We’ve done our learning through our AMS (advanced microbial selection) platform. Now, we’ve added tagging and colonization to our platform to tackle nitrogen fixation,” said CEO Marcus Meadows-Smith when talking with New Ag International regarding the announcement.
Commenting on his appointment, Curtis said “I was first attracted to BioConsortia by their unique microbial discovery platform, and as I dug deeper into their library, leads and products, as well as their current work on gene editing, I became more excited by the potential. I look forward to helping deliver products that will substantially change the industry.”
BioConsortia has a pipeline of natural products that are in registration phase (see New Ag International March 2020). Meadows-Smith said two biofungicide products and nematicide products going through EPA registration had experienced some delay due to the Covid-19 pandemic, but was confident the timescales would mean these products would still reach market by 2022-23.
Meadows-Smith was pleased the field trials were not delayed for the biostimulant products currently going through state registration. “We’ve kept our work moving and got the field trials out. If you miss that, you lose a whole year’s work.”
BioConsortia plans to remain an R&D company and is lining up distribution partners for the roll-out of the biostimulant products, targeted for 2021.
Dr Damian Curtis
Product news in brief
US agriculture inputs distributor Wilbur-Ellis has released a new seed treatment product, STEPUP 2.0., designed to interact with and respond to seed by supplementing the protein and amino acids released during the early stages of germination. STEPUP 2.0 is a soluble formulation comprised of protein hydrolysate obtained from the bio-fermentation process of proteins and amino acids. The redesigned formulation allows for lower use rates on seed which can result in better seed flow at planting while retaining its performance.
GROPRO has launched Awakening Pollination, a biostimulant that stimulates the plants' natural processes to enhance flower development while increasing stamen hold and pollinator activity. Awakening Pollination can increase pollination on all flowering crops, resulting in higher yields of fruits, nuts and berries. Awakening’s main additive, propolis, acts as a pheromone attractant. Awakening also contains auxins, cytokinins and additional supportive biostimulants.
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