Tate & Lyle Plc · LSE:TATE
Tate & Lyle — Investor Day (December 2012)
72 slides from Tate & Lyle's investor day presentation, Dec 6, 2012
Slide 1: Capital Markets Day
Capital Markets Day Chicago, 6 December 2012
Slide 2: Welcome!
2 TATE & LYLE
Slide 3: Your hosts for the day
Your hosts for the day…. Olivier Rigaud Karl Kramer President, Speciality President, Innovation and Food Ingredients Commercial Development Dr. Mike Harrison Dr. Judy Whaley Luis Fernandez Justin Kanthak Senior Vice President, Vice President, Vice President, Manager of Culinary New Product Developme
Slide 4: Today is about Speciality Food Ingredients, innovation and our new Centre
Today is about Speciality Food Ingredients (SFI), our innovation process and, most importantly, what our new Centre is all about We will tell you…. You will be able to…. Where we play in SFI See our labs and equipment What we see as SFI’s growth drivers Meet many of our people Our approach
Slide 5: In 2009/10, we undertook a detailed analysis of our business
In 2009/10, we undertook a detailed analysis of our business and concluded that…. Attractive market Solid building blocks in place We should focus on Speciality Food Ingredients Opportunities for further growth Clear understanding of sources of competitive advantage Operating model and foc
Slide 6: Tate & Lyle's competitive advantage comes from a unique combination
Tate & Lyle’s competitive advantage comes from a unique combination of…. Market Supply Chain Position Management Tate & Lyle’s sources of competitive advantage Technical Applications Expertise Capabilities Informs our strategy of Focus and Depth 6
Slide 7: We measure SFI's progress in four main areas
We measure SFI’s progress in four main areas Be a leader Grow above Expand our Be recognised as in our chosen the underlying emerging markets an innovative, segments market rate presence and business high-performance company by our customers Status: Status: Status: KPIs: #1 SPLENDA® Sucralose Market
Slide 8: SFI has delivered growth since its inception in May 2010
SFI has delivered growth since its inception in May 2010 Sales (1) Adjusted operating profit (2) £214m £887m 6% 15% £788m CAGR CAGR £163m FY10 FY12 FY10 FY12 (1) Sales figures are for financial years ended 31 March 2010 and 31 March 2012 (2) Before exceptional items and amortisation of acquired inta
Slide 9: Agenda
Agenda Subject Timing Presentor(s) Welcome, safety briefing and introduction 08.00 – 08:15 Javed Ahmed Speciality Food Ingredients 08:15 – 09:10 Olivier Rigaud Commercial and Food Innovation Center 09.10 – 09:30 Karl Kramer Interactive session 1 09:30 – 10:30 Teams Coffee Break 10:30 – 10:45 Innovat
Slide 10: The global SFI market is large and growing
The global SFI market is large and growing Global Speciality Food Ingredients Market c.US$35 billion (1) Other 11% Texturants 20% Growing at 4-5% per annum Strong, underlying consumer trends Fragmented market Sweeteners Flavour 33% 14% Higher growth potential in emerging markets Functional F
Slide 11: Tate & Lyle competes in three market segments today
Tate & Lyle competes in three market segments today Segment addressable market (US$) Speciality Texturants starches Other 5% 11% Hydrocolloids Speciality food starches $7.0 billion 10% Dairy stabilisers Emulsifiers 5% High Intensity Sweeteners Sweeteners 3% Flavour 33% Speciality SPLENDA® Sucr
Slide 12: These segments address strong, underlying consumer trends
These segments address strong, underlying consumer trends Convenience Health and Wellness Natural 24/7 lifestyles increasing Greater understanding of the Trend towards natural, demand for processed foods link between diet and health ‘cleaner label’ foods Convenience product launches Global populatio
Slide 13: These trends are increasingly pronounced in emerging markets
These trends are increasingly pronounced in emerging markets Convenience Health & Wellness Chinese packaged food market Number of diabetes sufferers US$ billion(1) (aged 20-79, in millions) 75.8 China 130 90 India 101 CAGR 61 16% 30 US 24 Russia 14 31.1 13 CAGR Brazil 20 13% 12 16.9 16 Mexico 10 Ban
Slide 14: These trends create important challenges for our customers
These trends create important challenges for our customers GLOBAL TRENDS WHAT OUR CUSTOMERS WANT FROM US ‘NON-NEGOTIABLES’ Convenience Shelf stability Taste Calorie-, Fat-, Salt-reduction Health and Wellness Texture Added nutrition Quality Cleaner label Natural Food Safety Cost optimisation 14
Slide 15: Portfolio and technical capabilities well-placed to provide solutions
Tate & Lyle’s portfolio and technical capabilities mean we are well-placed to provide the solutions our customers need Natural Speciality Speciality Stabiliser HIS(1) sweeteners starches systems Shelf stability Calorie-, Fat-,Salt- reduction Added nutrition Cleaner label
Slide 16: Speciality Food Ingredients
Speciality Food Ingredients The Business Starch-based speciality ingredients High intensity sweeteners Food systems
Slide 17: SFI's sales by product category and region
SFI’s sales by product category and region Sales by product category (1) Sales by region (1) Rest of Starch-based World Emerging Food speciality 5% Markets Systems ingredients 15% 22% 56% North America Europe & 54% Middle High intensity East sweeteners 26% 22% (1) Sales figures are for financial yea
Slide 18: SFI has a global network serving customers' needs
SFI has a global network serving customers’ needs Moscow, Russia Lübeck, Germany Food Systems Regional Sales Office Princeton, NJ Koog, NL Food Systems/ Innovation Centre Sycamore, IL Applications Lab Speciality Starch Food Systems Mold, UK Food Systems Houlton, ME Speciality Starch Lille, France Ch
Slide 19: Starch-based Speciality Ingredients
Starch-based Speciality Ingredients Speciality food starches Speciality sweeteners Soluble corn fibres
Slide 20: Starch-based speciality ingredients: 3 categories, 19 product families
Starch-based speciality ingredients consist of 3 main product categories within which there are 19 product families Main product categories and Product families grouped number of product families by operating margin (1) 7 Speciality food starches 11 5 4 3 Speciality sweeteners 5 Speciality fibres 3
Slide 21: Starch-based ingredients are highly versatile across applications
Starch-based speciality food ingredients are highly versatile and are used in a broad range of applications Starch-based speciality ingredient sales by end-use category (1) Speciality starch gives a Speciality starch used as an emulsifier gelling effect and thickener in nutritional beverages Other C
Slide 22: Solid positions in speciality food starch and sweeteners
We have solid positions in both speciality food starch and sweeteners Speciality food starches Speciality starch-based sweeteners Global sales in this category are estimated at Products in this category include crystalline US$1.6 billion and growing at 4-5% p.a. fructose and maltodextrins Tate
Slide 23: Demand for fibre is growing as benefits are better understood
Demand for fibre is growing as benefits are becoming better understood Soluble Fibre Category Benefits of Tate & Lyle’s polydextrose US and Western Europe (1) and soluble corn fibre products Beta- Other Boost fibre content glucan Resistant starch 5% 2% 7% Can help reduce calories Polydextrose 10% Pr
Slide 24: Global consumer fibre intake is below recommended levels
Global consumer fibre intake is below recommended levels Fibre intake below recommendations Those intending to consume more fibre Adult fibre intake by country (1) % who buy/would buy fibre-fortified food (2) France 59% Italy Recommended range Spain 43% 36% 39% UK 28% 30% Netherlands Greece 18% Germ
Slide 25: Tate & Lyle is a leading global speciality starch ingredient player
Tate & Lyle is a leading global speciality starch ingredient player Market Position Supply Chain Management Global #1 in crystalline fructose Substantial long-term corn Global #2 in speciality food starch procurement experience Global #2 in polydextrose Significant cost-efficiency due to b
Slide 26: High Intensity Sweeteners
High Intensity Sweeteners SPLENDA® Sucralose PUREFRUIT™ Monk fruit extract TASTEVA™ Stevia Sweetener
Slide 27: Strong positions in two growing high intensity sweetener segments
Tate & Lyle has strong positions in the two growing segments of the global high intensity sweetener market Global High Intensity Sweetener Market 2011, US$1.2billion (1) Ace-K Neotame 7% 1% Cyclamate 12% Sucralose Sucralose and natural high 34% intensity sweeteners gaining market share from other
Slide 28: Sugar replacement continues to be a key growth opportunity
Sugar replacement continues to be a key growth opportunity Considerable opportunity for …both for cost optimisation sugar replacement… and calorie reduction Global Sweetener Volumes (1) SPLENDA® Sucralose is 600 times Million Tonnes Sugar Equivalent sweeter than sugar 152 SPLENDA® Sucralose is 2-3 t
Slide 29: SPLENDA Sucralose, PUREFRUIT and TASTEVA have strong benefits
SPLENDA® Sucralose, PUREFRUITTM and TASTEVATM have strong benefits SPLENDA® Sucralose has a functional advantage PUREFRUITTM and TASTEVATM have a over other high intensity sweeteners taste advantage over Reb A 97 Aspartame Saccharin Reb A 97 Taste Taste profile profile Stability
Slide 30: Leading global provider of sweetener solutions
Tate & Lyle is a leading global provider of sweetener solutions Market Position Supply Chain Management Strong positions in the two growing Two-plant sucralose model provides segments of the high intensity unmatched security of supply and sweetener market (sucralose and traceability natural HIS)
Slide 31: Food Systems
Food Systems Stabiliser systems Customised blends
Slide 32: Food Systems are customised blends used in many applications
Food Systems are customised blends used in many applications What is a food system? Food Systems Sales Combination (blends) of ingredients By end-use category in FY12 Customised for specific applications What ingredients do we blend? Other (inc. Locust Hydrocolloids such as starch, pectin, Bea
Slide 33: Food Systems primarily serve SME customers
Food Systems primarily serve SME customers Key functionality Food Systems Sales By region in FY12 (1) Stabiliser systems used to: − “Hold together” ingredients − Maintain product consistency Rest of − Add texture and mouth-feel World 9% Also flavour and sweetener systems Emerging Markets 7% Mark
Slide 34: Food Systems operates locally but shares recipes globally
Food Systems operates locally but shares recipes and expertise globally Lübeck, Germany Food Systems Europe Mold, UK Food Systems Europe Bergamo, Italy Sycamore, IL Food Systems Europe Food Systems Americas Noto, Italy Food Systems Europe Johannesburg, South Africa Food Systems Africa & Middle East
Slide 35: Technical expertise, local knowledge and quality assurance bring advantages
Technical expertise, local knowledge and high levels of quality assurance bring key competitive advantages for Food Systems Market Position Supply Chain Management Global #2 in dairy stabilisers Supply of some ingredients Strong positions in countries such (e.g. starch) within Company as USA,
Slide 36: Tate & Lyle's ingredients at work: yoghurt example
Tate & Lyle’s ingredients at work Yoghurt Example HAMULSION™ Food system SPLENDA® Sucralose Thickens, stabilises, optimises cost Sweetens without adding calories and provides consistent mouthfeel (one all-inclusive solution) REZISTA™ Crystalline fructose speciality food starch Complements SPLENDA® S
Slide 37: Tate & Lyle has strong positions in its chosen segments
Tate & Lyle has strong positions in its chosen segments Sweeteners Texturants Health & Wellness Natural High intensity high intensity Speciality Speciality Food Soluble Sodium sweeteners sweeteners sweeteners food starch systems fibres reduction Tate & Lyle Cargill -- DuPont (Danisco) -- -- -- -- In
Slide 38: In summary
In summary….. Tate & Lyle has strong market positions and deep expertise in large growing markets which are underpinned by long-term structural global consumer trends 38 38
Slide 39: Agenda
Agenda Subject Timing Presentor(s) Welcome, safety briefing and introduction 08.00 – 08:15 Javed Ahmed Speciality Food Ingredients 08:15 – 09:10 Olivier Rigaud Commercial and Food Innovation Centre 09.10 – 09:30 Karl Kramer Interactive session 1 09:30 – 10:30 Teams Coffee Break 10:30 – 10:45 Innovat
Slide 40: What we set out to achieve
What we set out to achieve…. Combine science with commercial Focus Customer Speciality food Collaborative Leading-edge Solutions Responsible Accessible Culture Workspace Creative Open High performing Collaborative Global Flexible Become the Partner of choice 40
Slide 41: The Centre is focused on the customer, food and science
The Centre is focused on the customer, food and science 3rd Floor Six research laboratories each dedicated to an area of scientific focus/capability 2nd Floor Offices, open plan workspace, meeting rooms, video conferencing 1 2 3 4 5 1st Floor 1. Pilot plant 2. Processing labs 3. Culinary 4. Sensory
Slide 42: Significantly more capabilities to serve our customers
Today, we have significantly more capabilities to serve our customers New to Tate & Lyle Customer Benefits Full sensory capabilities Faster, more informed decision making Full culinary capabilities New ways to interact and ‘ideate’ High tech food processing labs Higher quality prototypes
Slide 43: Customer interaction and feedback has been very positive
Customer interaction and feedback has been very positive to-date Customer comments 500%(1) “Tate & Lyle has enhanced its value as a partner of choice” Customer “I have worked with Tate & Lyle for events and many years and really saw a unique and interactions different approach from your team” “The c
Slide 44: Four key components of the Centre
Today you will experience the four key components of the Centre CUSTOMER 44
Slide 45: Innovation at Tate & Lyle
Innovation at Tate & Lyle Capital Markets Day, Chicago 6 December 2012
Slide 46: SFI and ICD look at same customer challenges through different lenses
SFI and ICD look at the same customer challenges but through different lenses Shelf stability Texture Cost optimisation Taste Added nutrition Food Safety Cleaner label Quality Calorie-, Fat-, Salt-reduction Innovation and Speciality Commercial Development Food Ingredients Innovation Market opportuni
Slide 47: A more focused, rigorous, customer-centric approach to innovation
In the last 2 years a more focused, rigorous and customer-centric approach to innovation has been established Enhance collaboration and understanding Be more accessible and flexible Customer -centric Build a global mindset Create environment for innovation Enabling infrastructure Leading-e
Slide 48: R&D and commercial functions combined into one team
R&D and commercial functions have been combined into one team to drive innovation and bring new products to market Innovation and Commercial Development Research & Platform Open Global Marketing Development Management Innovation Clear focus on three SFI platforms Sweeteners Texturants Health & Welln
Slide 49: Five core scientific competencies key to innovation
Five core scientific competencies have been identified as key to delivering innovation in our three growth platforms Growth Sweeteners Texturants Health & Wellness Platforms Key Scientific Competencies Bio- Formulations Separations Particle Organic Chemistry Science Science Design Chemistry 49
Slide 50: ICD's resources significantly reshaped and strengthened
ICD’s resources have been significantly reshaped and strengthened Focused resources on ICD’s Strengthened skills, experience core scientific competencies and commercial expertise % of scientists in ICD % of staff % of scientists in ICD in ICD 31% 57% 26% 44% 40% 16% 32% 15% 13% 24% 11% 10% 9% 9% Par
Slide 51: R&D spend is broadly unchanged but now more focused
R&D spend is broadly unchanged but is now more focused R&D spend unchanged from 2008 R&D focus is now on SFI R&D expenditure FY 2008-2012 (1) % R&D spend by business unit (2) £29m £28m £29m £26m £25m FY 2008 Bulk Ingredients 42% 58% Speciality Food Ingredients FY 2012 15% Bulk Ingredients Speciality
Slide 52: New processes ensure rigour and discipline in decision-making
New processes have been implemented to ensure rigour and discipline in decision-making Stage Gate process Prioritises ideas, time and resources Risk-reward model Helps maintain a balanced portfolio Financial model Ensures rigorous standardised evaluation of projects Product launch calendar Co-ordina
Slide 53: Stage Gate prioritises ideas, time and resources
Stage Gate is a process that prioritises ideas, time and resources Stage Gates 0 1 2 3 4 5 Business Idea Definition Feasibility Capability Launch Case For every 100 ideas at Stage 0, typically, 30% will go to Stage 1 and become defined projects; of these, about 10% will reach Stage 5 and result in a
Slide 54: We categorise innovation in three broad categories
We categorise innovation in three broad categories Innovation Spectrum Incremental Next Generation New Projects typically with less Take existing technology More complex projects, complexity e.g. line extensions or products to ‘next level’ typically ‘new to world’ Estimated percentage split by categ
Slide 55: We regularly evaluate balance of risk and value in our pipeline
We regularly evaluate the balance of risk and value in our pipeline GREATER RISK HIGH RISK LESS REWARD HIGH REWARD REASSESS/KILL NEW RISK LOW RISK HIGHER THAN AVERAGE REWARD LESS REWARD LESS THAN AVERAGE RISK INCREMENTAL NEXT GENERATION RETURN Innovation Incremental Next Generation New spectrum 55
Slide 56: Metrics used to measure our progress
A number of metrics are used to measure our progress including….. % split of pipeline by platform (1) Number of projects in pipeline (2) 59 33% 35% 46 28 32% Sweeteners H&W Texturants 2010 2011 2012 Year-5 revenue estimate of new products in pipeline (3) (indexed) 130 100 (1) As at 30 September 2012
Slide 57: Enhanced infrastructure and customer offering
We have enhanced our infrastructure and customer offering Enhanced infrastructure Commercial and Food Innovation Centre, Chicago New applications labs in São Paulo and Mexico City New Food Systems lab and pilot plant near Lübeck, Germany Customer focus Dedicated account managers for key glob
Slide 58: New way of collaborating reduces time from Idea to Plate
Our new way of collaborating is reducing time from ‘Idea to Plate’ BEFORE Tate & Lyle’s innovation pipeline Customer’s innovation pipeline NOW Tate & Lyle’s innovation pipeline Time from ‘Idea’ to a customer’s Collaboration launch is being reduced by up Customer’s innovation pipeline to12 months 58
Slide 59: Integrated approach to bringing new products to market
A fully integrated approach to bringing new products to market requiring close ICD and SFI interaction ICD SFI Joint ICD Joint SFI and SFI and ICD Business Case Feasibility Capability Launch 59
Slide 60: We leverage internal and external sources to drive innovation
We leverage internal and external sources to drive innovation In-house Open Tate & Lyle innovation Innovation Ventures New products or technologies Leverages global network Leverages global network of generated by in-house of research institutions, research institutions, venture scientists in
Slide 61: Open Innovation helps us access new technologies
Open Innovation helps us access new and exciting technologies Scout Beacon 61
Slide 62: Innovation case studies
Innovation case studies 6 December 2012
Slide 63: Global consumer fibre intake is below recommended levels
Global consumer fibre intake is below recommended levels The Opportunity France Italy Recommended Spain range UK Netherlands Greece Germany US China Mexico Chile Brazil 0 10 20 30 40 Fibre intake (g/d) (1) Amalgamation of sources for each country; Most recommendations for adults call for fibre intak
Slide 64: PROMITOR Soluble Corn Fiber
PROMITOR™ Soluble Corn Fiber (SCF) The Science Digestion-resistant carbohydrate In-house discovery PROMITOR™ Soluble Corn Fiber 85 is the premier soluble fibre in the market Health and Reduces calories and sugar while adding fibre to the diet nutritional benefits Can be used in a wide range
Slide 65: Acerola Flavoured Blueberry Juice
Acerola Flavoured Blueberry Juice The Solution With PROMITOR™ Built with: Reference Soluble Corn Fiber 85L PROMITOR™ Soluble Corn Fiber 85L Benefits: Excellent source of fibre Mixes easily with other ingredients Heat and acid stable Prebiotic fibre with excellent tolerance Provides an exce
Slide 66: Sodium intake globally is above recommended levels
Sodium intake globally is above recommended levels The Opportunity Japan Australia Netherlands Italy Spain Germany France UK Canada US Mexico Chile Argentina Brazil 0 1000 2000 3000 4000 5000 6000 Sodium mg/d Intake mg/d Recommendation mg/d References: Source: See Appendix 1 66
Slide 67: SODA-LO Salt Microspheres
SODA-LO™ Salt Microspheres Open Innovation, Science and Applications Open Innovation Unique technology + Eminate developed great technology Hollow crystalline microspheres Unable to commercialise successfully Ability to reduce salt by up to 50% Needed partner with global applications Fun
Slide 68: Reduced sodium microwave popcorn with SODA-LO
Reduced sodium microwave popcorn with SODA-LO™ The Solution Reference 25% Reduced Sodium Built with: SODA-LOTM Extra Fine Benefits: 25% reduction in sodium Natural taste of salt Clean flavour Label-friendly Reduces sodium content in snack foods without compromising on salt perception and f
Slide 69: Key takeaways
Key takeaways ICD structure and processes are well embedded We have invested in key innovation enablers We are getting closer to the customer at the right levels We are starting to get to market faster Making good progress but with much more to do….. 69
Slide 70: Appendix
Innovation at Tate & Lyle Appendix
Slide 71: Appendix 1
Appendix 1 Sources for bar chart on slide 22 showing sodium intake vs. recommended levels by country Busch J et al. Salt reduction and the consumer perspective. New Food. 2010;36-39. Salgado MH, Rivera ME, Villasona CA, Estrada MA. [Variations in the individual intake of salt in the presence or abse
Slide 72: Capital Markets Day
Capital Markets Day Chicago, 6 December 2012