DetailMarketingandSalesPlanDevelopmentStudyInterimreportCholineChloridev3

1、detail marketing and sales plan development studycholine chloridejanuary 12 16, 2008riyadhan interim presentation to1 kline & company, inc. 2007. all rights reserved.stage 2 deliverables (screening)overview of the deliverablesstage 3 deliverables (demand)stage 4 deliverables (supply)supply deman

2、d analysis and product allocation2 kline & company, inc. 2007. all rights reserved.stageobjectivesfor target markets: npotential in 2010 - 2020nbroad level prospect profile (database): business, consumption, grades, suppliers, packaging & logistics, nproduct allocation among key countriesnpr

3、icing ntypical sales contractfor target marketsnpestle analysis : ncompetitors : current & future capacities, operating rate vs. profitabilityngrades profitabilityntrade flow (2010 -15)nsabic competitiveness (delivered cash cost)nmarket entry optionsnby product value assessment (if applicable)co

4、mpetitor profile & market entry strategyintroductory meeting14nprioritize and align program modules with sabic teamnunderstand current channel set up of sabic internationally, which can be leveraged nunderstand product slate and preliminary production cost estimatesfor target marketsncustomer su

5、pport assessmentnsales plannpre-marketing tasks nlist of resources: to develop capabilities for customer supportmarket profile: future forecast 3customer support and sales plan5our full program comprises of 5 stages, this report has the deliverables for stages 1 to 4.rationale for market selected2nr

6、ationale for addressing key markets including:neuropenmiddle east nasia3 kline & company, inc. 2007. all rights reserved.due to tight timelines, it might be difficult to meet our february 16 20th final meeting date.weeks012345678910111213introductory meeting1rationale for select marketsmarket pr

7、ofile: future forecast competitor profile & market entry optionssales plan, budget and resource planning2345project kick-offnov 9/10interim meetingjan 13 -14finalmeetingfeb 16-20sabic approval of market selectionchristmashajj commences4 kline & company, inc. 2007. all rights reserved.stage 2

8、 deliverables (screening)overview of the deliverablesstage 3 deliverables (demand)stage 4 deliverables (supply)supply demand analysis and product allocation5 kline & company, inc. 2007. all rights reserved.objectiverationale for market selected2key tasksnfrom kline database and global research s

9、uggest key consuming centers and supply centers : europe, asia and middle eastnreview databases to update country demand supply scenarios and forecast supply additions and demand projections (2010-2015)nidentify key barriers to trade antidumping laws, tariff and non tariffnassess why are these prefe

10、rred regions : logistics swot analysis ndiscuss assumptions, validate and finalize with sabic teamnvalidate the rationale for markets selected : europe, middle east and asiastage 2 : rationale for markets selected.deliverablesprovide rationale for select regions for sabic (2010 2020) based on :barri

11、ers to tradenpresence of strong competitorsntariff barriersnlegislative barriersnmaturity of marketnsubstitutionnexpensive supply chain growth outlook nmarket growth outlook (2010 2015)nnet import of product (2010)nminimal price discounting vs. markers such as icis pricingnlogistically attractive (i

12、.e. low cost to deliver product to marketnlack strong competitionall key countries that are critical for sabic in terms of volumes and profitability will be assessed6 kline & company, inc. 2007. all rights reserved.choline chlorideglobal demand assessmentcholine chloride is primarily used in ani

13、mal feed, primarily for white meat. it is used to stimulate the animal growth by improving the natural choline content of untreated animal feed, poultry feed and pig feed are the main applicationspoultry feed (cc forms 0.1% by wt.)pig feed (cc forms 0.050.06% by wt.)smaller volumes are used in fish

14、feed choline chloride is sold at different concentrations (50% to 75%). market numbers in this report are on a 100% basis unless stated differently. the 2007 global demand is 175 kt. the market is expected to grow at 3.9% p.a. through 2010 and will result in demand of 195 kt by 2010asia: 4.4 % p.a.

15、(no growth in japan)europe: 3.9% p.a. (higher growth in central europe)americas: 2% p.a. (higher growth in s america)overall market will reach 237 kt in 2015 and 420 t in 2030market driversthe main market drivers are meat consumption as well as professionalism in growing animals these are in turn li

16、nked togrowing economygdp growth raterise in living standardpopulation growth 2007 global demand for choline chlorideby major regionforecast demand for choline chlorideby major region7 kline & company, inc. 2007. all rights reserved.choline chlorideglobal supply assessment (on 100% basis)the sup

17、ply is controlled by 5 large players that account for 85% of the global capacity2007 supply situationbalchem is the leader with 29% of global capacityshandong nb of china is the biggest regional player from china with 12% sharetaminco and balchem are the only players that operate multiple plants in

18、different parts of the world2010 supply situationshandong has plans to increase capacity by 20kt and taminco plant of 12kt in billingham, uk will close down.some local chinese supplier will increase capacity with capacity increasing by 11kt globallythai choline chloride co., ltd. is developing a pla

19、nt with 20 kt capacity (operation startup scheduled for q2/2009)*top 3 players will still account for 60% of global capacity2007 global capacity for choline chloride by major supplier2010 global capacity for choline chloride by major supplier*to be verified8 kline & company, inc. 2007. all right

20、s reserved.choline chloride global suppliersproducerformer ownerlocation countrycapacity (kta) 2007, cc75% (100% basis)balchemchinooksombracanada45 (33.8)ducoaverona, msusa22 (16.5)akzo nobelmaranoitaly28 (21.0)tamincoair productsbillinghamuk12 (9.0)ucbgentbelgium20 (15.0)akzo nobelyixingchina10 (7.

21、5)ucbshanghaichina10 (7.5)basfbasfludwigshafengermany50 (37.5)bio productsbio productsst. gabriel, lausa45 (33.8)shandong nb groupshandong nb groupshandongchina40 (30.0)celanese (ducoa)celanese (ducoa)coatzacoalcosmexico14 (10.5)kolinkolinkoreakorea8 (6.0)tianjin bohai tianjin bohai tianjinchina8 (6

22、.0)tianjin no_2 tianjin no_2 tianjinchina6 (4.5)other chinese producers = 80% = 150% - 80%, =2 25% - 50%, =3 = 25% = 4product substitutionhow easily can the product be replaced by another product or being phased out because of technology changehigh probability of substitution = 1 medium probability

23、of substitution = 2 low probability of substitution = 3 tariff do countries/regions have import tariffs?high tariffs = 1 medium = 2low = 3 impact of legislative/government issuesa sense of how legislated is the region and how strongly are these legislations enforced e.g. reachhighly legislated = 1 m

24、edium = 2low = 3 10 kline & company, inc. 2007. all rights reserved.discussion of the screening criteria.barriers to trade to sabicy axiscriteriadescriptionratings usedbarriers to trade to sabicfragmentation of demanddetermination of whether there are many smaller sized consumers in the market (

25、hard to reach) or if there are few, larger customers. very fragmented markets are easier to penetrate than markets which have low fragmentation low fragmentation = 1 medium fragmentation = 2 high fragmentation = 3 ratio of demand versus local capacityif the capacity is less than demand there will be

26、 an opportunity to importdemandcapacity = 3 supply chainestimated supply chain ease from sk easy/low cost = 3moderate degree difficulty/cost=2 difficult supply chain/high cost =1 11 kline & company, inc. 2007. all rights reserved.discussion of the screening criteria.growth outlookx axiscriteriad

27、escriptionratings usedgrowth outlookmarket growthmarket growth outlook (2010 - 2015)aagr of the chemical product in % potential of importsis region poised to be a net importer of material or supplier?ratio of import versus total market in the regionprice attractivenessminimal price discountingdiffer

28、ence between the average global sales price and the sales price in the regiongrowth of consumer base potential for increase in customer base - aagr of the customer base in %market size in ktonnes is reflected by the size of the bubbles12 kline & company, inc. 2007. all rights reserved.our screen

29、ing was conducted in 16 regions/countries13 kline & company, inc. 2007. all rights reserved.major countries by regionregionmain countriessabic regionaustraliaaustralia, new zealandchq14 (pacific)chinachinachq11 (china)danube + russiaaustria, slovenia, hungary, slovakia, romania, bulgaria, ukrain

30、e, russiachq5 (europe)gccsaudi arabia, jordan, iraq, uae, yemen, oman, iranchq1, chq2 (local, gccindian sub cont.india, pakistan, afghanistan, nepal, bangladeshchq6 (india sub continent)japanchq12 (japan)koreachq8 (far east)latin americaexcludes mexicochq10 (south america)mediterraneanspain, france,

31、 italy, croatia, serbia, greece, turkey, syria, egyptchq5, chq3 (europe, middle east)new zealandchq14 (pacific)naftausa, canada, mexicochq9 (north america)north africamorocco, algeria, lybiachq4 (africa)north w europegermany, benelux, uk, ireland, scandinavia, czech, poland, baltics, belaruschq5 (eu

32、rope)se asiaindonesia, malaysia, thailand, singapore, vietnam, cambodia, chq7 (se asia)sub sahara africasouth africa, other african countries except north africachq4 (africa)taiwanchq8 (far east)14 kline & company, inc. 2007. all rights reserved.market selection - choline chloridelegend= 5 kt= 1

33、0 kt= 25 kt=50 ktcholine chloride growth factors vs. barriers to tradelownorth america60 ktsouth koreasubsaharan africachina22 ktmediterraneansouth americaindian subcontinent5ktnorth africagccjapandanube basinaustraliataiwannorth western europenew zealandhighgrowth factorslowhighhigh growthlow barri

34、ers to tradeinvestlow growthhigh barriers to tradedo not invest/exitbarriers to tradeselectively investse asialowsk capacity 15 ktnorthwestern europe: includes benelux, germany, poland, scandinavia, uk, balticsdanube basin: includes hungary, romania, bulgaria, czech, austria, slovakia, croatia, serb

35、ia, moldova, ukraine, russiamediterranean: includes france, italy, spain, greece, turkey, portugal, albania, cyprus, bosnia, malta, montenegro, egypt, lebanon, israel, syriaindian subcontinent: includes india, pakistan, bangladeshsoutheast asia: includes malaysia, indonesia, singapore, thailand, vie

36、tnam, philippinesnorth africa: includes morocco, tunisia, algeria, libyasubsaharan africa: includes south africanorth america/nafta: includes usa, canada, mexicosouth america: includes all latin american nationsnote: all volumes are on 100% choline chloride basis15 kline & company, inc. 2007. al

37、l rights reserved.regions selected for follow up choline chlorideprimary focus onse asiadanube basinsub saharan africagcctaiwanaustraliasecond priorityindian subcontinentchina (competitive situation)mediterranean16 kline & company, inc. 2007. all rights reserved.stage 2 deliverables (screening)o

38、verview of the deliverablesstage 3 deliverables (demand)stage 4 deliverables (supply)supply demand analysis and product allocation17 kline & company, inc. 2007. all rights reserved.objectivemarket profile: future forecast3key tasks : for target marketsninitiate market research leveraging klines

39、existing database, along with a mix of primary and secondary researchnassess product/ grade/ application wise : demand-supply scenario, make forecast for the same post 2010, through 2015 till 2020nidentify major customers in select markets and provide details that would enable sabic garner market sh

40、arenidentify pricing mechanism and references used in the industry nbased on historical pricing trends and related attributes develop a likely price scenario and reference price relationshipnstudy a typical sales contract accepted in the industrynproduct allocation (per grade per region per country)

41、 and critical success factors to garner market share with key customersdeliverables on next slidestage 3 (tasks): assess sabics market positioning.18 kline & company, inc. 2007. all rights reserved.nproduct allocation (grade and specifications) per region, per select country for (with clear assu

42、mptions behind the forecast model)2010, 2015, & 2020 nfor select (target country) -identify major customers (contacts info of key customers)-provide inputs in terms of overall business, end-produce profile, consumption of key grades and specificationsmajor supplier to key customerstypical packag

43、ing & logistics, and customer support requirementsnproduct pricing mechanisms pricing mechanism reliable price referencespricing history and forecast scenario (2000 2020) in select markets per product detail assumptions used abovendetail a typical sales contractobjectivemarket profile: future fo

44、recast3deliverables : for target marketsnproduct allocation (per grade per region per country) and critical success factors to garner market share with key customersstage 3 (deliverables):assess sabics market positioning.19 kline & company, inc. 2007. all rights reserved.demand analysis in se as

45、ia20 kline & company, inc. 2007. all rights reserved.total 2007 demand for choline chloride in se asia is 7,200 tonnes:70% of the cc used is in powder form 64% of total powder is on vegetable carrier and 36% on silica, as silica is more expensive, and used mainly for fish foodout of total powder

46、 consumption cc50% forms 85-90% and cc60% forms the rest.overall market growth at 4.07% p.a. through 2010 will result in a demand of 8.1 kt by 2010liquid growth : 3.5% p.a.silica carrier: 3% p.a.vegetable carrier: 5% p.a.overall market will reach 10 kt in 2015, 12 kt in 2020 and 16 kt in 2030overall

47、 growth of 4.1% from 2010 to 2015overall growth of 3.4% from 2015 to 2020overall growth of 2.9% from 2020 to 2030market drivers:the economy in se asia is growing at 5-6% annually, this drives increased meat consumptionalso the animal feed industry increasingly uses cc to boost productivityanimal fee

48、d industry grew by 5% in last 5 years and is expected to grow by 3-4% in next 5 years2007 region demand for choline chlorideby major gradeforecast demand for choline chlorideby major gradecholine chloride - south east asiademand assessment21 kline & company, inc. 2007. all rights reserved.major

49、choline chloride distributors include:jj degussa, transworld (philippines)jj degussa (indonesia)jj degussa & trade-link (vietnam)age dor (malaysia)typical account serviced by a distributormedium to small feed producers supply 2-3 brands targeting high, medium to low quality choline chloridelocal

50、 or regional players with small choline chloride requirementschinese suppliers are very prominent in the sea marketchinese products dominate the sea markets like philippines, vietnam, & malaysiacc in powder form is replacing liquid due tolower price & low capital expenditureliquid faces free

51、zing problems in some regionsdistributors are expected to continue to play a major role in se asiadistributors play a major role in sea due to lack of suppliers in the regiondirect indenters, big distributors supply the market with 2-3 grades from different players and avoid exclusivity contracts wi

52、th suppliers2007 region demand for choline chlorideby sales channelcholine chloride - south east asia demand fragmentationforecast demand for choline chlorideby major sales channel22 kline & company, inc. 2007. all rights reserved.choline chloride south east asia major identified customers*name

53、and locationgrades usedvolume usedmajor suppliersbetagro, thailand (3-4 feed mills)cc50%, cc60%, cc75%420 tpa 3 grades ( cc75% - 60%, rest -40%)basf (thailand)saha farm, thailand (3 feed mills)cc75%240 tpa of cc75% (buy equipment themselves)taminco, europe (via local distributor)japfa comfeed, indon

54、esia (10 feed mills)cc50%, cc75%total 840 tpa of cc ( includes cc50% -60%; cc75% - 40%)taminco (direct purchase)pt gold coin, indonesia (3 feed mills)cc75%360 tpa of cc75%suppliers name not disclosed (lead time:20-30 days)rfm swift foods, phillipines (3 feed mills)cc50%420 tpa in cc50% form on corn

55、coblocal distributors of (1. shandong be-long chemical co. ltd, 2.hebei cangzhou dayang animal medicine & 3.hebei cangzhou dazheng animal medicine)gold coin, malaysiacc75%204 tpa of cc75% ( buy equipment themselves)shandong nb group (since 2 years)sinmah multifeed, malaysia (1 feed mill for poul

56、try)cc75%180 tpa of cc75%2 suppliers whose names not disclosed (lead time 21-30 days)cargill, vietnam (5 feed mills)cc60% 200-300 tons of cc60% on corn cob3 suppliers whose names not disclosed (direct purchase)* customer profiles to be provided in appendix (word file)23 kline & company, inc. 200

57、7. all rights reserved.choline chloride - south east asia typical customer requirementssmall customersthese are either small 1st tier distributors (who supply to medium/small feed mills and 2nd tier distributors) or small/medium mills themselves1st tier distributors prefer keeping 2-3 brands targeti

58、ng high, medium and low quality cc thus maintaining continuous supply and volumesthey avoid exclusivity agreementssmall to medium mills prefer powder formpackaging requirement: powder: 25kg plastic knitted bagsliquid: 200kg plastic drums (low demand)their suppliers are responsible for logistics issu

59、e till the portlarge customersthese are big feed mills or leading 1st tier distributorsthey prefer cc in liquid and powder formpackaging requirement: powder:25kg plastic knitted bagsliquid: 200/250 kg plastic drumsthe suppliers are responsible for logistics issue till the portthe suppliers dont prov

60、ide any other service to the company. this product is straightforward for application in animal feed so that it doesnt need technical support. some of these big mills buy their spray equipment themselves24 kline & company, inc. 2007. all rights reserved.choline chloride - south east asia key distributors*name and locationgrades usedvolume usedmajor suppliersjj degussa, indonesia (one of the top 3 for cc in indonesia)cc