This article appeared in the Spring 2016 issue of Pulse Crop News.

Allison Ammeter, APG Chair

The opportunity arose for me to take part in an “Exploring European Food Ingredient Clusters Tour” last November. As a strong proponent of value-added processing, I was thrilled when APG approved my participation. I believe that the knowledge and understanding I gained, along with the other members of the tour, will benefit Alberta agriculture in the future.

The tour began in London with a focus on consumer markets. While the main focus of the tour was on food ingredients, we realized it was important to look at the entire food chain, starting with consumers and those who sell or market food to them. UK retailers and food service companies are recognized globally as being trend-setting, and London is one of the world’s most upscale markets when it comes to fresh and local foods, so it made sense for us to start there in observing food trends and innovation.

Our tour started by meeting with Emma Finn, Trade Commissioner for the Canadian High Commission in the UK. She spoke to us about the importance of Canadian crops to UK products, and some of the many ways in which they are being used. We then heard from Miguel Flavian, a London-based retail food industry specialist, about key trends in the UK and how large food retailers such as Tesco, Marks and Spencer, and Waitrose are responding.

Following that, we toured several upscale grocery stores to see the theories in practice. It was quite amazing to me to see multiple aisles of beautiful fresh meal packages, ready to take home and eat, with aisle labels such as “Thai”, “Moroccan”, or “Greek” where in Canada  we might see an aisle of more standard frozen dinners.

We then toured the New Covent Gardens Market, the largest fruit, vegetable, and flower wholesale market in the UK, located on 57 acres of prime London real estate. Farmers deliver here fresh, and upscale restaurants and food service companies choose their ingredients here. Freshness was king.

We then spoke with Patrick Mewton, Managing Director of Houlihan Lokey, an investment banker active in global mergers and acquisitions in the food ingredient industry. He confirmed the value of food ingredient companies in recent years – outperforming wider capital markets.

Our London tour ended with a presentation by Niels Ladefoged, Chairman of the Danish Club of London. He gave us an amusing, entertaining, and informative history lesson into the Danish mindset of cooperation, innovation, and trust, which prepared us well for the next leg of our tour.

The group moved on to Copenhagen, Denmark, as many key players in the global food ingredients business are located in that region. Despite a relatively small geographic area and a high cost of wages and benefits, Denmark has developed a tremendous value-added food industry. The cornerstones of this industry seemed to be innovation, research, development, collaboration, and trust. Over and over, we saw examples of failing being a stepping stone to the next invention, skilled employees moving from one company to another for “cross-training”, and cooperation between educational institutions and private companies. It was thought-provoking, to say the least.

The first company we met with was Chr. Hansen, a global bioscience company, developing cultures, enzymes, and colours for the dairy, meat, wine, human health, and animal health industries. One of their stated focuses was to meet the world demand for natural “clean” ingredients, which I found interesting as many of their products are genetically engineered (such as rennet). They are Number 1 or 2 in all of the sectors in which they operate, yet view partnering with smaller firms and universities as a key to their competitive advantage.

The next company we visited was Danisco, which was purchased by DuPont in 2011. DuPont is aggressively acquiring other companies, as evidenced by their merger with Dow 10 days later. Their plan is to create a specialty nutrition component from the Danisco portion, but we may have to stay tuned for that.

Our best meeting was with our next company, Novozymes. We met with Frank Hatzack and his Innovation Development team, a group of brilliant, creative, curious minds who build on each other’s thoughts and ideas. Their focus is on human and animal nutrition and the world demand for protein, and plant protein in particular. They talked about how they attract innovative ideas and thinkers using various social media and educational platforms, yet avoid acquisitions as they did not want to “dilute” their own profitability.

Our next series of meetings was held at the Agro Food Park in Aarhus, which seemed to be the place for which all of our previous learning had prepared us. The park is comprised of over 60 companies and has more than 900 employees. It is a unique mix of large established companies, knowledge institutions, startups, specialized service providers, and risk capital providers, with a management structure designed to encourage collaboration. Companies that choose to locate in the agricultural park do so knowing that they will be encouraged to cooperate, collaborate, and innovate with others. Events are regularly held to encourage personal networking – even the central cafeteria was designed with that in mind.

One of the main companies we met with at the park was DC Ingredients, a division of Danish Crown. DC was created to innovate and find value in the offal that they previously paid to have removed. Today, the high-end ingredient business generates more value than the meat from the animals! Innovation at its finest!

We finished our tour with a visit to Tetra-Pak World Headquarters in Malmö, Sweden. Tetra-Pak has a unique business model, in that they sell not only the packaging, but the machines to do the packaging, which sets customers up as life-long partners. In addition to presentations about the company, they allowed us to visit their display room with multiple walls showcasing many of the products they have packaged around the world, which was truly amazing. They also treated us royally, even flying the Canadian flag outside their headquarters to greet us!

So, our takeaways and reflections from the tour? Can anything Denmark is doing be duplicated in Alberta? Can we focus more on adding value to the many crops we grow, rather than simply loading them into ships and shipping them afar? I say yes.

The keys seem to lie in truly encouraging research, development, and innovation. One thing that stood out to us was the close relationship between research in educational institutions in Denmark and resulting product development in companies. In Canada, it seems that most academics are rewarded by being published in journals, rather than by seeing research commercialized. Both are important.

Another difference was in the amount of budget that was dedicated to R&D – far higher than many of our industries. How do we encourage this? This may be a place for government incentives to better operate.

More than anything, we need to encourage a culture of innovation to develop. A statement on the Agro Food Park’s website read: “Denmark cannot compete on low production costs of wages nor the production areas, and therefore it is of utmost importance that we maintain our forces: innovation and development.” Our industry in Alberta is definitely growing, and the political will exists to see much more economic development. I believe the crop commissions can play a valuable part in this.

I wish to thank the Alberta Crop Industry Development Fund (ACIDF), Dennis McKnight – The Innovators, Dr. David Hughes Emeritus Professor of Food Marketing, Imperial College, London, and Darren Walkey – Business Director, U of A, Faculty ALES for the design, development, and organization of this tour. I look forward to seeing value continuing to rise from all that we learned.