Background last update:6 Aug 2012

The Southeast Asian feed additives market

The Market for feed additives in Southeast Asia is growing and is moving towards maturity stage. However, the introduction of new products is needed to ensure the future of the market, accoriding to a new report by Frost and Sullivan.

By Emmy Koeleman
The report analysed the animal feed additives market in Southeast Asia from 2002 - 2012, with 2005 as the base year. In 2005, the feed additives market segments in Southeast Asia (amino acids, acidifiers and enzymes) recorded revenues of US$284.3 million, with a volume of 107,100 tonnes. According to the report, the compound annual growth rate (CAGR) is expected to be 7.6% from 2005 - 2012. The feed amino acids market is the largest segment in terms of volume and revenue generated in the feed additives market in Southeast Asia. Following the European Union's (EU) ban on the use of antibiotics as growth promoters, acidifiers are proving to be excellent alternatives to antibiotics and are expected to achieve significant growth. This is most strongly felt in countries such as Thailand that have large poultry export volumes to the EU. In the feed enzymes market segment, phytase is likely to continue its dominance due to its cost reduction and environmental benefits.
Challenges and drivers
The report discusses several industry challenges. Compliance with strict regulation set by the EU is one of these challenges that are expected to have a significant impact on the feed additives market in Southeast Asia. In addition, the control of diseases, such as bird flu and foot mouth disease (FMD), also remain a challenge. Lastly, low awareness among end users is still present, which limits the usage of feed additives. This is mainly due to the cheap generic products that dominate the Asian market and are competitive with the branded products. The report also mentions several market drivers, such as the consistent and growing demand for meat products, the increased awareness among veterinarians, feed millers and integrators and more scientific evidence that backs the advantages of using feed additives.
Key market restraints
Besides the challenges and drives, the Southeast Asian feed additive market also faces some restraints. Conservative farmers, for example, are often unwilling to try new additives. Furthermore, developments in the EU have influenced consumer groups to push for stronger regulations. Lastly, the lack of variation in feed ingredients limits usage and variety of feed additives in this part of the world.

Competitive analysis
The feed additives market in Southeast Asia is still dominated by large multinational companies. These are mostly manufacturers involved in the feed additives industry on a global level. The Asian manufacturers are entering the market in increasing numbers, however the quality of their products is still not comparable to those from Western companies. Local participants active in the supply to the animal feed additives market are usually distributors, traders or pre-mixers. A number of mergers and acquisitions, as well as joint ventures, took place among suppliers of feed additives in recent years. The most notable acquisition in 2006 was the acquisition of the Addiseo Group by the Chinese company, China National Blue Star Group Corporation.
Recommendations and conclusion
The market for feed additives in Southeast Asia is growing. It is moving towards maturity stage in the feed amino acids market and towards a decline in the feed antibiotics market segment. In addition, the feed acidifiers and enzymes market segments are in the process of significant growth. The introduction of new products is needed to ensure the future of the market; however, they have to show improvements over existing products in factors such as ease of handling, competitiveness in price, consistent results and product stability and efficacy. In addition, mergers, acquisitions and joint ventures are expected to be critical success factors as they provide research and development benefits and an increase in the market share. Besides the two factors mentioned above, companies that want to succeed in the feed additives market need to invest in advertising and promotional activities, conduct validation studies to support their products and build up the brand name of their products.
Source: Feed Mix Magazine Vol. 15 nr. 2

Editor AllAboutFeed

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