Tate & Lyle boss: ‘We need to go where our customers are headed’

By Elaine Watson

- Last updated on GMT

Related tags Specialty food ingredients Investment

Javed Ahmed: "We were told to step up our innovation game."
Javed Ahmed: "We were told to step up our innovation game."
Tate & Lyle’s customers think it needs to step up a gear on innovation and increase its presence in emerging markets, chief executive Javed Ahmed has revealed.

Speaking at the Morgan Stanley Global Consumer Conference in New York last week, Ahmed – who took the helm two years ago - delivered a frank assessment of Tate & Lyle’s strengths and weaknesses, and admitted bosses still had a long way to go before they walked their own talk.

He added: “We are seen as a long-term valued partner, and we get very high marks for quality, reliability, and for service. However, we were told to step up our innovation game and strengthen our presence in emerging markets: the two key priorities​ [for Tate & Lyle’s key customers].”

More white space for us

Currently, said Ahmed, Tate & Lyle’s specialty ingredients business is focused primarily on Europe and North America.

“Emerging markets are the single biggest growth focus for most of our large food and beverage customers so we need to go where our customers are headed.”

But he added: “We have a very limited offering in 40% of the global market. This is a key untapped opportunity. The other characteristic of this market is that only about 40% of it is comprised of the large food and beverage companies, our traditional customer base.

“47% of this market is comprised of small and medium enterprises and there's another 13% which is private label. In both of these two segments, we do not have any meaningful presence, providing more white space for us.”

A ‘misalignment in terms of where we wanted to go and where we put our investment focus’

While the company’s stated objective for years has been to build its presence in specialty food ingredients, there had been a “misalignment in terms of where we wanted to go and where we put our investment focus​”, claimed Ahmed.

“In fact, 70% of our growth investment during 2006-2010 went into commodity products, whereas our stated intent was to grow our value-added and specialty products.”

Meanwhile, the “operating disciplines and processeswere relatively weak compared to other businesses I had been involved with… the IS and IT infrastructure was dated and not appropriate for a company of our size​”, he added.

Finally, using the same sales force to sell bulk and specialty food ingredients was not working, he claimed. “We were taking too much of a one-size-fits-all approach.

“In early 2010 it became clear that there were some major fixes required.”

T&L today: A less complex business with an improved financial profile

Since then, the firm had created two global business units: Bulk Ingredients and Specialty Food Ingredients, each with its own dedicated ‘go to market’ teams.

“We have ​[also] largely exited our sugars business with the sale of our Vietnam operations, our one remaining sugar asset, expected to close in the next few months. This has resulted in a less complex business today with an improved financial profile.”

Meanwhile, major improvements had been made on the operational front, with the development of a common IT platform that will be rolled out next year, he said.

Progress had also been made on streamlining support functions using a global shared service center in Lodz, Poland, which is “already delivering financial services to our European operations”​, he said.

“We will migrate the other planned regions and services in a phased process during the next 15 months.”

Innovation

Bosses have also created a new global division called the Innovation and Commercial Development Group (ICD), which brings together R&D, product management and marketing under one roof, he said.

“We have also established a small open innovation team to develop partnerships with universities and research institutes, look for new processes, technologies, any IP that might be of interest to us​” he said, citing the recent partnership with monk fruit sweetener firm BioVittoria.

“We are also investing in our customer engagement capabilities through the development of our new global Food Innovation Centre in Chicago which will open early next year.”

Emerging markets

Finally, progress had also been made in emerging markets: “In China, we have secured new regional customers, particularly in the dairy segment.

“In Latin America, the strengthening of our sales team has also led to new customer accounts and driven strong volume growth in a number of specialty food ingredient products.”

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