dedicated marketing strategies for the global agchem markets · 2018-10-03 · • markets •...
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Dedicated Marketing Strategiesfor the Global AgChem MarketsMichael Heinz Group Vice PresidentGlobal Strategic MarketingAgricultural Products Division
August 2005
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Pipeline
BASFTheChemicalCompany
Strategy:Focus on high-value• Markets• Products• Innovation
ProfitabilityProfitability
CustomerSatisfaction
PipelineProfitability
CustomerSatisfaction
Pipeline
Success intoday‘s and tomorrow‘s
agro markets
BASF – Top Player in Agricultural Products
1 | Presence in the Right Segments
2 | Have the Right Technologies
3 | Successful Partnerships
4 | Growing the Future
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Market Segmentation Drives Strategy Combination of Customer Needs, Crops and Countries
Focus on attractive market segments is key
Crops
Customer needs
Countries
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Global AgChem Market 2004
Source: Phillips McDougall, BASF
USD 6 bn
USD 9 bn
USD 11 bn
USD 9 bn
MarketSize
Strong biotech impact, emergence of fungicides
Soybeans, Sugar cane, Fruits & Vegetables
17%S. America
Fast population growthand rising buying power, change in dietary patterns
Rice, Fruits & Vegetables, Cotton, Sugar Cane
25%Asia
Biotech aversion, middle and eastern European countries joining EU
Cereals, Vines/GrapesFruits & Vegetables,Oilseeds
32%Europe
Strong biotech impact, emergence of fungicides
Corn, Soybeans, Cereals, Cotton
26%N. America
KeyCharacteristics
Major CropsShareRegion
Our focus is on North America, Europe, Japan and Brazil
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0
10
20
30
40
50
60
Argentina USA Brazil China
020406080
100120140160
France Germany USA China0
50
100
150
200
Japan USA China India
Corn Soybeans
Wheat Rice
600
0
20
40
60
80
100
120
140
France USA Brazil China India
2003 Spending for Crop Protection USD/ha
Source: Global insight 2003
Focus on the Right Crops and Countries
Spending in high value markets is one determining factorfor BASF activities
7Source: Phillips McDougall, BASF data
Dev
elo
pm
ent
of
agro
chem
ical
mar
ket
2005
–20
09
Above averagemarket growth
expected
Below averagemarket growth
expected
Development of agrochemical market 1999 – 2004
Below average historical market growth
Above average historical market growth
Global AgChem Market by Crops
Crop market drivers
• Technology shifts
• Change in dietary patterns
• Renewable energies
Circle size = agrochemical market 2004
1-2 bn USD
2- 4 bn USD
>4 bn USD
Fruits &Vegetables
Soybeans
Rice
Corn
Cotton
Sugar
Non-Crop
RapeSeedCereals
Seed Treatment
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We Focus on Important Customer Needs
New Opportunities
Herbicides
Insecticides
Fungicides
Indications
éIncreased yield and quality requirements create opportunityfor plant health products
High value segments, e.g. seed treatment, termites
î -1% p.a.Only few unmet needs (glyphosategaps, cereal graminicide) limit demand for innovations
ì 2% p.a.Phase out of old products and resistance trigger high demandfor innovations
ì >2% p.a.New diseases and resistance trigger high demand for innovations
Long-Term Market Growth
Customer Needs
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Attractive Intra-Segment ShiftsHigh Growth Potential With Innovative Solutions
• Top-line insecticide market growth of 2% p.a.
• Regulatory pressure and resistance issues demand new modes of action
• New chemistry classes to grow by more than 5% p.a.
• Mature “old” chemistry being steadily substituted
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
F20
06F
2007
F20
08F
2009
F
Old Chemistry: Organochlorines, Organophosphates, Carbamates, Pyrethroids
New Chemistry:Neonicotinoids, Phenylpyrazoles,Benzoylurea, Semicarbamates, Others
Niche Chemistry: Acaricides, Nematicides, Insect Growth Regulators
Source: Phillips McDougall, BASF data, crop applications only
Example Insecticides
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We Hold Leading Positions in Attractive Market Segments
Fungicide EUR Opera®, Opus®
Fungicide USA Headline®
Fungicide BRA Opera®, Caramba®
Herbicides USA Guardsman® Max, Outlook ®
Fungicide BRA Opera®
Herbicides BRA Facet®, Clearfield ®, Aura®
Herbicides USA Newpath®, Facet®
Insecticides JAP Prince®
Fungicide Citrus ARG Comet®
Insecticide Grape EUR RAK®, Cascade®
Fungicide Coffee BRA Opera®, Opus®
Insecticide Brazil Standack®
Herbicides USA Raptor®, Extreme®
Fungicide BRA Opera®
Insecticide USA Termidor®
Insecticide AUS Termidor®
Insecticide USA Phantom®
Top 3 ranking brands
Cereals
Corn
Rice
Soybeans
SpecialtyCrops
Non CropUses
1 | Presence in the Right Segments
2 | Have the Right Technologies
3 | Successful Partnerships
4 | Growing the Future
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FormulationTechnology
New Active Ingredients
LeveragingTechnology
Verbund
All three dimensions of technology drive market success
We Have the Right Technology Mix
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2 new Fungicides 2 new Herbicides 1 HT Project*
Row Crops
Powerful Pipeline with New TechnologiesNew Active Ingredients for Areas of True Opportunity
Specialty Crops
Non Crop Uses
Seed Treatment
In Launch In Development
Boscalid (F) 2 new Fungicides 1 new Insecticide
Boscalid (F) 1 new Herbicide Chlorfenapyr (I) 1 new Insecticide
3 Fungicides
*Herbicide tolerant soybeans
F500 (F)Dimoxystrobin (F)Tritosulfuron (H)Picolinafen (H)Dimethenamid-P (H)
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Challenge for Soybean Growers Asian Soybean Rust
Asian Soybean Rust
• Major threat to growers
• High damage potential
Customers’ needs
• Excellent plant protection preventative and curative
• Peace of mind
• Enhancing quantity and quality of harvest
Market size in South America ~ USD 800 million. Additional potential in North America larger than USD 300 million.
Healthy Soybean Pods
Soybean Pods infected with Asian SoybeanRust
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Plant Health effecton soybean yield
Build on first-mover and market leader experience in South America
Leverage BASF knowledge on Plant Health™ benefits of strobilurins that go beyond disease control: plant growth efficiency and plant tolerance to stress
New opportunity for BASF and our customers
• Improved grower profitability
• Increased marketable crop yields
• Strengthens BASF´s portfolio in the US
We are Benchmark for Soybean GrowersF500® with Plant Health™ Effect
Plant Health™with
Objective: Identify new products with effectsbeyond classical crop protection
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US Soybean Growers Trust inBASF’s Competence
F500® – US market leader in cereals, peanuts, fruits and vegetables in less than two years
Headline® – product of choice in soybeans in first year
Plant Health™ – BASF develops new market segment in USA
9%
9%
13%
35%
15%
0% 10% 20% 30% 40%
Quadris (SYN)
Stratego (BCS)
Folicur(BCS)
Quilt (SYN)
Source: Stratus Survey April 2005
Soybean Fungicides Grower Purchase Intentions for 2005
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Boscalid – Innovative new mode of action activeingredient to control multiple fungal diseases in avariety of specialty crops like grapes, fruits & vegetables
Customers’ needs• Safeguarding quantity and quality of produce• Broad spectrum activity
BASF solution• New mode of action• Broad spectrum of fungal diseases controlled• New tool for resistance management
Boscalid: Flagship of Our GrowingSpeciality Crop Business
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Number of countries with Boscalid registered
0
5
10
15
20
25
30
35
40
2002 2003 2004 2005
We Set Benchmark in Specialty Crops
• Solution for a great variety of customer needs
• First registered in 2002
• Sales target >150 million EUR
• Registered in 36 countries
• Registered for over 100 crops
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Formulation TechnologyTailor-made Formulations for Specific Customer Needs
Formulation is the process of converting an active ingredient into an applicable plant protection product
Active Ingredient Formulation Performance
• crystalline • oily• resin-like• etc.
• suspension • concentrate • granule • etc.
• bioavailability • uptake by plant• photo stability• residual action• concentration• shelf life• etc.
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Customer need – improve original formulation,characterized by loss in efficacy over time, stainingof equipment/clothes and unpleasant odor
BASF solution:
AquaCap™ TechnologyInnovative, patented formulation technology (water-based microencapsulation)
Prowl H2O launched 2003• Reduced staining potential, virtually no odor• Enhanced persistence, i.e. long-lasting effect • Reduced use of organic solvents• Smart extension of product lifecycle • 15% of Pendimethalin sales in year two after
launch are patent-protected
We Develop Innovative FormulationsProwl H2O – Microencapsulated Pendimethalin Herbicide
Microencapsulated pendimethalin
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Leveraging Technology Verbund Fight Against Malaria – Deadly Threat to Millions
Malaria kills more than one million people and causes over 300 million acute illnesses per year
Customers’ needs
• Effective insect control
• Protection especially against malaria
• Ease of use, i.e. no retreatment of nets necessary
WHO recommends insecticide treated bed nets
WHO figures
Market potential of USD 200 million (institutional buyers)
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We Set Benchmark in Malaria ControlLong-Lasting Insecticide-Treated Nets
Technology Verbund at work:Agricultural Products Division:• Insecticide Technology
Specialty Chemicals Division:• Textile Technology
BASF Solution – Long-lasting Insecticide-Treated Nets• No need for retreatment• >95% knock-down of mosquitoes after 20 washes• BASF ensures quality by managing entire
value chain• Submission for WHO approval• Market launch expected in 2006
1 | Presence in the Right Segments
2 | Have the Right Technologies
3 | Entrepreneurial Partnerships
4 | Growing the Future
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Problem for Rice GrowersRed Rice Control
Grower problem: Red Rice weed
• Difficult to distinguish from crop
• Difficult to control
• High damage potential (up to 100% yield loss)
• Conventional herbicides not satisfactory
Customers’ need
• Safe and reliable solution to control red rice weed
Red Rice (Oryza Sativa)
Rice Crop
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BASF solution for rice growers
System of Newpath™ Herbicide + herbicide resistant CLEARFIELD® Rice
• Superior control of red rice and broad leaf weeds
• High reliability
• Ease of use
• High-yielding, non-GMO varieties
• Certified CLEARFIELD® quality
+
We Set Benchmark in Red Rice ControlCLEARFIELD® Rice Production System Introduced in 2002
=30% market share
in the US
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CLEARFIELD® – Network and alliance model to deliver trait technology to the farmer
BASF forms winning
partnerships
Best Trait Provider
Best Seed Partner/Dealer
Best DistributorBest Seed Breeder
Best Farmer
We Partner With the Best in Seed“Virtual Seed Company”
CLEARFIELD crops
• Canola
• Lentils
• Sunflower
• Rice
• Wheat
Peak Sales Potential200 million EUR(not included in pipeline)
1 | Presence in the Right Segments
2 | Have the Right Technologies
3 | Successful Partnerships
4 | Growing the Future
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2003: Seed treatment assets and technology acquired with “Fipronil Package” from Bayer
BASF Strategy
• Maximize the synergies of acquired product range
• Develop seed treatment solutions based on our existing innovative BASF active ingredient portfolio
• Use BASF Verbund to find and establish new innovations and high value solutions around the seed
Seed Treatment – A New Opportunity Driver for Long Term Profitable Growth
Protected seeds
Healthy plantsSales 2004 approx. 100 million EUR
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Total 2004: approx. USD 1.2 billion
Seed Treatment World Market Growth Opportunity for BASF
World market growing strongly with more than 5% p. a.
NorthAmerica
14%
Europe51%
Asia/Pacific
16%
SouthAmerica
14%
ROW5%
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Post-Harvest Freshness Preservation
• Water-based liquid polymer coating
• Preserves fruits and vegetables
• Very cost effective
• Commercially available and FDA approved
• Extends shelf-life and improvesquality of produce
Pre-Harvest Disease Control
• New mode of action fungicide
• Excellent performer in high value specialty crops like fruitsand vegetables on value determining diseases
• Safeguarding quantity and quality of harvest
Harvest
with Boscalid
We Protect the Crop Beyond the Farm Gate
Fruit & Vegetable Grower Fruit Company – Retailer – Consumer
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Key Messages
• BASF focuses on high-profit segments
• BASF brings leading technologies to the market
• BASF forms winning partnerships
• BASF is exploiting new growth opportunities
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We Set Benchmark inCustomer Satisfaction
Country
BASF in the eye of our customers:
Year 2004/5Year 2001USA #3 #1
Brazil n.a.France #5Germany #1 #1UK #2 #1Italy #2 #1Japan #9
#1#1
#7Source: Various independent customer satisfaction studiesStratus (USA), A Granja (Brazil), Eider (France), DLG (Germany), B2C (UK), CIF (Italy), Crecon (Japan)
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Disclaimer
This presentation contains forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove tobe accurate.
Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors includethose discussed in BASF’s Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this presentation.
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