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FOCUS ON CERTIS EUROPE

(Crop Protection Monthly - July 2009)

Certis Europe markets a wide range of crop protection products that includes conventional pesticides as well as biological pesticides, beneficial insects, pheromone trapping and monitoring devices. Since its launch in 2001, the company has expanded its activities both geographically and in terms of technologies and product portfolio. Certis employs 174 people and in addition to branch operations in the UK, Netherlands, Begium, France, Spain and Italy Certis has a sister company Speiss-Urania servicing markets in Germany and Eastern Europe. The company has its own proprietary products but has also established an extensive supplier base that includes Kumiai, Mitsui Chemical, AgroKanesho as well as Bayer CropScience, Syngenta and others. At the end of the last financial year, Certis Europe reported year end results of €119 million, showing a 5.3% increase in turnover to March 2009.This was in line with corporate targets for the year and continued the significant year on year growth posted by the business since its launch. Bob Skillicorn, CEO of Certis Europe spoke to Crop Protection Monthly about how the company intends to grow into a $300 million enterprise over the next 3-4 years and become a leading player in the European market.

 Crop Protection Monthly editor, Martin Redbond asked Mr Skillicorn about the current state of the industry.

For a long time crop protection was seen as a dirty industry. In the last few years, however, the pendulum has swung the other way. Although there are still concerns about the environment, issues around food availability and whether we use land for food or fuel mean that crop protection is once again seen as a necessity. In addition the industry has improved its image by changing the way it interacts with the public. Certis has an involvement with biologicals and soft pesticides and these are no longer seen simply as a sop to the green lobby but as a critical part of the future and the sustainability of the crop protection industry.

Is your business dependent on growth in the organic sector

Organic is an established sector and it gives people the right to choose how their food is grown. However, it has failed to grow significantly during the boom years. Certis, needs to be at the heart of Integrated Pest Management (IPM) and this is very much a long term approach. In future there will be more growth in sustainable food production which is about growing food with confidence, knowing how the food is grown and minimising residues. It is best achieved through a mixed portfolio of products. Our business is to determine what concerns the population has about food and to provide suitable products and programmes to achieve this.

Certis Europe was previously focused in horticulture. Is this still your major market

Our strategy has shifted its focus. A key strength of the company is our high level of capability in high value speciality crops in Europe. We wish to remain a leading player in these markets. However, we have identified some opportunities in arable markets. We had products in our range that did not previously fit five to 10 years ago either because of cost or competition. Some of these products have now been developed to replace competitive products that have been withdrawn in the EU registration review. In addition our supplier base and shareholders have brought forward new products for arable crops and they expect us to able to represent them.

Are you now actively seeking products for broadacre crops

Our sales are increasing in both cereals and potatoes following new product introductions such as the fungicides cyflamid and bethiavalicard-isopropyl. We now have now some interesting products for oilseed rape and are well established in the key oilseed rape markets France, UK, Germany and Poland. We are interested to bring in third party products to enhance this position. We do not, however, wish to market products like glyphosate but would consider post patent products where there is an opportunity to add value to the market or product. It is important to us that we can secure access to a future supply of products. With a reducing number of active substances we must ensure that there is a role for third party distributors like ourselves and must look at all the options available. This will include product acquisition such as the purchase of imazalil and creating our own IP. It could also include company acquisition, previous examples of this are Luxan and BCP.  However, there are a reducing number of opportunities that would fit our business. We will also be looking at acquisition to expand our distribution. In Poland we sell to third parties currently but it is on our agenda to look at what position we should adopt in the future in Eastern Europe.

 What success have you already had in Europe

In Spain, where we operate through a network of 200 distributors who sell to retailers, the company is now well established in protected vegetables (sales were up 5.4% in 2009 to €9.18 million).  We have made similar progress in Italy (sales up 13% to €8.77 million). Growth in both these countries will continue to come from the high value sector. In the UK sales turnover was €17.25 million in 2009 (up 10%). We are a big player in the slug market and have recently introduced a new product SLUX.  Most of the growth in the UK in the future will come from arable crops. In Netherlands we are already the No 4 in the market behind BBS (2009 sales revenue was €36.57 million) and will continue to consolidate our business there. In France we are established in high value crops (sales revenue of €29.57 million) but growth will come by concentrating on arable crops and we are looking to position ourselves in both oilseed rape and maize. Country turnover at end of March in each of the countries with the exception of the Netherlands was up on the previous year.

 Is the increasing European leglisation of concern to the business

We have expanded our registration capability dramatically and now have 12 people in the regulatory team, five located centrally dealing with Annex I issues and seven at country level working on Annex III. Imazalil was one of the first Annex listed compounds and we have just gone through the reregistration processs. We have lost some products like dichlobenil but some of these have been resubmitted. We will defend as many as possible because of the shortage of products in the high value speciality markets and the lack of new solutions to replace them. We do have concerns about losing products but are often able to fill the gaps. The registration situation has overall worked in our favour.

 Your parent company Misui & Co is a global trading business. Are they committed to the crop protection industry

Mitsui & Co has had the benefit of high commodity prices in recent years but understand the volatility of the markets. They do see significant value in food related businesses because they are stable markets. As a result they are prepared to invest in them. Japanese companies are still capable of bringing active substances to market and it is therefore important that Certis continues to offer a secure access route to Europe. We can be involved early in the decision making process and can give development and regulatory advice. Our partners can retain a degree of independence which is difficult to achieve when working with multinational manufacturers. In working with Certis they can maintain control of the product for longer. We want to establish ourselves as the leader of a Japanese Alliance in Europe. We are already doing this but believe we can enhance our position further. We have succesfully brought to market three Japanese active ingredients since 2002/03 -  cyflamid and acetamiprid (Nippon Soda), bethiavalicard-isopropyl (Kumiai).

 What are the  key competitive advantages that will secure a strong future for the company

We have a stong distrbution platform, strength in our own IP and are able to introduce new ais sourced through our established Japanese relationships. The company also has a well established IPM platform and knows how to fit non-chemical products into the portfolio. This will benefit us particularly when we are looking ahead to the sustainable use of pesticides. Companies can buy in products but cannot easily buy in technical expertise. We already have the expertise in house and believe it will give us a significant competitive advantage in the future and will enable us to grow our business.  

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