all tech

Question 1

Economic

Answer 1

Global production of animal feed is rising → due to global population that was growing and rising incomes and living standards
failing oil prices weakened ethanol demand which allowed ALLtECH to explode other markets

Question 2

political

Answer 2

Commercial feed production happened in over 140 countries but was concentrated in a handful: us and china, the f was consolidating → due to gvt policies

Question 3

technologcial

Answer 3

Altech has 8 patents for its top selling product mycosorb
Using technology on the farms
Research and development

Question 4

sociocultural

Answer 4

why the commercial feed industry was consolidating→ generational shifts in mill ownership
Farmers did not trust new products, hesitant to change, large organizations, trusted distributors

Question 5

Sustainable physical

Answer 5

Shift towards being environmentally friendly

Question 6

Industry analysis

Answer 6

From 1975 to 2016, global commercial production of animal feed rose from 290 million metric tonnes (MT) to over 1 billion MT (see Exhibit 1)
Global feed market: valued at 460 billion
Global production of animal feed is rising → due to global population that was growing and rising incomes and living standards (mentioned above )
Future demand was going to come from developing countries with those with food deficits or large middle classes
Commercial feed production happened in over 140 countries byt was concentrated in a handful: us and china, the industry was consolidating → due to gvt policies and generational shifts in mill ownership , many players buying many parts of the supply chain

In past 10 years, more new additive products have come to the market. The industry has been bombarded and new copycat products have come. Also less research has been done before and the quality is declining

low margins

Question 7

global

Answer 7

Top Producers: The industry is concentrated, with China and the United States accounting for about one-third of total feed production volume. Over 140 countries produce commercial feed, though major production is centered in a few.

Question 8

The industry was consolidating

Answer 8

This means that smaller mills were struggling bc they didnt have the resources for operations , they couldn’t achieve economies of scale or invest in automation
Larger feed mills, particularly those that invested in automation and scaling up their operations, were able to achieve significant efficiency gains. For example, a feed mill with a 100,000 metric ton (MT) capacity in a mature market(like the U.S. or Europe) might only need three workers to run it, compared to 45 workers in a similarly sized mill in China (a few points about the industry)
Factors that contributed to the consolidation : gvt policies and generational ownership

Question 9

Trends

Answer 9

Improving animal welfare and food safety
environmental impacts
algae as a substitute–> an environmentally friendly substitute for fish oil
emerging digital technologies to improve the sustainability, safety and efficiency of livestock farming → video cameras, robots , keenan feeders wagon (acquired by alltech, which could detect small errors )
Trend of consolidation
trend of copycat

Question 10

xSuppliers

Answer 10

All tech has limited power because they depend on intermediaries like feed companies and the nutritionists to reach farmers
The blurring of lines between the links in the value chain makes it hard for all tech to compete
Buyers have significant influence
Supplement companies: they sell their products to feed companies and premix companies (premix are intermediaries that sourced and combined third party supplements into new blends for onward sale)–> they are suppliers for feed supplements to feed companies and premix companies
All tech took on a role of becoming the distributor in recent years
Feed companies sell into the marketplace through distributors and dealers, co ops and directly to farmers
Industry consolidation and vertical integration had blurred the lines between some links in the value chain as some players would participate at several stages like cargill
the dependence on intermediaries (such as feed companies and nutritionists) to reach farmers. These intermediaries, while necessary, created a bottleneck in Alltech’s ability to directly communicate the benefits and value of its products to the end customers—farmers. → suppliers do not have so much power whereas all techs buyers do have a lot

Question 11

Buyers: how do each have power

Answer 11

The farmers (very price sensitive, nutritionists have to be judicious when recommending feed supplements , hard to persuade the farmers to pay for ingredients that were novel or expensive , they also don’t like new things)–> ALLtech lacks direct relationships to them
Feed companies blend materials together with additional ingredients that are developed by supplement companies :
Feed companies directly buy from all tech and then sell to the farmers so they have a lot of power , direct connection to farmers
Feed companies have power because they can influence farmers awareness of and willingness to pay for different feed supplements
Premix companies also buy from all tech→ Premix companies typically operate on slim margins (around 4% EBITDA), so they have limited flexibility on pricing, which restricts Alltech’s ability to raise prices for its products and impacts profitability
Farmers also rely on the nutritionists for their info
Distributors
Dealers
Co ops
Alltech relies on feed and premix companies to distribute its supplements, and consolidation means that these intermediary customers are growing larger and potentially gaining more bargaining power.

Question 12

Substitutes

Answer 12

Algae to replace fish oil → still being developed
Feed companies were increasingly reluctant to buy alltechs products, often using lower cost subs instead
“The ability to substitute a program is much more complex for a competitor than the ability to replace a product”–> not a high threat of subs
Insects, seaweed, algea
Overall, not a huge threat

Question 13

Threat of rivalry

Answer 13

Large players are able to participate at severagal stages due to consolidation and vertical integration→ Cargill→ Cargill operates from raw material trading (grain and oilseed) to premix and feed production, and even animal protein production. Such integration allows major players to capture more of the value chain and streamline processes, while potentially increasing their influence over market prices and distribution
Nurteco and cargill are two big competitors
They are large animal nutrition and health companies
Could move to consolidate downstream control and lock alltech out of the market
Growth is slow→ creates more competition
High Rate of Product Entry and “Me-Too” Products: The industry faces a rapid influx of new products and “me-too” products that replicate established supplements. This leads to increased competition, especially as lower research standards in some companies lead to more undifferentiated products in the market.
Limited R&D and Declining University Research: Decreased quality in academic research and limited R&D by companies create a landscape where product differentiation becomes harder to achieve. This intensifies rivalry as companies compete on price and established relationships instead of unique product innovations
Companies compete heavily on innovation, and those that lag in product advancement risk losing market share. To remain competitive, firms must frequently introduce new, high-performing products

Question 14

New entrants

Answer 14

There are barriers-> you need good relationships so companies coming in wont have this
Need high capital requirements (thats why small mills were struggling)
Need investment in r and d→ The industry requires significant R&D investment, particularly for innovative supplements that address specific animal health needs,
companies like Alltech hold patents on their products, creating legal barriers and protecting their market share against new entrants.
Economies of Scale and Consolidation: Larger firms like Cargill operate at multiple levels in the value chain, from feed production to animal protein production. This vertical integration, coupled with industry consolidation, can make it difficult for smaller entrants to compete on price or distribution reach
Relationships with farmers→ they dont trust new people

Question 15

Opportunities

Answer 15

Investing in developing emerging markets as there is more growth→ if we look at exhibit 5 we can see how the average growth is the greatest in the middle east and africa so all tech can expand there
Growing in china for crop science and to became an environmental services company in china, providing crop and animal nurtiriton in an envrionmentlaly sustainable way (they like the ace principle so expand there even more)
- china was also bad at innovation

Building a facility in china to manufacturer products domestically that alltech couldnt import
Go into technology→ emerging digital technologies that could improve sustainability, safet and efficiency of livestock farming (robots, sensors, keenan feeder wagon)
Lyons expressed confidence in Alltech’s ability to become a leading supplier of fishmeal replacements, particularly in Brazil, where they could leverage local resources like sugar for algae production
Acquiring more small owned farms → building more relationships

Question 16

Threats

Answer 16

There were chinese regulations limiting foreign ownership of feed mills
Other regulations on brazil or china
Competition: cargill and (add the other company) Could move to consolidate downstream control and lock alltech out of the market
Farmers could become dependent on certain companies and nutritionists or be too price sensitive
ME TOO PRODUCTS—> many new products but less research
the industry being super skeptical of all tech (they dont like change and dont want to adopt all tech products)
lakeland feed company threat of company image

Question 17

Your overall conclusion about the company’s external environment: explain your overall assessment of the industry based on the analysis done and what it would take to succeed as a firm in this industry (i.e. identify key success factors)

Answer 17

Marketing to feed companies?
have to educate the marker about its products, have to make alltech a premium player , the industry does not like new tech advancements and alltech wants to bring them in, so they have to communicate with the market and explain what they do
2) Relationships
data doesnt matter to farmers, they want the trust of nutritionists
have relationships with suppliers so that alltech can sell through them, acquiring more small owned farms
Success in this industry requires building and maintaining trust with farmers and other intermediaries, like nutritionists and feed companie
Significant capital
Investing in research and development→ not too mich else about this topic
High capital is needed for manufacturing facilities, distribution, and R&D.
Distribution channels → value chain presence or will be locked out
Need to have direct channels to farmers

Question 18

Strengths

Answer 18

Innovation and R&D:
Alltech is a leader in yeast fermentation and natural feed solutions, which are its core competencies. Its focus on cutting-edge biotechnologies sets it apart from competitors.
The company’s “ACE principle” (for the Animal, Consumer, and Environment) reflects its commitment to innovation and sustainability, helping maintain its reputation as a forward-thinking organization.

Global Presence:
Operations in over 120 countries provide Alltech with a broad market reach, allowing it to customize solutions for local markets and adapt to varying customer needs.
- also lessens the risk like if one market does bad another one will be doing well

Brand Reputation and culture
Alltech has built a strong brand image as an innovator and advocate for sustainability in the feed and nutrition industry, earning trust among its customers.
- premium payer im the indytstru

Strong Relationships:
The company’s ability to establish trust with niche communities, like Mennonites and Hutterites, underscores its relational strength and customer focus.

adapting
- they wanted to part of the algae substitute
- they realized the solution selling wasn’t working for one group and tired it with other communities and it worked

marketing ?

• patented their products
• specialized talent program
• first mover in live yeast
• put customer needs first
• optogan
• Ridleys

Question 19

Weaknesses:

Answer 19

Integration Challenges:
Acquiring feed companies has created tension between Alltech’s high-margin supplement business and the low-margin, traditional feed business. This complicates integration efforts and dilutes focus.
when they acquired us feeds–> they underestimated us feeds reliance on third party distributors

On-Farm Presence:
Compared to competitors, Alltech lacks strong on-farm distribution networks, limiting its ability to directly engage with end-users like farmers and nutritionists.

Dependence on acuiqisitons :
The acquisition-heavy strategy introduces financial and operational risks, particularly if integration fails or margins remain low in acquired companies.

too focused on mature markets

Question 20

Primary Activities:

Answer 20

supply chain managenebr Sources high-quality raw materials, like yeast cultures and vitamins. ***88
Maintains sustainability focus through strong supplier partnerships.

Operations: ***
Its fermentation-based production is a key differentiator, emphasizing natural and sustainable processes.
Innovative fermentation processes for proprietary products.
Focus on eco-friendly, natural solutions to differentiate from competitors.

distribution
Collaborates with feed and premix companies to create customized blends.
Major global presence.
4-6 months could take

Marketing & Sales:
Strong focus on marketing its innovative products and principles (e.g., “ACE”), appealing to environmentally conscious consumers.
visit their customers personally
premium player in the industry
high profile sporting events
held events

Service:
Alltech provides tailored solutions and support for its customers

Question 21

Support Activities:

Answer 21

Finance:
They don’t want to go public, family owned,
didn’t want to do acquisitions at the start

Human Resources:
A focus on maintaining a cohesive company culture supports long-term success.
To ensure a consistent brand image and better experience for their customers all Alltech employees have to attend a 3 day cultural training day called “back to basics”
they hire people who are recent graduates and were attracted many people from dif countries

Question 22

Sources of Competitive Advantage

Answer 22

Innovation Leadership:
Alltech’s expertise in yeast fermentation and natural feed solutions gives it a distinct edge in the market, aligning with trends toward sustainability and premium nutrition.

Reputation and Trust:
Its strong relationships with niche communities and its commitment to environmental and social responsibility build customer loyalty.

Global Reach:
Operating in over 120 countries allows Alltech to tap into diverse markets and growth opportunities.

Question 23

Competitive Advantage:

Answer 23

Alltech has a clear competitive advantage in innovation and sustainability, setting it apart in an industry dominated by cost-focused competitors.
However, this advantage is under pressure from challenges in integrating low-margin acquisitions and gaining on-farm presence.

Question 24

Overall Position:

Answer 24

Alltech is strong in the feed and nutrition industry due to its innovation-driven approach and global presence. However, its long-term competitiveness depends on addressing integration issues and expanding its reach to farmers and nutritionists.

Question 25

Core Competencies:

Answer 25

1. Innovation in Yeast Fermentation
   Valuable: Yeast fermentation aligns with increasing consumer demand for sustainable and natural feed solutions, giving Alltech a unique edge in the market.

Rare: Few competitors have comparable expertise or the same technological know-how in natural fermentation processes.

Costly to Imitate: Alltech has invested years and 10% of its revenue annually into R&D, making it extremely resource-intensive for others to replicate.

Nonsubstitutable: No other technology delivers the same combination of sustainability, efficiency, and product quality in the feed supplement industry.

2. Global Presence and Market Reach
   Valuable: Alltech’s operations in 120 countries and strong relationships with niche communities (like Mennonites and Hutterites) ensure market adaptability and resilience.

Rare: While large companies operate globally, Alltech’s ability to tailor its approach to diverse markets and maintain trust in niche communities is uncommon.

Costly to Imitate: Establishing a global network of 100 manufacturing plants and building long-term customer relationships is highly resource-intensive.

Nonsubstitutable: The combination of global scale and local expertise is essential for Alltech’s success and not easily replaced.

3. Sustainability and “ACE Principle”
   Valuable: Sustainability practices are increasingly important to consumers, regulators, and partners, giving Alltech a competitive advantage.

Rare: Alltech integrates sustainability into its core operations, whereas many competitors focus solely on cost.

Costly to Imitate: Decades of commitment and brand trust in sustainability cannot be easily replicated without significant time and resources.

Nonsubstitutable: The ACE principle (Animal, Consumer, Environment) is deeply embedded in Alltech’s brand and business model, making it irreplaceable by competitors.

culture ?

Question 26

business strategy

Answer 26

Differentiation strategy
Alltech held 8 patents for its top selling product Mycosorb, which was used to feed pets→ it helped absorb mycotoxins
Offered different supplement packs such as the fertility packs for farmers that wanted to aid their animals fertility
Alltech needed to educate their consumers about their benefits of their products and why their products were worth the higher premium they charged their products at
Their goal was to create innovations that helped with animal welfare, food safety, reducing emission and lessened their environmental effects
Their new farm tech could potentially generate 240 billion dollars in revenue, this tech included Keenan’s feeder wagon that used technology to control and track feed rations and formulations that were given to animals by the farmers
Ever since the start of their company their strategy has been innovation based, they first began with introducing smaller innovations, for example, unlike other companies who put dead yeast in supplements they put live yeast in dairy.
They follow three main principles of using innovation to create products that are safer for animals, consumers and the environment (ACE)
Their marketing strategy was extremely important as farmers were skeptical about trusting larger corporations that charged higher prices, so they need to use marketing to convince potential consumers of the value their supplements bring
Their marketing strategy is to place Alltech as a sophisticated and high class supplement company → they host a variety of events to showcase further convey such as more luxurious sporting events and social events
“10% of the company’s annual gross revenue was invested in R&D”
“No product to date had been able to match the nitrogen release curve associated with Optigen” → Optigen is protein supplement for cows that used nitrogen as its base (no other product was similiae to it)
In their Center for Animal Nutrigenomics in Kentucky they use DNA microarray technology to study the biology of animals and how nutrition affects their biology , the diseases they get infected with, theri growth, and more.
Another innovation was Algae based supplements as fishmeal replacement
Their supplements were very big on being naturally based rather than chemically based
They are a private company and have no plans on going public, their strategy is to grow opportunistically and fill the needs of customers where they arise
In 1997 they decided they has too many products in their line, this was too expensive for them as these products had high r&d costs, therefore they limited their product line as many other companies with differentiated strategies do

Question 27

elements of cost leadership

Answer 27

Differentiation strategy as shown earlier but also try to accomplish economies of scale through opening in many markets
They are expanding in many different countries- they currently operate in emerging markets such as China and Brazil, the US is also a big player for them
By the 1990s they had entered 15 countries which included post soviet countries and by 2017 they had sales in 120 countries

Question 28

Downstream vertical integration

Answer 28

The industry was consolidating, many Alltech copycat products were benign introduced into the market, theres more want for animal based protein as emerging markets are becoming wealthier, and less research being done by companies the speed at which products were being introduced to the market was extremely fast. Alltech craved the trust based relationships with farmers that only distributors had, their industry was slow growing and due to their slowing profit and increasing lower cost substitutes, they decided to partake in a series of acquisitions. They decided to grow their company through acquisitions aka vertical downstream integration.
This way Alltech could also educate the farmers on their products directly as they acted as their own distributors now
The first two acquisitions Alltech pursued were of small companies the first was US Feeds, and the second was a small horse feed company in florida. Neither of these acquisitions went well as the previous companies had bad reputations are relied on distributors heavily
Next they acquired Eastman feeds which is a canadian based in canada, this was more successful as they were more familiar with the customer base Eastman has previously had
To continue with their acquisition strategy they would require outside financing so they went into debt to acquire the necessary funds for financing
In 2015 they acquired a much larger company based in the US, this acquisition was much larger than the companies they had previously acquired, the company was named Ridley’s. This acquisition could allow them to increase their revenues by 50%–> Many members of the Alltech company were worried about this acquisition as Ridley’s did not partake in the same high innovation strategy that Alltech did. They did end up acquiring Ridley’s as they were worried other large companies would also pursue vertical downstream integration and shove them out of the market completely if they did not take big leaps in this direction as well.
They decided marketing was very important as they needed to convince farmers to steer away from buying the lowest cost feed, rather to look at the benefits of buying higher cost but better quality and value feed and supplements.
By 2018 they were working on many more acquisition deals, especially with smaller family owned farms as many of these farmers knew that Alltech was also family owned.
Lyon (the owner) was set on downstream vertical integration as he believed this was the only way for alltech to truly grow, and develop the relationships with customers it needed to thrive and ensure they had market access.

Question 29

horizontal diversification

Answer 29

diversified in other divisions like crop science, beverage and life science
becoming an envuormntal services company\
were internal to all techs culture

combined sales of 150 million

Question 30

corporate level

Answer 30

horizontal
solution selling: want to bundle products into purpose specific mixes but feed nutriosinfsts didnt like this

Question 31

why do acquisitions

Answer 31

feed companies didnt want to buy their prodict
they waned to get closer to the consumer and grow faster
wanted to acquire Ridley to become more present on firms and become more credible

Question 32

information systems

Answer 32

all tech had always been data driven
some argued that all tech should invest in systems to empower farmers to make data driven purchase decisions
these on farm analytics could measure the links between inputs and outputsf

Question 33

acquisitions

Answer 33

acquired us feeds
Ridleys: would Increase all tech revenue and give it on farm presence and solidify its position as a credible player in feed but was risky because could take on debt

Question 34

big six: cooperative

Answer 34

downscoping : getting rid of non core activities
wanted to just focus on products with the biggest sales