Hello everyone, welcome to DSM's Virtual Investor Day. For those of you who were with us on the earnings call yesterday, welcome back. Today is going to be something a little bit different. We will take you through the journey of DSM and how we've progressed with our strategy, and we will, of course, talk about the nutrition growth platforms and the related innovations as promised, in line with the theme of today's investor event. We would, of course, have preferred to welcome you in person, but with COVID, it's just not possible. However, we do want to keep it lively with interaction with a lot of colleagues. As you are not with us, and in fact, we are not together, this is going to involve a lot of studio hopping. Here is the program.
Dimitri and I will kick off, followed by Trish with the innovation programs. Chris will take us through the journey of nutrition, setting us up nicely to talk about human nutrition with Philip and Maha, food specialties with Patrick, and animal nutrition with Ivo and Christie. We will wrap it all up with a Q&A where all of the speakers will be available to answer your questions. With this, that gives me just enough time to make it to the studio where Dimitri will welcome you just now.
Thank you, Geraldine, be careful, and travel safe back here up in the studio. Also, very warm welcome on my behalf to this virtual investor event. I want to go back to mid of February, when Geraldine and myself took over as Co-CEO of DSM. During that time, we started to travel, to talk to you as investors, as analysts, to talk about the strategy of DSM, talk about who we are, what we intend to plan going forward with DSM. That was in the time where COVID-19 hardly existed. It was talked about, nobody would believe that it would end up in a global pandemic, as we see today. During these talks, during these meetings, you also raised a couple of times, "Dimitri, Geraldine, this Co-CEO ship, how is that going to work?
How are you going to make speedy decisions?" I'm pretty sure that we told you at that time the story that we are five, six years together in the managing board. We are fully aligned on where we want to bring the company, aligned on the strategy forward. Still, you were a bit staring at us and saying, "Mm-hmm." At max, I think we got your benefit of the doubt. Let's go back to that time when we started our co-CEO ship. What a way to start our tenure, with unprecedented and challenging times. First of all, we started with creating environment where our people, our employees, could stay safe and healthy by implementing strict measures, which we've copied and learned from Asia, where it started.
By doing so early on, we could keep all our facilities up and running, and therefore, could also secure the supply to our customers. To supply secured products and services to our customers, who could then supply their critical businesses to their customers and consumers. Amidst these unprecedented times, we continued to make good progress on our strategic journey. We did three acquisitions. We announced an intended divestment of Resins & Functional Materials, and we implemented two change programs. Let me start with CSK, which we acquired end of last year, and we started immediately the integration project in quarter one this year. We acquired Glycom per the 1st of April, and we are currently starting that integration. Then Biomin and Romer Labs, being part of the Erber Group, just recently acquired on the 2nd of October. Also there, we're starting the integration project.
We announced the intended divestment of Resins & Functional Materials, a business where I grew up in, 30th of September, with the intention to close in the first half next year. During all these nine months with COVID impacting the whole business, we also implemented two change programs, one in nutrition to continue the growth trajectory for nutrition, we called it Fit for Growth, and one in materials, we call it Agility to Grow, where we had to restructure part of our businesses because COVID had just such an impact on that business. In that journey, under these nine months, we continued to make extremely good progress. Hey, Geraldine, you made it safely up here. Great to see.
Yeah. Thanks, Dimitri. I have to say that all of the things that you have listed, we would not have been able to do them on our own. I, therefore, also want to thank all of our colleagues, the whole company, for what we've managed to achieve in what is a rather complicated year of 2020. Now, it's also fair to say that we would not have been able to navigate these rather choppy waters if we didn't have a really well-established long-term strategy, one that we are very confident in and that's well understood by the whole organization. Now, we've also found out that actually strategies grow over time in strength. Our growth and value strategy started in 2015, then we sharpened it in 2018. Therefore, this slide should not be new to most of you, and it still holds perfectly true.
At the time, we asked ourselves two big questions. One is, how do our competencies and our purpose, creating brighter lives for all, align with the mega trends and with the SDGs? Having established that, we then asked the second question, what does that mean in terms of the areas where we should focus in order to grow? The answer is health, nutrition, and sustainable living. This is actually really important and helped us a lot in the last nine months. In a year where everything changes pretty much every other week, it's helped us focus in the right areas to drive growth. It has also actually made our capital allocation a lot easier, a good example are the three acquisitions that were just mentioned.
Thirdly, of course, it has helped us assess when is the right time to make the right portfolio changes. Actually, to that point of portfolio changes, it's probably good if we start with our materials businesses and put them back into context following the divestment announcement that we made in September of the divestment of our Resins and performance materials businesses.
Let's lead you through the continuous journey of that material business, where we have continuously upgraded our portfolio. Let's go to 2010, 2013, where we have evaluated the portfolio at that time, we decided to restructure part of that portfolio by exiting the bulk chemicals part. Caprolactam, acrylonitrile, composite resins, did no longer fit in the portfolio we wanted to build for materials. Taking from there into the next step, we continued our value upgrade of that portfolio. In the last bit, step number three, in the 2016 to 2020 timeframe, we differentiated our growth approach. We sub-segmented the materials business into maximize returns, growth, and accelerate growth. Also differentiate where we put our resources in. Where do we put the money? We put the majority of the money in the accelerated growth areas. Therefore, build a very strong materials business.
A materials business where we have deliberately chosen to grow in certain areas and not in other areas, and therefore continue to upgrade the quality of the portfolio. EBITDA percentage-wise, we beefed it up from 13% in 2015 to over 20% in 2019, while at the same time improving the EBITDA growth. The EBITDA growth on an annual compounded average basis was 12% points for the materials business. Quite an achievement and showing the strength of the materials business. That materials business today, after the divestment of Resins & Functional Materials, is still a EUR 1.7 billion business with strong growth potential. It fully fits into the sustainable living part of our strategy. It adds four growth drivers to the materials business. One, to select the right segments to play in. We call them winning segments. Within these winning segments, we choose the areas where substitution is ongoing.
Substitution for new technology who basically substitute old technology. Products which are more sustainable to products which are less sustainable. That substitution, fueled by innovation and the sustainability trend, made the materials business the business where we are today. Having said that, we should be able to grow the top line with mid-single digit and the bottom line with a high single digit %. That is materials, a very strong quality business. Now let's move from one strong quality business to another strong quality business, our Nutrition and Health business. The Nutrition and Health space is a fantastic space to play in. It is an attractive market helped by global macro trends, and it's fully aligned with the critical SDGs, Sustainable Development Goals. It has proven to be a growth area for a long period already. Why is that?
It's because consumers want to improve their health. They're seeking help to improve their health and looking for sustainable nutrition. Society demands solutions for health challenges. Environment is more and more impactful in the choices we make. Sustainable food production is the key. Therefore, it is absolutely key that there is health for the people and health for the planet. In this fantastic, attractive space, we at DSM, in our nutrition and health business, we have a fantastic business model. We have a unique business model. Why is this so unique? Because it started with global products a long time ago, global products which we were selling to a multitude of end markets. We have built that global products.
It's not only vitamins, it's cultures, it's enzymes, it's minerals, it's new products who filled our toolbox. With that toolbox, we could offer expertise, application know-how to make the difference to our customers and apply solution thinking. That you see on the second bit, it's called local solutions. This is for animal nutrition in the different species in animal nutrition, ruminants, poultry, aqua, and it's the end-use segment in Human Nutrition & Health, early life nutrition, food and beverage, medical and pharma, dietary supplements. Adding the expertise of the broad toolbox of global ingredients and combining them in a solution to our customers makes us successful and makes our customers successful. That is the uniqueness of this model. There are not many players who have these two boxes reinforcing themselves. How does acquisition and innovation play in all of this?
Acquisitions and innovations strengthen that value proposition, strengthen that business model. Let me lead you through a few of these acquisitions. One CSK, Glycom, Biomin, and Romer Labs. They add to this business model. Let me give you an example on Glycom. Glycom has the largest facility of HMOs in the world. By doing so, we add the HMO category to our global product toolbox with all the expertise around these molecules. We translate them to solutions in our early life nutrition space. Because in the local solutions part, we do have that expertise where HMOs fill in fully with ARA, DHA, and we can make a difference for our customers to continue to grow. Biomin, another example. Biomin in the world, in the industry, is seen as the undisputed leader for mycotoxin absorbers. That adds another fantastic category to the global products toolbox. It's enlarging.
It adds specialty character to it. That coupled with a fantastic global exposure and infrastructure in the Animal Nutrition & Health space is a fantastic bolt-on acquisition, which again strengthen this unique business model. On the innovation side, we have lots of innovations ongoing, and they also strengthen that unique business model. Veramaris, Avansya, Bovaer, formerly known as Clean Cow, Balancius, CanolaPRO, just to mention a few. Let me take you through an example on Bovaer. Bovaer is an additive for feed, which reduces the methane at cows. It adds again to the global product toolbox we have. It has been coupled with the end-use expertise we have in Animal Nutrition & Health. By doing so, we can create a formula to help our customers or farmers at the end to reduce their methane emissions, and other emissions in their cow farming.
It truly strengthened the global unique business model we are building. You could say, "Is there more?" Absolutely, there is more. Isn't it, Geraldine?
Well, indeed. While we are very proud of our existing business model, we have spent some time thinking about what's coming next. In order to do that, we started by looking back at the story of food and nutrition. Like all good stories, it starts with once upon a time. Once upon a time, pretty much everyone lived off the land. We produce the food that we eat ourselves. Now, fast-forward a little bit, new agricultural practices were able to increase the amount of food that was produced, and that enabled towns to grow, but they were still supplied by the local farms. The real shift actually came a bit later when the tractor and other machines started to replace the horses, the cows, the humans.
This was a very exciting time because it was when we were asking ourselves the question, can we bring a lot more people out of hunger? Now, not only by applying mechanization to the food space, but also some of the solutions of the Industrial Revolution. Here we should think about productivity, scale, specialization, lower unit cost, globalization. Well, the answer turned out to be yes. Again, fast-forward a couple of decades, we have seen that the proportion of people who are in hunger has gone down dramatically. That is a huge achievement that we can be proud of and will continue to be proud of. Having said that, it hasn't solved all of the problems, and it has come at a price. Now, we like to think about the price in two ways. First, we have seen that food and nutrition have become separated.
Why? Well, because actually the main focus was on calories. Let's think about this. Sure, we have less people suffering from hunger, but 2 billion are still suffering from malnutrition, and that is actually increasing. At exactly the same time, we have an even bigger number of people who, while eating too much fat, sugar, salt, are also actually suffering from a deficiency in essential micronutrients. It's even fair to ask ourselves the question in these COVID times. Would the pandemic have as drastic an impact if we were all better nourished? We know already that the answer to that is no. That's one area of concern. The other area of concern is actually our planet. If you look at the current food system, it's having significant environmental implications. Here, we have to think about topsoil destruction. A third of topsoils are already destroyed.
We have to think about desertification, which is accelerating at pace, and loss of biodiversity, not only biodiversity in plants, but also in animals due to monoculture. This is before we've even looked at the impact of climate change. It's in fact known that the food system of today will be unable to continue to produce the amount of food going forward, let alone actually meet the needs of a growing population. Now, does that mean there are no solutions? That's not the way we look at it, and we believe that we can help contribute to finding solutions to, on the one hand, bring nutrition and food back together for everybody, but also reduce the environmental impact of food production. Now, how does that relate to our story as a company?
Now, as you know, as DSM, we have been part of that journey too, because we have 150-year history, a history of nutritional ingredients, and we have the broadest and deepest knowledge of what actually makes food nutritious. It is what our customers praise about us, and it is the core of our science and of our global products. Now, in addition, in the last 15, 20 years, we have extended our reach. We have made sure that we become even more relevant to our customers, to the end markets, and in that way, grow and develop a local network that enables those local solutions. We believe that what comes next is even more exciting. Now, we've already mentioned that the trends around consumer society and the environment that we're seeing today are already fully aligned with our competencies as a company.
They all point towards one thing that they have in common, health through nutrition. Here, we need to think about the health of people, including the aging population, the health of society, reducing the cost of healthcare, but also hopefully reducing inequalities, and thirdly, the health of the planet. Now, that is what we think about when we think about health through nutrition. There are a whole other sets of mega trends that we need to think about, and those have to do with technology. With the scaling of digital technologies, with the breakthroughs in biosciences, we believe there is the emergence of unprecedented precision. Now, why is precision so important? Because it enables personalized nutrition, and it enables personalized feed for the animal space. So this is where we're seeing the biggest developments coming. Now, it's not only about technologies, by the way.
The digital era is also about behaviors. Most of us are becoming quite comfortable with tracking what's going on with us, both inside and out, amongst others, through personal devices like this one. Imagine what would happen if we can use this information to actually help better health through nutrition. Add on this a little bit of DNA sequencing, there is a true potential to reduce, to avoid some of the medical conditions that are known and yet are still developing because of the wrong nutrition. This is what we see about this unprecedented precision, is that all put together, this becomes very exciting. What does that mean for DSM? We are determined to start developing solutions both in animal and in human nutrition to provide us. We see precision as the big next phase in the story of food and nutrition.
Now, let's have a look at our business model. What does that actually mean to this already pretty unique business model? We see precision as a brand-new area, the new market that is emerging, and we believe we are the best place to actually provide value to our customers with this precision. It is a market in its own right, and it is a market of scale. To give you an idea of size, it is estimated that the precision nutrition in the human space will reach EUR 60 billion by 2040, and we believe that this will go faster in the animal space. You may ask, "Hmm, pie in the sky?" Certainly not. In fact, we've already started the journey, and we are progressing step by step. You will be hearing quite a lot about this with our colleagues today.
If you are interested, please stay tuned. There's one aspect that will, of course, be critical, and that is the quality of our innovations.
You're perhaps asking yourself, "Where does innovation play a role in all of this?" The answer is, it plays a role in all of this. Innovation is today in our company project-based, and we're going to tune and refocus that according to platforms. Platform-oriented, close to the business, platforms who shape the DSM of the future. These four platforms are around precision, prevention, proteins, and pathways. Our Chief Innovation Officer, Trish Malarkey, who will tell all about that after our speech here. Stay tuned for more innovation-reminded information. Where does that bring us from a nutrition and health perspective? We deliver a very strong performance in an attractive market, and we've alluded to that. It's an attractive space to be in.
Within that space, we have a unique business model of global products, local solutions, now added with the precision which Geraldine just explained. By doing so, we feel we can continue our pathway on a top-line growth of mid-single digit and a high single-digit EBITDA growth. How is this playing out for the whole company of DSM? Well, despite these challenging conditions, we will keep delivering on our targets. That is from a profit perspective, but DSM being a truly people, planet, profit perspective. We also commit to our people and planet ambitions. Having said that, Geraldine, with all of this, how are we going to execute this and what are our priorities going forward?
Yeah. Let me tell you what we actually intend to spend our time on in the coming quarters. Rest assured, the top priority is to deliver on our performance and our deliverables to all of the stakeholders. Now, to do this, of course, we have to be the partner of choice for our customers. That's where growth will come from, and there's a whole ream of activities in order for us to make sure that our existing businesses are performing really well. Now, on top of this, we need to make sure that our innovation programs and projects come to market on time, and that we integrate these acquisitions that we've just been talking about in a very effective and efficient way, so we can get the benefit of the growth as fast as possible.
All of this will keep us busy, is keeping us busy actually right now. We also want to be building for the future. To build for the future, we need to start thinking about those new business models that come with precision. Not only the business models, but also, of course, the capabilities in digital and in bioscience, and we may use a bit of M&A to do that. In addition, you've heard us now talk about health through nutrition, and we really want to make sure that we are increasingly positioning our nutrition business in line with this development. Last but not least, of course, we want to make sure that we have highly motivated colleagues with the right skills, the right profiles, and the right mindset to get us onto this next journey for the company.
Now, organizational changes are something that happen all the time. We will do that as we need and when we need it going forward. Of course, starting with an efficient carve-out of our divested businesses in the months to come. Now, as for the financial policy, well, to be honest, I can be pretty quick here because our capital allocation remains unchanged. It is very well aligned with the fact that our strategy is an organic growth strategy at heart. Therefore, that's what we want to prioritize and deploy our capital predominantly there with potentially also some M&A, as we've said in the past. As for capital intensity, we are definitely committed to staying a high investment grade credit rating. With this
Let me try to close this part. We are a purpose-led, performance-driven company. That's not a tagline, it's not a PowerPoint slide, it's not a storyline. It is who we are. During COVID-19, I've seen people pushing the boundaries. I've seen people running the extra mile to secure supply to our customers. Being courageous, caring, and collaborative. During COVID-19, I've seen people stepping up the plate to create a safe and healthy environment for them, for their team, for their colleagues. I've seen integration started of the acquisitions we've done. I've seen change programs being implemented in very difficult conditions. Therefore, a big chapeau to all 23,000 employees who make that happen. A big chapeau. That with extremely high spirit. We just recently got feedback from our yearly employee engagement survey, where the engagement amongst our employees went up with 2%.
In these difficult circumstances, in these unprecedented times, that is a fantastic achievement. That is what made the company tick 30 years ago when I joined DSM as a youngster. It makes me tick today as Co-CEO, as one of the Co-CEOs of this company, because it's a great company to work for. I know I'm perhaps a little biased, but it is a great company, and it's a company to be proud of. With that, I'm happy to introduce you to Trish Malarkey, our Chief Innovation Officer, our executive committee colleague, who will tell you all about innovation.
Thank you, Geraldine and Dimitri. Hello, everyone. I'm Trish Malarkey, DSM's Chief Innovation Officer. As someone who joined relatively recently, I can confirm that DSM deserves its reputation as an innovation powerhouse. Let me share with you what I see as some of the hallmarks of this intrinsically innovative organization. DSM had the ambition and vision to make early, bold investment decisions more than a decade ago, and we continue to do so as a purpose-led frontrunner in sustainability. Our big tickets are breakthrough solutions to some of the key challenges facing the world, and you'll hear more about our progress in several of these later. A critical factor for their success, as with all innovation, is the full support and sponsorship we enjoy from top management.
Our openness to partnering with academia, public-private partnerships, and others in the value chain ensure we have access not only to the best technology, but also routes to market. We've experimented in a structured, unbiased, and holistic way, learning with all possible innovation vehicles, such as internal R&D, corporate venturing, internal venture building, M&A, licensing, and much more. Underpinning this, we have uniquely powerful set of scientific competencies that serve the health and nutrition of both people and animals. We gain compelling business synergies from much of our research. Our intrinsic innovativeness is reflected also in our performance, as DSM is in a strong position to deliver in our growth targets. Even without the Materials projects that will join Covestro, we will achieve our target of €350 million in net sales from innovations next year.
This will include contributions from big tickets such as eubiotics, gut health, Balancius, Veramaris, and Avansya, from our B2C business, i-Health, and many more. Materials, of course, will be an important contributor. Today we're focusing on our nutrition business, which represents around 80% of our total sales. With our origins as a producer of nutritional ingredients, we continually develop state-of-the-art chemistry and biotechnology. To provide these ingredients to customers as solutions in food, animal feed, and in personal care, we have built formulation and application capabilities. Our recent acquisitions have strengthened this and helped to pave the way to today's opportunity to realize health benefits through nutrition. This really will be unlocked by translating and combining our understanding of animal and human nutrition, physiology, and the mode of action of our ingredients, combining it with emerging digital and data technology.
We can increasingly develop solutions that match an individual's personal health and their lifestyle. In animals, we can precisely optimize food conversion based on an animal's genetics, its microbiome, and the environment it lives in. Ultimately, science and technology has been and will be the foundation for us to deliver business growth. To help us capture these new opportunities and to give focus to our innovation efforts, I want to walk you through our Four Ps framework in a bit more detail. The Four Ps are overarching growth themes capturing global, societal, technological, and environmental trends that inform our innovation platforms. Let me start with Pathways. With 150 years' experience of applying science to create the best nutritional ingredients, this truly is our base strength.
With the advances in biotechnology and our core competencies, we can look to microorganisms to produce ingredients and intermediates more cost effectively and with a better environmental footprint. One example in our bio-based vitamin and carotenoid platform is the potential to enzymatically process vitamin A. Vitamin A plays a vital role in many important bodily functions, but the standard chemical production is energy intensive, it's complex, and it certainly creates wasteful byproducts. Innovation will allow us to deliver the health benefits of vitamin A in a much more environmentally sustainable way. However, we're also more than an ingredient company. We provide solutions, and our proteins theme addresses how to meet the protein demands of a growing global population. Reducing the environmental footprint of farming is the goal of our animal emission reduction platform. Our Clean Cow project dramatically cuts methane emissions, one of the largest contributors to climate change.
Behind Clean Cow, we have a pipeline of novel approaches and supporting services. We're also working on alternative sustainable food proteins, which includes scaling up CanolaPRO, a plant-based meat and dairy alternative. That means understanding how the protein functions and how it can be applied in different ways for various food matrices. In our prevention pillar, we have a rich portfolio of natural, active ingredients that help to maintain and improve the health of people and animals. As we learn more about microbiome modulation by nutrition, for example, we can see how it affects people and animals and the resilience to stresses and diseases. This creates opportunities within our animal gut health and our human healthy gut platforms. In animals, building on our successful work in Balancius, the development of novel products and solutions together with new technologies and services creates opportunity to reduce antibiotic use in the food chain.
For people, we are investigating the potential to help with diseases such as irritable bowel syndrome. Our cultures powerhouse platform, meanwhile, includes bio-based preservatives as alternatives to chemicals in the food industry. We have bio-preservation cultures that are natural, label-friendly solutions for applications where right now there are either no or limited preservatives. In combination with other DSM ingredients such as starter cultures, probiotics, and enzymes, this offers natural preservation solutions that will dramatically prevent wastage. I would be remiss not to mention immunity, given how topical it is right now. There's a wealth of global scientific literature on the immunity-boosting properties of vitamin D, for example, and increasingly how it can help prevent the infection of COVID-19 and alleviate the symptoms of those who have it. It can take months to reach optimal vitamin D status through improved diet or traditional supplements.
In our immunity platform, we have an innovation called ampli-D that helps people reach ideal vitamin D levels three times faster. It's not a wonder drug. It won't cure COVID-19, but it can provide our immunity a crucial boost. Finally, precision. As you heard earlier, we regard this as the next frontier in nutrition. With digitally enabled scientific approaches, we can also precisely optimize an animal's feed, and we can develop individual nutrition solutions to match anyone's personal health and lifestyle. With AVA, we have a personalized nutrition platform that provides nutrition and coaching recommendations across a wide range of health and wellness segments. You'll hear more about this and many other innovations later today. Naturally, we tend to talk to you more about our mature innovation projects. As you can see, within each growth theme, there are several innovation platforms.
For each of these, we are defining a clear pipeline of multiple projects at various stages of development. I hope that as we walked through the four Ps, you saw how this framework provides focus and how it links our existing portfolio with our future pipeline. When we look ahead to 2025, our success is not dependent on two or three programs. For sure, the impact of our big tickets should make a meaningful contribution. By 2025, the likes of Clean Cow and Avansya will still be growing towards their peak. While we will say goodbye to some of our materials projects next year, we are also gaining other opportunities through acquisition, such as with the Erber Group. This should continue to contribute to our original 2025 targets and beyond.
I hope I leave you with a better sense of how our approach and our four Ps framework creates a seamless, complete two-way link from our nutrition strategy through to our scientific competences. We are building a business-anchored pipeline of innovation in nutrition that is aligned with future strategic needs, that supports our growth ambitions, that helps us determine which scientific competence we build and maintain, and most importantly, motivates our people, our customers, and our stakeholders around science and innovation. I am now going to pass over to my colleague, James, who will introduce you to our nutrition colleagues and how we will build on our current strengths and use innovation to capture the attractive growth opportunities.
Thank you, Trish. Welcome, everyone. My name is James Bauly, Global Lead for Personalized Nutrition, exceptionally for the next hour or so, your host as we move to the second part of today's program. Having heard from Dimitri, Geraldine, and Trish about how DSM aims to capture the opportunities arising from those global mega trends and changes in customer needs and consumer behaviors, we'll be exploring some of the key themes around these topics in more detail with the leadership of the respective businesses. I would firstly like to welcome Chris Goppelsroeder, CEO of DSM Nutritional Products, to talk with us about the nutrition strategy over the last few years and its results, as well as perspectives going forward. Chris, a very warm welcome. It's a pleasure to be here. I'd like to start by reflecting on performance. How do you feel, Chris?
Looking back over the last five years, are you happy with the achievements of the nutrition business?
James, I'm very happy about what we achieved. I mean, we have a unique business, one with purpose, and then we have strong performance on top. I mean, what do we want more?
Very nice. Can you elaborate a little bit more, please?
Yeah. 2015, we set ourselves very ambitious targets. These ambitious targets were such that we had to do something different. When you look today, we delivered. I'm particularly proud about the year-over-year improvement we did. When you look at this slide, and you start with the left, organic sales growth at 6%, that's definitely beating the market. Every year, on average, 6% growth. Then on the EBITDA side, double of that, nearly double of that rate with 11%. That's also a good way of showing that we have leverage. Last but not least, if you combine the two, moving from 17% to 21% EBITDA margin. Yeah, we created a real growth business with DSM Nutrition, with very attractive margins.
Those are indeed impressive numbers, Chris. Very impressive. What do you believe were the key strategic moves enabling such success?
There are always many, as you can imagine. If I bring it to one, then I would say further building out our business model.
Right
was probably the most important element that we did.
Okay. What does that mean exactly, Chris? Can you compare the new business model with the old one and perhaps explain the main differences?
Yeah. Let me try that by showing you what actually we showed in 2015 to our investors. You see here the global products and local solutions picture as we had it at that time.
Yeah.
In 2015, we had a very big nutrition business, but the vitamins piece in it was pretty big. That vitamins piece that we had at that time was also quite volatile, probably also because we managed it quite operationally. The other point is, when you look on the right-hand side on this picture, the in-market organization was region oriented.
Right.
Region only.
Yeah.
Which more or less led to undifferentiated product selling and, yeah, probably little to no-
Right
innovation pool that was created from that. When you take that all together, certainly not optimal.
Right
when we look at it from now.
Indeed. There needed to be some kind of evolution. How does it work now, Chris?
When you look today, the picture looks a bit different. You have three major levers that probably changed it for the better. Let me start with number one in dark blue. We put a strategic category management in place. A category management that leveraged the unique business model with a purpose to reduce the volatility of the profitability of the vitamins portfolio. I think we were quite successful. Number two, we put end market focus in place. End market focus together with market insights leading to more solution selling, so real solution selling, and obviously a much more market pull in terms of innovation. That then in turn leads to number 3.
Right
which is a beefed up portfolio. Beefed up by two things. One, the innovation we just talked about. The other one, clearly M&A. Altogether, three levers that changed the picture, I think, materially for the better.
Very good. This makes perfect sense, Chris. On paper, obviously, it sounds relatively simple. I assume in reality it took a bit of a time to make all of this work. You touched on volatility earlier. Could you describe the elements that lead to a more limited volatility of the vitamin portfolio's profitability?
Let me try that, James. On this picture, you see our vitamins set up in a portfolio of market position and supply position. As you can see, in all vitamins, we have a strong market position, which is probably not so surprising given that we have a big market share in all of them.
Right.
It changes a little bit, the picture, when you look at the supply position. There, you see that in fat-soluble vitamins, we're talking about A, E, and D. There we have a leading supply position.
Right.
That is both in capacity and cost. Whilst for the water-soluble vitamins, such as the B vitamins and vitamin C, we're more on the average side of things. When you think about our investment strategy, capital expenditure, right? We very much focused on the fat soluble side, where we already are leading. On the water soluble side, we were a little bit more modest. Instead of increasing capacity a lot there, we rather opted to buy externally, sourcing. We didn't do it across the board. We did it mainly for Animal Nutrition & Health, the reason is very simple. The first is the regulatory stringency of the animal nutrition side is less than the human nutrition. Most importantly, the volatility of pricing on the animal side is quite a bit larger than on the human side.
All in all, when you take this together, it makes it quite clear that we did a bit of a different strategy. If you now complement that with the vast premix position we have on the animal nutrition side, it generates for us, for that external sourcing, a hugely leading purchaser situation, which is quite powerful.
Yeah.
As you can see, this make-and-buy strategy has certainly had an influence. There is another element that probably is important, and that is, I would say, the portfolio effect. What is the portfolio effect? It's essentially that individual vitamins do not move all in sync with each other in one or the other direction. That's actually positive.
Yeah.
The portfolio effect is that if you have all of the vitamins, some go back up and some go down. In total, the fluctuation of the profitability has been reduced dramatically, as you can see here. It is not zero.
I don't want to say that. It's not zero, but it's much less than it was.
Right. Yeah, indeed. That looks like a lot less volatility also than I realized. I'd like to come back to the end market orientation. You touched on it. If I understand it correctly, you're actually selling to a large extent the same products into different end markets. How can you then also create differentiated solutions per segment and still drive growth?
That is indeed a good question, James. Let me try to answer this with our human end markets. Here you see the five different segments that contribute to our EUR 3 billion sales in the human business. It's Early Life Nutrition, Food and Beverage, Dietary Supplements, Pharma and Medical Nutrition, and Personal Care and Aroma. Each end market, we can clearly see, has a very different key success factor when you think about what customers value especially.
Yeah.
The innovation space is also very different. Whilst the products that we sometimes sell are the same, the kind of where they go to is very different.
Yeah.
Instead of going through all of them, I think that's a bit too long, let me choose just early life nutrition and dietary supplements. In early life nutrition, what customers want is top-notch quality. Is that surprising when your end consumer are babies and toddlers and children? Not really, right? What these customers want is peace of mind, and we give them that peace of mind with a top-notch quality system in both procedures and systems. That is important to them, but it's not good enough. They want even more from us. They are also in a race, in a race that is innovation based, in a race to come as close as possible with their products to mother's milk. Mother's milk, which is essentially the gold standard in this industry.
Yeah.
In that instance, I think you probably are aware we have done quite a bit over time. In the last 10 years, the first thing we did was certainly the acquisition of Martek. We added omega-6 and omega-3 to the portfolio, which was a huge innovation wave in the industry. Just recently with Glycom, human milk oligosaccharides, HMOs, we added another step in the same direction. I think we have put ourselves clearly on the map for early life nutrition. If I then move maybe to dietary supplements, altogether a different game. In dietary supplements, the name of the game is understanding science of the health benefits of our product. Then comes the important part, and translating those into claims that customers understand, but even more so, consumers understand to create a pull. That is certainly key in that area.
Maybe not all remember, but maybe about 10 years ago, we have put in place a group that is called Nutritional Science and Advocacy, and what they do is just that. They just do that. Now very recently, COVID-19 unfortunately came along, and you can imagine that now all changed. The whole focus is on immunity. We threw all our resources on that subject, on that health benefit.
Because we did that and could do that so quickly, we could help our customers from day one in this new normal that COVID-19 created. I think we all know we have a fantastic portfolio for immunity. Think about vitamin D, vitamin C, the omegas, et cetera, probiotics. I'm particularly hopeful about something new. We have something new in the pipeline, and I'm totally excited about it. That is particularly helpful in immunity with COVID. Even more on the horizon. I hope this shows a little bit how the same products can do different things in different end market segments.
Very good, Chris. Looking forward to hearing more about that later as well. Absolutely, with this unique set of end markets, I totally see why you've opted for this segment orientation to fuel the organic growth. At the same time, the market insights coming from those segments have obviously been very helpful in targeting new innovation projects and products from M&A.
True
All in all, how successful do you then rate your overall portfolio expansion over these past years?
James, it's a fair question. If I try to show that here, on the bottom, you see the existing portfolio and top what we added in the last five years. Yeah, it looks pretty nice on this picture, but we have to be a bit fair. The new products that are depicted here, only about half of them already today have a significant addition to our sales and to our profits, and the rest, not yet. When you think about the power of this new portfolio, this can create a new wave of profitable growth. If I turn a little bit to the two main markets, animal and human, we also have a bit of another thing to look at. What is, if you say trend or what is the North Star? Where do we think everything is going in those two markets?
If I start with animal, the North Star for a while, and will stay the North Star, is sustainability. If I put it a bit more precise, it's sustainable animal farming. When you think about that in the background of your head, Veramaris, our joint venture for omega-3 in fish, together with Evonik, Bovaer, CleanCow, or Precision Nutrition, they fit exactly that bill.
It's even true for our latest acquisition, the Erber Group, with mycotoxin mitigation, but also what they bring along to our already growing heavily Eubiotics franchise. It fits, again, very much the bill. If you go a step even further, many of our existing products already fit very nicely. Just think about more with less with enzymes and so forth. It all fits very nicely together.
Yeah.
Now, on the human side is different, but also there we have a clear North Star, and given COVID coming along, it is even more pronounced.
I'd say health is and will remain our North Star. Maybe the question is personalized health or just health. Also here, our existing portfolio has already done nothing else but health through nutrition. If you look at the new portfolio, let's start with EverSweet, our stevia joint venture with Cargill.
CanolaPRO, our plant-based protein joint venture with Avril. As I just mentioned, ampli-D, that's the product for immunity, COVID-related immunity. It's all fitting to the health aspect of our population. HMOs, we just discussed, fits the bill also. Also our acquisitions fit into that.
Yeah.
Last but not least, our big future also in personalized nutrition, as you know better than me, is again in that direction. I think also there we have a clear North Star. If I can say, this makes me feel we have an exciting new portfolio, but it is also fitting with the future.
Yes. Very nice. I'd love to spend more time.
Me too.
with you about this. It's a very exciting glimpse. We are, however, going to be learning more about some of these with the respective business leaders. Chris, perhaps this is a good time to also talk about the team for a few minutes and touch on who does what in the nutrition organization.
Gladly do so. As we know, without team, nothing works. I'm particularly proud of this team here, the nutrition leadership team, but also the whole organization of DSM Nutrition as we have done this all the last five years together. Why I put this organization like you see it in front of you, bang into the business model is because I think that's the secret behind our success. Our organization is a live example of the business model. Let me be clear. Operations, innovation, and category management are clearly the global products piece. They are working on the product definitions, whilst our market piece is very much coming together with Animal Nutrition & Health, Human Nutrition & Health, Food Specialties, and personal care and aroma on the right-hand side.
You have the classical people and organization, finance, control, strategy, and myself being the ones that kind of encompass everything. When you think about that, it actually is the secret sauce, if I can say so, why this worked. Some of them you will talk to, I think, James, just in a few minutes. Animal nutrition, human nutrition, food specialties, Ivo Lansbergen, Philip Eykerman, and Patrick Niels. I think you will hear much more from them.
That's exactly right, Chris. Thank you. Let me thank you for this interview. What a journey it's been. Perhaps before I let you go, one last question. There's this poster entitled Human Nutrition, sorry, Health and Nutrition Campus. What is all that about, Chris? What are you planning, and where are you planning it?
Yeah, thank you for leading me to finally a very important question. As you know, innovation is a leading pillar of our strategy. I think everybody has made this clear, also the Co-CEOs just before me and Trish. It's also a personal topic for me. It's very close to my heart. We also know that from past mistakes, that if you want to make out of innovation successful commercial business, there are a few things that are really important. Let's say the one that we most feel is important for us, looking at our past mistakes, is putting together market-driven business thinking with technology-driven R&D thinking. If they are close together on every step on the way, it will be good. With this state-of-the-art Health and Nutrition Campus, we want to essentially do just that.
We will build it here in Kaiseraugst, in the headquarters of DSM Nutritional Products, and we're very proud to be soon in a space where we can do innovation much faster. Now, there's a small but important detail that I want to show you.
Okay.
I need to bypass you here.
Sure
behind you, because we have here a fantastic model of what we want to do. If I can explain briefly. This is the Rhine River, this is our main building, and what we are building is this innovation building here.
Got it.
Given that we want them to work closely together, you see that here we made a physical connection between the two. We went out of our way to connect those two buildings and not have them separate as silos. Now, on top of it, we put here in the main building, but also here in the innovation building, quite a lot of interactive spaces for project teams, cross-functional project teams, to work together and interact in an agile way. All of this is unfortunately not yet there. Unfortunate, but it will be there at the end of 2023. I think it will also kind of manifest or bring testimony to the point that we want to stay in Switzerland.
Yeah.
Our commitment to Switzerland, but it definitely means here's innovation as a key pillar to who we want to be as DSM.
Thank you, Chris. Tremendously inspiring. I, for one, can't wait to see this become a reality.
Me too.
Bright Science, Brighter Living really shines through. Thank you again, Chris, for your time.
Thank you.
Really enjoyed the interview. I'd like to now hand over to a break. We're going to take a 10-minute break, and then we'll be back to talk, as Chris mentioned, to the leaders of the respective businesses, starting with Human Nutrition & Health. See you back here in 10 minutes. Thanks again. Thanks, Chris.
Thank you, James.
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Welcome back. Next up, I would like to welcome Philip Eykerman, President of Human Nutrition & Health, and Maha Elkharbotly, Global Vice President, Specialty Solutions for Human Nutrition & Health. Welcome both of you.
Thank you.
Philip, congratulations on your new assignment. It is quite a time to be taking on that role. We can hardly talk about Human Nutrition & Health without touching on COVID and the current pandemic. We hear that COVID is boosting demand for immunity. Is this a temporary situation or a more structural increase in demand for immunity-related products?
Thank you, James. COVID has a big impact on our business. The impact it has on the globe and on our day-to-day life, I think is unprecedented. I think it's also woken up the world to the importance of preventive health, and especially immunity. Every other year, we do a big survey with 12,000 consumers, and what we see is that people are buying more dietary supplements, but also taking them more. We see also that people are introducing immunity-boosting ingredients into their day-to-day lifestyle. This is an example of a bread with lipids. I can tell you, it tastes very well. Of course, that creates a big demand for some of our products, especially vitamin C, vitamin D, the lipids, the probiotics, but also vitamin E and A.
If we take all those products together, that's roughly 50% of the EUR 2 billion of sales that we have, and of the products that we bring to our customers and our consumers through the dietary supplements, through pharmaceuticals, through medical nutrition, but also through infant formula and normal food and beverage products. Of course, the biggest effect we see in dietary supplements, that is globally in terms of retail value, a EUR 40 billion market that has been growing at 3%-4% per year. Typically, what we saw is that the herbals and the probiotics were growing above average, and the minerals and vitamins a bit below average. That trend has currently reversed.
We see the vitamins and the minerals grow above the average at the moment, and the total has gone up from a 3%-4%, where it was in recent years, to now 4%-5% growth per year. In some regions, like the U.S., we even see an 8% growth this year for dietary supplements. Yes, big impact. Is that impact going to last? Yeah, I think so. As long as COVID will be on top of people's mind.
Yeah
the impact will last. The more that people integrate it into their day-to-day habits, the more it will stick, James.
Yeah. Thanks, Philip. Indeed, immunity going to be critically important for the foreseeable future. Maha, what is the real impact of micronutrients on the immune system?
Micronutrients play a very critical role in our immunity support. We have two types of immunity, which is our first one is our innate immunity, which is our first line of defense, which micronutrients support, as well as our adaptive immunity, which is our second line of defense. In the EU, micronutrients have already been granted several health claims, and in the U.S., the U.S. FDA allows immunity claims as well in front of pack. Here's a great example for our customers, where we were able to support them with our regulatory teams and our scientific teams to be able to support them, to be able to put such claims in front of pack, which is obviously quite important for our customers.
Very good. I think, Philip, you also have another example that you wanted to share today.
Absolutely, James. I think there is mounting scientific evidence that vitamin D could play a very important role in fighting COVID-19, both in prevention as well as in treatment. If you look at the total global population, almost 40% of people are deficient on vitamin D, and almost up to 90% don't have the optimum level of vitamin D in their blood. We have a new product in our pipeline that we call ampli-D, which is a much more highly bioavailable form of vitamin D. In fact, it's the form of vitamin D that flows in our blood. This can basically boost the vitamin D level in the blood to the optimum levels in a matter of days and weeks. Whereas with normal vitamin D dietary supplements, this can take up to months.
This is, the example that you see here, is the product as we make it and deliver it to our customers, who then can basically put it on the shelves with their labels on it. This has the ingredients in the pill or the gummy.
Right.
The pill or the gummy in the bottle, the bottle in the box with all the regulatory documentation with it, all from DSM. This is what we call a market-ready solution. We've currently got regulatory approvals for this product in Australia, but are working on getting swift approvals also in the other regions, and I think this could be really a game changer in the fight against COVID-19.
Very nice example, and we'll definitely be talking about solutions more later on, and it's a great example of quickly meeting a critical need for people. Now we've talked about immunity, ingredients, product solutions. I also want to touch on eye health, Philip. How does the eye health business play into this?
Yeah. Eye health has been a great business for DSM. Since we've acquired it almost now 10 years ago, it's been growing double digit with very attractive margins. I think we've got a fantastic team there that also is delivering a very good year this year and is launching a number of new innovations. These are some examples that you see here, one for adults, one for kids, of immunity-boosting products under the Culturelle probiotic line.
Very good. Thank you. It's a lot to talk about on the immunity side. Be sure to check the virtual rooms also. There's a lot more information around immunity. I'd like to change tack a little bit now and talk about your recent acquisition, Maha, of Glycom. Firstly, do Glycom also play in immunity?
Yes, they do, with HMOs. HMOs is Human Milk Oligosaccharides, which is basically a group of carbohydrates that behave, and together they are considered a prebiotic, a very advanced prebiotic. We find those mostly in breast milk. I just want to be very clear, the breast milk is the golden standard. What we try and do, is to help get formulas to as close as possible to this golden standard to support mothers that are not able to breastfeed. HMOs are critical in supporting the infants in developing an immune, a digestive system. Via when you have a healthy digestive system, you're able to create a strong immune system to actually support the infant against infections, basically.
Very good. That's extremely helpful to understand what HMOs are and how critical they are in this particularly critical category. Can you also say some words about Glycom the company?
Definitely. With Glycom, we have welcomed into the DSM family, the largest manufacturer of HMOs in the world. Obviously, having HMOs as part of the family makes sense because DSM, we're obviously the leading manufacturer of early life nutrition ingredients with our vitamins and our lipids. Now we're able to offer our customers a complete solution for their early life nutrition and their formulas.
Very good. The Glycom acquisition and HMOs in general, am I getting that right, is mainly for early life nutrition, or can you add some perspectives on some other areas as well?
Yeah. For now, definitely it is early, with early life nutrition. This is where we're seeing it in the market. However, we already have four human clinical trials that have actually given us several irritable bowel syndrome claims for growing up children as well as for adults. We see the HMO's role, and as we develop more science, to be expanding into more segments as well as being able to offer more health claims.
Okay, very interesting. There's definitely some perspective on further breadth.
Yeah.
With that in mind, how big would you say the market is for HMOs?
Right now, we see that the market is around EUR 100 million, which we expect it to grow by fivefold over the next few years. Obviously, how is it going to grow? It's going to grow because via the science and obviously more understanding of the ingredients, more inclusion rate, as well as penetration into new segments with medical nutrition, with, also in F&B and possibly also in pharma.
Very good. Well, thank you. Some really interesting perspectives on, we've talked about ingredients and product solutions. I want to now come back to the word solution, right? We touched upon that a little bit earlier, and you're often talking proudly about your unique business model. Chris himself earlier mentioned global products integrated into local solutions. Can you elaborate more on your journey from an ingredient supplier to a full solution provider?
At DSM, we pride ourselves in being the end-to-end partner for our customers. What does this mean? It basically means we pride ourselves in being able to provide our customers with very high-quality ingredients straight. A vitamin C, a vitamin D, just a single ingredient. We also pride ourselves in being able to support our customers in premix, where they are actually looking at having more than one ingredient put together, where we are able to support them with sourcing multiple ingredients. Last but not least, is to support them in market-ready solutions. Just as Philip mentioned earlier, in regards to getting a complete product for them, where they get to focus on the branding and commercialization, or in certain instances, where even they ask us to support them, to be able to support them in marketing activities, in new regions.
For example, in China, which is what we have here with one of our customers, support with Victor Axel in China.
Okay. Wow. Yeah, really interesting adding a whole raft of additional value for our customers across that whole solution. Is this the model for the future?
We believe so. We believe in the way for us to be able to support our customers to grow is going to be able to help us provide our customers with a long-lasting relationship. Obviously, the more ingredients we're able to bring in, the more support we're able to provide them with running unique solutions and innovation, then we're able to make sure that our customers are focused on their strength, and we are focusing on supporting them. Today, 60% of our sales is straight and 40% is from solutions. We see that balance of sale shifting over the next few years.
Very nice. I'd like to now build on that topic of solutions. Philip, coming back to you, the CEOs talked earlier about the opportunities that you see in digital and gave the example of personalized nutrition, a topic very close to my heart. Of course, it sounds exciting. There's a lot going on. How real is it? Is this really the next dimension in your business model?
Thank you, James. I think it is absolutely real. We see this space developing very rapidly, and we also believe that for DSM, this could be very significant opportunity.
Right.
Some analysts say that this could be up to a EUR 60 billion opportunity by 2040, not for DSM, but for the globe.
Yeah.
Yes, I think it's a very exciting space. If we look at the market today, the players are primarily startups and challengers, and we see no champion yet that has to date pulled together already all the necessary building blocks, which are, one, the diagnostics, two, the recommendation engine, three, the personalized nutritional product
Yeah
Four, the kind of delivery format that would go with that. It's certainly an opportunity here.
Very good. What specifically does DSM have to offer here?
I think we've got all the necessary building blocks for science-based personalized nutrition. In the first place and foremost, we are experts in nutritional ingredients, as well as all the science that comes with it, and the optimum delivery formats, if I can say it like that. We've built a network, an ecosystem, let's call it like that, through investments that we've made, but also partnerships that we've made that give us access to diagnostics, to recommendation engines, et cetera. I think what is critical is bringing all those elements together because that is what there is customer pull for. Customer basically wants fully proven end-to-end concepts. In order to deliver that, we're currently in the process of setting up a separate from DSM venture called Hologram Sciences.
That's going to be based in Boston, and it's going to be led by an experienced startup team, and we'll provide them with $50 to $100 million over the next five years to get the venture off the ground. Products will be coming soon. Already in the coming quarters, we'll have launches of concepts around immunity, but also, for instance, around pre-diabetes treatment for type 2 diabetes. Very exciting.
Thank you. Very exciting. Thank you so much for sharing. Really exciting news. As we perhaps work towards a wrap up now, we've talked about a lot of exciting areas, right? I want to ask you, Philip, how will they also make a meaningful contribution to our growth? How important are all of these programs to that growth?
Very important. I think there's still a lot of science to be developed in this space. You've seen all the innovations that we're working on.
Yeah.
A number of new products like MPD, like HMOs, like new lipids, like new pharmaceutical concepts, et cetera. Also a number of new business models like the market-ready solutions, like personalized nutrition. Then there's still some share to be gained for us in the space of medical nutrition, for instance, but also in pharmaceuticals, where we're not yet at our fair share. Still lots of opportunity that should allow us to grow at least mid-single digit in this business, James.
Thank you. Maha, perhaps from your side, some last words alongside the numbers side of things.
Yeah.
Anything you'd like to add?
Obviously, the numbers are very important, and we have a good understanding of that. We also know that our mission is to provide health through nutrition, both for the growing population as well as for the developing countries. With that, we really understand that what we are creating is products with a purpose, and we are proud of that mission, and that is what we're trying to deliver right next to the numbers.
Thank you both so much. The excitement and passion really shining through again. Really appreciate the time. With that, I'd now like to hand over to our other studio to Patrick Niels at DSM Food Specialties. Patrick, over to you.
Good afternoon. My name is Patrick Niels, and I'm here today to talk to you about food and beverages. Food. Over 800 million people don't have enough. Nearly a third of the global population is missing out on essential nutrition from their diets one way or the other. Another third is over-consuming often the wrong things. We at DSM are uniquely placed to help address this, helping to make the food and drink that we all need more delicious, more nutritious, and more sustainable. Together with my team, I lead DSM Food Specialties, and it is exactly what we aim to do. The food and beverage market is subject to rapid change, driven, of course, by evolving consumer needs. The name of the game for our customers, food and beverage producers, is to anticipate on these changes and develop and deliver on-trend differentiating products faster than their competitors.
What do they need? Taste and texture. It all starts with taste. The physical and emotional experience you have when taking a sip or a bite is absolutely critical. Food simply has to be delicious. Besides this, consumers are increasingly aware of the role food and nutrition plays in their health and wellbeing. I know I have become a lot more label conscious in recent years for myself and for my family. As consumers, we want shorter and more recognizable ingredient lists. We also look for food with additional health benefits and improved nutritional value. Last, but by no means least, sustainability becomes more and more important. It starts with more efficient food production, more cost efficient and more resource efficient. One third of all food is currently lost or wasted and not consumed. Nearly EUR 1 trillion in wasted value each year.
There's a clear and urgent need for sustainable solutions. In this market environment, speed is key. Our customers need partners that help them get to market faster and differentiate from their competition with market-ready ingredients and solutions. Over the years, we at DSM have built a really strong and broad global product portfolio of specialty ingredients for the food and beverage industries. We supply dairy cultures, enzymes for multiple applications across dairy, baking, beverages, coatings and preservation systems, yeast extracts, and processed flavors, et cetera. These are all about taste, texture, and supporting an efficient and sustainable production and consumption. As Chris said, it's all about bringing these global products in local solutions for our customers, and we do this by increasingly focusing on our end markets. Over recent years, we've expanded our portfolio with the acquisition of our hydrocolloid activities, giving us much stronger capabilities in texturizing.
The increase in consumer interest in health and wellness creates enormous opportunity for us to add our global nutritional products to the mix with our vitamins, our minerals, and our nutritional lipids, as well as opening up clear opportunities for new innovations. Our portfolio is increasingly about integrating taste, texture, and our health offerings. Summarizing, we have a unique and broad range of global products. Next step, we have a deep expertise in application in our core end market segments that allows us to pull these together in integrated local solutions, combining taste, texture, and health at the same time as bringing efficiency and sustainability benefits for our customers. Let me illustrate this with an example. I have to admit, I personally do enjoy a good burger. I'm not alone in that.
One of the fundamental shifts in our industry is the boom in demand for plant-based options alongside the traditional choices. The race is on to deliver the best, the most authentic plant-based burger possible. That means, first of all, delivering authentic taste and flavor and a fantastic texture mouthfeel. Needs to be firm, needs to be juicy, needs to be succulent. These enzyme yeast extracts and processed flavors deliver this authentic meaty taste and flavor. With our hydrocolloids, and soon with CanolaPRO, we can help deliver the perfect texture and juiciness. The next wave of demand by consumers is going to be for a better health appeal and a comparable nutritional profile. We can help reduce the amount of salt in the recipe and, uniquely, provide the vitamins and minerals that make it a more nutritious choice, as well as enriching the protein.
This will allow our customers to support their product positioning with front-of-pack health claims. By the way, although it's a separate value chains, our enzymes are also included, as well as our vitamins and lipids in the bun. Of course, in case you would prefer a cheeseburger, we have also our dairy solutions providing everything for the cheese. You get the picture. The key takeaway here is we're increasingly using the full potential of our nutrition portfolio to differentiate ourselves from competition. We are the only player in the market who can bring taste, texture, and nutrition with our efficient and sustainable clean label solutions. I'm excited about the potential for expanding our share of wallet in this fast-growing plant-based space.
There is much more background on our integrated solutions, how they bring value to producers of meat and dairy alternatives in the virtual venue, I encourage you to take a look. Going forward, what are our drivers for sustained growth? First of all, we will continue to deepen our integrated application know-how. I will give you an example of how we do that in a moment. Secondly, we will further broaden our global products portfolio, and we will power that through our innovation efforts as well as through M&A. Dimitri, Geraldine, and Trish talked about how the four Ps are guiding our innovation strategy. As I said, we are deepening our application know-how and expanding our product portfolio. Let me give you an example of application-driven innovation. We recently launched a combined enzyme and culture offering for the production of mozzarella, specifically tailored for the U.S. market.
Mozzarella is the biggest global cheese segment, and the biggest application area for that is pizza cheese. Our solution of enzymes and cultures enables pizza cheese with a more balanced and buttery taste profile and better texture with a softer stretch, which is actually what U.S. consumers prefer. It also enables an increased yield per liter of milk. Very important, too. This launch is doing very well. We're growing double digits in this segment. Great example of application innovation. Our innovation platforms and pipeline also enable us to expand our global product range, including our CanolaPRO and our Avansya EverSweet offering. I already mentioned CanolaPRO in relation to meat and dairy alternatives, so let me say a few words more about it now. With CanolaPRO, DSM developed a proprietary process to source a high-quality, nutritionally complete plant-based protein from canola, rapeseed for us.
It improves taste, texture, and nutritional value of vegetarian and vegan products. Earlier this year, we formed a joint venture with Avril, joint venture is called Olatein, to produce this CanolaPRO. Avril is a very strong partner for us. Avril is backwardly integrated with canola. We have a factory already under construction in France. DSM will take care of the route to market and further R&D and application development. Commercial launch is expected in 2022. Now, CanolaPRO is an excellent match with our portfolio of ingredients for meat and dairy alternatives, giving producers in this area much more formulation flexibility for taste, texture, as well as nutrition. Our canola protein will be a key building block as we look at further growth in alternative plant-based proteins.
One of the other product innovation areas I want to manage is the work we're doing in sugar reduction, specifically our Avansya joint venture that we have together with Cargill. I'm very proud to say that in its first full year of operation, we expect Avansya already to hit double-digit million sales. I think this is a great example for large innovation with early market success. The opportunity continues to grow, the market and societal demand for great-tasting, zero-calorie, non-artificial sweetener is only becoming more and more urgent. There's more background on Avansya's progress and how EverSweet is hitting the market with consumers and customers in the virtual venue. Now next to innovation, we'll also use M&A to boost our growth and to support deepening application and broadening our ingredients profile.
Most recent example being the acquisition of CSK, where we have significantly strengthened our position in dairy, which is our biggest segment. We have strategically improved our geographic footprint with a state-of-the-art manufacturing facility in the Netherlands, in the heart of Europe. We've also deepened our dairy application innovation capabilities, for example, in tvaroh, a very popular category in Eastern Europe. Additionally, we've expanded our product portfolio, especially in taste and texture with unique starter cultures and complementary enzymes specifically for semi-hard cheeses and fresh dairy. The integration of CSK is proceeding very well, and both top line as well as bottom line synergies are already beyond the business case expectations. Summarizing, what does this all mean for our future growth? Well, we have a winning business model with a clear focus on integrated solution in taste, texture, and health.
We will drive growth by further strengthening our global product and local application offering, both through innovation as well as through M&A. As a result, we will continue to deliver above-market sales growth. While the market grows at around 2%, we aim for mid-single digit. I personally am very excited because we, as DSM, really are uniquely placed to bring value by helping our industry partners make the food and drink on which all of us rely more delicious, more nutritious, and more sustainable. With that, it's time to turn to DSM's activities in Animal Nutrition & Health, and I'll hand over to James.
Thank you, Patrick. I am now joined by Ivo Lansbergen, President, Animal Nutrition & Health, and Christie Chavis, Vice President, Specialty Solutions, Animal Nutrition & Health. Welcome to the both of you. Ivo, as we just heard from Patrick, our colleagues at DSM Food Specialties are enjoying a great success story with alternative proteins. Aren't you a little bit afraid that your attractive market will disappear, or at least drastically decline over the next few years?
Right. Yeah. Thank you for the question. Actually, a question I hear more often. I'm quite confident. I'm quite confident that this is not going to be the case. We will see animal protein growing by a level of 1%-2% for the foreseeable future. Why is that? The current population is about 7 billion. It's expected to grow by 2050, to grow to 9.7 billion people.
Wow.
That's about 40% increase. That's number one. Number two is all those people, of course, they would like to actually consume animal protein, but also it's linked to GDP. GDP per capita. People have more spendable income, and therefore will consume more animal protein. These are the big drivers, actually, for the future growth, for sure. In addition, and let's actually not forget about that, alternative proteins, very important indeed, but it's still fairly small compared to animal proteins in itself. To give you a bit of a flavor, it's about a 2 billion market for alternative proteins, and it's about 2 trillion for animal proteins. Still quite small.
Yeah
Growing quite nicely.
Okay. Thanks for that clarification. The overall market, still very large and steadily growing. Does this mean that the feed additive market that you're targeting will also grow only at that 1% to 2%?
No, we expect actually the market to grow faster. We expect the market to grow by 4%-6%, so let's say mid-single digit numbers. The reason for that is actually a couple of drivers. One is the professionalizations of farms, and that's happening as we speak.
Okay.
In China, we see that happening. Actually, that's creating more demand for premixes for feed additives. That's number one. China, APAC, LATAM, that's where we see it happening. Feed conversion remains and is right now a very important point. Driving up efficiency, very important indeed. Actually, the banning of antibiotics as a growth promoter, also that actually is going to be a very important driver. Last but not least, this is absolutely something which up and coming, it's been in the news for quite some time, it's now becoming quite serious, environmental concerns.
If you really want to tackle the environmental concerns, we have to do something there, and feed additives will play a very important role, and actually will therefore actually also see the growth of the 4%-6%.
Very clear. Thank you. I also want to touch on demand crises. We've seen African swine fever. Do those types of crises worry you?
No, not really. We have seen, of course, the crisis hitting us to some extent, but we actually shown to be quite resilient. We have been able to navigate through the crisis because we are so uniquely positioned. We have premix locations in all continents, so we are very strong in that sense. Also we are not totally dependent actually on swine. Swine is important factor, and of course, a market. Of course, yeah, we are also active in poultry, layers, broiler, ruminants, beef and dairy, aqua. That in itself with our business model-
feed additives and at the same time the premixes made us actually quite resilient.
Yeah.
Last but not least, let's also not forget, I mentioned professionalization of farms. That's happening also because of an outcome of ASF, and that will actually drive growth rather than actually being negative, it's a positive. Overall, I'm not that negative.
Very good. With that being said, what about the overall situation? What type of growth do you expect for your business going forward in the coming period?
Yeah, I expect at least to be growing at mid-single digit numbers. As you see here on the graph, we actually been showing this over the last five to 10 years.
Quite nice and steady growth. We expect that to continue in the future. Why? Based on the drivers, as I mentioned before. Again, the banning of antibiotics growth promoters, the environmental concerns. For that, of course, you need innovation funnel. We have that. We are working on that, tackling these biggest kind of challenges in the industry. I am quite optimistic for the future.
Very good. Thanks, Ivo. A nice segue to talk to you now, Christie. Ivo mentioned pressure on productivity, increasing need to control emissions, and also given this very rapid population growth that we're facing, is it actually possible to feed close to 10 billion people on the planet in the future?
Well, thank you, James, for that very important question. The answer is, it depends. It's a yes if the industry continues to innovate as it has over the last couple of decades. If you look at the trajectory of animal output, overall agriculture output from farm to f ork, it has dramatically increased from what we've been able to do with fewer resources over the last couple of decades compared to the period prior to that. If we continue to work together and to innovate, bring new technologies to the market, we can meet the demands of the future, we believe. Because of this, we've launched our We Make It Possible sustainability campaign. This is a campaign designed, more than a campaign, really a platform and a strategy of how we will continue to do business.
Everything from our portfolio today as it is, and what's the impact of those products and how they can influence sustainability, all the way to guiding our innovation and research efforts. Through this We Make It Possible campaign, we are very committed to bringing sustainable solutions to the marketplace.
Very good, thanks. Let's explore some of these themes in more detail now, Christie. Would you care to give us some examples of those growth drivers?
We have six sustainability business drivers that we're focused on. I'll mention just a few of them today. Think about reducing livestock emissions, reducing food loss and waste, how we can improve food quality or improve the lifetime performance of animals. Let me give you just a couple of examples. If you think about products that can increase the strength of eggshells. Today, billions of eggs never reach a consumer because they've been broken along the way, billions. Imagine if just 10% or 15% of those eggs actually reached a consumer. That's one example. Another example would be from our enzymes platform. We've developed a product called Balancius with our alliance partner, Novozymes. Balancius improves the overall gastrointestinal health, digestive performance, and the overall performance of an animal.
By supplementing with Balancius, you can improve the lifetime performance of that, the growth, and reduce the need for antibiotics. Lastly, I would mention Veramaris. Veramaris is a very cool technology that's designed to bypass catching all this wild caught fish to feed into the salmons for the source of omegas. Instead, we go straight to the source of omega, which is the algae, and feed it directly. A very cool technology that we're very excited about that can and will have an impact on marine biodiversity.
Thank you for those examples, Christie. Really inspiring. I'd like to pick up just quickly on Veramaris, which you mentioned at the end there. Obviously, Veramaris has already been in the market since around the second half of last year, if I'm not mistaken. What progress have you made since then?
Yeah, thank you for that. We've already have sales of our Veramaris product, and we're ramping up production out of our Blair, Nebraska facility in the U.S. Even more exciting is we're expanding into other species, including shrimp and some applications in pet. There's a lot of excitement and a lot of information on Veramaris in our virtual room. Would ask that you take a moment to check that out.
Yeah. Thank you. Don't forget, please go to the virtual rooms to find more detail on some of these projects. Continuing the theme of sustainability, Ivo, I'd like to pick up on another really important project in this space, Bovaer or Clean Cow.
Yeah.
If you'd like to explain a little bit more about that, please.
Right. Let me just small correction here. It's Bovaer.
Bovaer.
Because we are actually indeed tackling the emissions, the emissions actually into the environment. Yeah, it's quite a bit of an excitement. We see Bovaer getting more and more traction and more attention actually from media, but also actually in the value chain. We, in the meantime, have conducted trials with 10,000 animals across the world, varying from New Zealand all the way up to Europe, it is a lot of database. The data are quite striking. 30% methane reduction is quite substantial, even sometimes higher. In that sense, I think there's quite a bit of an excitement. We are right now in a regulatory approval stage. That means it goes a little bit into a black box in the European kind of constellation, EFSA.
We are waiting, of course, for questions, and we expect actually approval towards the end of 2021, so therefore, to commercialize probably early 2022. That's where we are right now.
Got it.
Quite a bit of excitement.
Got it. Thank you. Bovaer. Thank you. Really appreciate that. I'd like to continue on the theme of emissions reductions. What are your thoughts on how to create further impact in the coming years in this space of emissions?
Yeah. I think a very good point indeed. This is something, as I mentioned before, the key growth drivers in feed additives, environmental concerns becoming actually really top of mind of players like retailers. We do believe that we should really make it measurable, because we do believe that what you measure, you can act on. We are working on a service, a sustainability service, which is going to be able to provide an environmental footprint on the farm level. That means that we can actually determine the environmental footprint on the farm level, and then also actually translate to the retailer who's buying from that farm.
Right.
Actually linked to the retailer, of course, the consumer. They will get far more transparency in the environmental footprint of the protein. That's what we're working on, and soon to be launched.
Sounds like a very innovative approach indeed. Obviously, this type of approach will require a lot of data and also proximity to the farmers to be successful, right? I assume that farm data is also generally very important for the business model evolution in the space of so-called precision nutrition. Another service that we're working on?
Yeah.
Share more.
Yeah, absolutely. It's already been shared by Geraldine and Dimitri as well, but precision nutrition becomes very important. Farm data in general. I mentioned sustainability. The sustainability service will actually use farm data, but also we use the same data for precision nutrition, where we really can target sometimes even individual animals. That is a key trend what we see happening overall actually across the world, and especially of course, in a more kind of developed areas. Professionalization of farms will play a very important role because that, of course, can enable access to data. In combination with the data, let's not forget, of course, that DSM is uniquely positioned there with the premix locations as we have. We can provide solutions to indeed these farmers. In combination with precision nutrition.
Yeah
sustainability service, and actually then provide solutions as well. That's what's coming up for sure in the future.
Very good. Thanks. Indeed, the CEOs earlier talked about the four Ps of our innovation areas. Christie, we talked already today about precision and proteins. Can you also share an example around how prevention can play a role in your innovation pipeline?
Oh, absolutely. When we think about prevention, let us focus on Gut Health and the microbiome. This is an area of science that I believe is just in its infancy to understand how the microbiome can influence the overall health and outcome of the animal. Truly the intersection between nutrition and health. We have an extensive research program looking at Gut Health overall, as well as all the prebiotics, probiotics as well, that fall into our Eubiotics category that can prevent a need or a use of an antibiotic. This is critically important as there's some governments around the world, such as the Chinese Ministry of Agriculture, who have recently banned antibiotics as growth promotants, and others are adopting a new antibiotic policy. This fills a tremendous need for the producer.
Very good. Thanks, Christie, for those insights. Some really exciting portfolio extensions coming up. Ivo, turning back to you, what will the Erber acquisition bring in addition to strengthen our portfolio?
Right. We sometimes actually inside, internally actually talk about the match made in heaven, and I think now, of course, with the closing done by the 5th of October, it is indeed we see that confirmed. We are now actually becoming the undisputed leader in Animal Nutrition & Health. Quite significant, because this acquisition in itself actually puts us in a square leading position of mycotoxin actives, clear. Feed enzymes, which we actually historically already have. Eubiotics, let's not forget about that either. Christie actually talked about it in terms of gut health. This will actually position us quite nicely. Overall, that actually will position us very strongly as an undisputed leader in this business.
Indeed. Really comes across as a match made in heaven, as you say. Christie, what are some other ways that the Erber acquisition can strengthen the DSM offer and the capabilities?
One of the areas I'm most excited that Erber Group brings to us is their extensive capabilities in food and feed diagnostics. Combine that with the amount of data that they collect on mycotoxin and mycotoxin testing, and overall data analytics. This allows us to identify the right insights to bring the right solutions to the customers. Tremendous opportunity when you think about the combined approach. In addition to the diagnostics, they have some strong premix capabilities in Central and Eastern Europe as well as Southeastern Asia. Combine that with DSM, where we are integrated into all the essential ingredients such as vitamins, our full specialty portfolio, and our extensive global premix network, we're really excited about what we can bring to the animal nutrition community.
Very good. Thanks. You've both shared so many different aspects today. You're covering a lot of ground. With that, Ivo, I'd like to come to my final question. Ivo, how do you feel? Are you excited about the future?
Very good question, and hopefully, you got it actually in the meantime. I'm very excited indeed. The market is growing quite nicely. There's absolutely a need. I talked about the drivers, and all in all, if you really ask me indeed, why am I so excited? This is really because we are right now at the moment that we can make animal farming truly sustainable. Truly sustainable from a social, from a financial, and from an environmental perspective. Social, ensuring that farmers can earn a decent living, quite important. Financial, that people have access to affordable protein, not only in the Western world, but actually in developing markets. Very important indeed.
Third, that should not really come at the expense of course, the environment. Reducing emissions, reducing the output of manure, et cetera, having a detrimental impact there. We have the portfolio. We have our positioning in premix, the locations there providing the solution. Together with a growing market, yeah, I am truly excited actually about this market.
Well, thank you, Ivo. Thank you both so much. The enthusiasm and the passion really shines through, so thanks again.
Thanks.
With that, we'll be now taking a 10-minute break before coming back for a live Q&A session. If you'd like to register for questions, the number will be up on the screen. You dial +31205315851, followed by star one. As I say, that number will be up on the screen. We look forward to seeing you back here in 10 minutes for questions. Thank you.
[Presentation]
Welcome back everyone for the Q&A session. We are now going to be really seeing the effects of the studio hopping that I was talking about at the beginning. We are all respecting, of course, the coronavirus measures, and for that reason, staying well apart here, but also in different studios. I just want to warn you that could create a little bit of a time delay between questions and answers, because we do want to make sure that you have plenty of opportunities to ask questions to all of our colleagues as well. That's one thing to bear in mind. The other one is that we do have quite a long queue of questions from what we can see.
I would ask you to start with a couple of questions, max three, and then we can always come back and take some more, just to give a chance to as many people as possible to connect with us and ask questions. With this, we will get started, and you're going to be familiar with the process because we are going to be working with the same operator as we did yesterday for the Q3 earnings call. That is Patricia. Let me see whether we have Patricia online. Patricia, can you hear me?
Yes, I can.
Okay, great. I think you will be familiar with the process, and that is, I believe, star one. Right, Patricia?
Exactly. Yeah.
If you have a question for us, I'm becoming an operator here. Please press star one, we will be hearing what your question is, then we will do our very best to hand the questions around and make it as lively as we can in the answering as well. With this, I think we can get started. Patricia, any questions in the queue?
Yes, we have some. The first question is from Mr. Andrew Stott, UBS. Go ahead, please. Your line is open.
Good afternoon. Let me just start by saying thanks for putting this event together. It's been really useful, couple of days to catch up on the strategy. I can see that it must be a huge amount of effort in the virtual world, so thank you. Two questions from me, please. The first is on the organic sales target, the nutrition, the 6% that you've done versus the 5% you target. I know that's 2021, when you think about the midterm potential, and particularly the immunity strategy, do you think you could start to think a bit higher than 5%? Do you really consider that pricing on commodity vitamins in particular, may need to be sort of borne in mind in that conservatism? That's the first question. Do you stick with the 5%? Second question is very straightforward.
Erber, you said higher growth than nutrition, than your animal nutrition business. Is that high single digit growth for Erber related to the synergy potential or to the fact that it's a different type of business with the diagnostics in there? Thank you.
Welcome. Thank you for bearing with us and for your attention over two days. I am really glad that you found the content useful. In terms of I will start with the first question, then Dimitri, if you want to add on to that, then maybe we should hand on to Ivo for the Erber growth. We'll see whether our studio hopping works. You will be the first one, Andrew, to test us out on this one. When it comes to our growth ambitions, and you know that from 2015 we've been talking about mid-single digit. Really today we were very keen to show the breadth of the growth platforms and the innovations that we have. We also want to be very realistic with our ambitions. Mid-single digit is our midterm ambition.
Now we will, of course, at the start of next year, come out with a guidance which will be specific for 2021, with all the moving parts as we really do. Now, with a nice platform of innovations, with some acquisitions that will bring some additional impetus to our growth. Is it a five? Is it a six? Where exactly does mid-single land? It's difficult to tell. One thing we're very confident in is the quality of our business, and the ability to grow in broadly that space. We want to make sure that what we're putting forward is solid. That is really the frame in which to hear and to see our ambitions here on the mid-single digit growth. Now, Dimitri, I don't know if you want to add to that before we pass on to Ivo?
Yeah, let me frame a little bit what you also mentioned, the immunity opportunity. I think Philip also alluded it too in his presentation. Maybe we can also switch a bit to Philip later on after Ivo told his story about Erber to create some context about we see in immunity, because it's certainly a great structural opportunity, perhaps even after COVID-19. Indeed, before I hand over to Ivo, Erber, absolutely the specialty part, and I hope you've also seen the presentation of Ivo. I mean, he was passionate and very confident about the growth numbers, which we obviously, as Co-CEOs, Geraldine and myself, really like. With that context, some color from you, Ivo.
Yeah. Thank you, Dimitri. Much appreciated indeed. Quite a bit of excitement actually from my end. Let me talk about Erber briefly. Mycotoxin actives, the ingredient actually going after the mycotoxin problem, of course, and actually helping us to manage it. Together with the Eubiotics, because that's of course, a very important element of the portfolio of Erber. There we do indeed actually expect a higher growth rate, higher than the mid-single digits or a little bit higher single digit. That's something we see in our own portfolio right now as well. We see ingredients in the DSM portfolio also actually growing their higher single digit, but that's more on the specialties and that's also what we expect in the Erber context. Back to you, Dimitri.
Yeah, let me also contextualize that a little bit. Remember that Erber had a high single-digit growth on its own, not only because of the diagnostic, but also because of the specialty part of that business, so a perfect fit with the animal nutrition business we have. Secondly, remember that the quality of that business was around the 20%. This is really a good quality business, so that the context of Erber. Let's close the circle, Geraldine, to Philip, to give some color on immunity.
Yes. Thank you, Dimitri. Immunity is certainly boosting our growth this year. Now already for three quarters in a row, as I said, do I hope to see that continue as people build that into their day-to-day lifestyle? Yeah. I think there's a good chance that this will give us an extra contribution to the growth we were expecting for the coming years. Again, as Geraldine said, mid-single digit mean is still within a range, and I think we feel relatively comfortable with the 5% at the moment and with the mid-single digit target. It certainly gives us more comfort in that ambition.
Thanks, Philip. Patricia, any other questions in the queue, please?
Our next question is from Mr. Charlie Webb, Morgan Stanley. Go ahead please, sir.
Brilliant. Thank you very much. I reiterate Andrew's comments. A very useful event. Clearly a lot of effort has gone into it, thank you for that. Two questions from me then. First one, just around the idea of the shift towards solutions, obviously away from ingredients, obviously a trend that has been evolving in your nutrition business for some years now. Is it right that it is 40% solutions, 60% ingredients? That's roughly the split today. I think I heard that correctly. Can you help us understand the timeframe of how you expect that to continue to evolve? Clearly, more and more of the innovation is geared towards solutions. Just trying to understand the timeframe of how that's going to continue to evolve over maybe the next five years.
Just also a reminder on how the margins and returns look like from when you sell a solution product versus a pure ingredient would be helpful. Second one, just around precision nutrition, and targeted nutrition angle that you see as obviously a very attractive growth opportunity. Is this an area where you're going to have to partner up? I'm just trying to understand how do you get access to the data, the personal data, the consumer data, to be able to be more precise with the nutrition ingredients that you want to offer. Is this an area we should expect future partnerships, or is it a situation where you believe you can grow that yourself organically?
Okay. Thank you for these two questions. Spot on. Let me say a little bit about the shift to solution provider. I think Chris and also myself in the speech told a little bit how we build our business model. With the precision part of that obviously becomes even more important. This is an evolution. It's not a revolution. It's something which we built on what we already have. Don't expect me to say exactly on the timing on how that looks like. It's an evolution, and we're going to build our strategy accordingly, building on the business model which we've presented. What we see in terms of margins, obviously, the specialty part has higher margins. Ivo was alluding to it. We also build our global portfolio accordingly. We don't think in specialty and other businesses as such. They reinforce themselves.
You need the whole package for the solution. That's the way how we think about it. Then on your question on precision. Indeed, precision nutrition, for animal as well as for personal, data is absolutely the key. We have a lot of data around nutritional science, nutritional ingredients, how that's being applied to the end use. Maybe I hand over to Philip to give a bit of background on something where we feel strongly about is Hologram Sciences, which we started, then maybe also later to Trish, our Chief Innovation Officer, to say a little bit on how this innovative model looks like. Maybe first to Philip.
As I mentioned in the interview, the end-to-end concept in Personalized Nutrition consists of a number of building blocks. You have the diagnostic to capture the data. You then have the recommendation engine to tell the consumer what he exactly needs to supplement with. You've got the supplement as such, and then the delivery format, which can be a pouch, which can be a filling into a Nespresso type of machine, et cetera. I think over the recent years and months, we've been building all these building blocks. Either ourselves, either through acquisition, either through partnerships, and we're now ready to really start bringing some of these integrated end-to-end concepts to market. We're going to do that ourselves, test them in the market under a certain brand that we're going to create. Test it again, and then sell to our customers these proven concepts. That's the goal.
We're ready to go. We set up separate company for that because I think it requires a bit of separate from DSM, if I can say it like that. A real startup environment in Boston with an experienced team, with the necessary funds to bring some concepts to market in the next quarters. We've got two in the making. We'll see how it goes. We're quite confident about this opportunity.
Thank you. Maybe Trish, a little bit about our innovation model.
Yeah.
Around the whole precision part.
Yeah. Thanks, Dimitri. I think it's exactly as you said, it's a little bit of an evolution. We're in this position, we've got great chemistry and biochemistry capabilities. We've also got application and formulation capabilities. Now as we think about some of the nutritional sciences that we have, we can actually move into this space a little bit. As Philip said, we don't have it all, and that's why the how part of the question, we have to really look at ways in which we can partner with others to bring some of those bits together, and Philip's already talked about Hologram Sciences as one of those ways. That's a little bit of a how. How can we do it? Using the experience we've learned about starting up internally and starting up externally.
We're going to use that experience to really run a venture under DSM's umbrella, but outside of DSM.
Thank you very much.
Patricia, any next questions in the queue?
The next question is from Ms. Nicola Tang of Exane BNP. Go ahead please, your line is open.
Hi, everyone. Thanks a lot for the presentation, and thanks for the opportunity to ask some questions. In the Food Specialties section, you talked about your unique sort of integrated solutions model covering taste and texture and nutrition. On the taste side, if I'm not mistaken, I think you mainly have only processed flavors. I was wondering if you feel like you might benefit from having a broader sort of flavor portfolio to offer that full integrated solution. That was the first question. My second question would be on the HMO market, can you talk a little bit about the regulatory hurdles that you might face in launching some products in the newer applications, like you were talking about on the immunity or the diabetes side, I think it was.
Also, could you talk a little bit about the competitive environment, as I see some other sort of familiar names like Chr. Hansen or the DuPont and Lonza partnership also being quite proactive in the HMO space. I was wondering if you could talk about what differentiates your Glycom portfolio. Thank you.
Thank you, Nicola, and thanks for being with us. You know what? These questions clearly point to some of our colleagues, so why don't we hand over straight? I'm pretty certain Patrick would love to answer the taste and texture question. Then I think for the HMO, again, a combination of Philip and Trish. Let's start first with Patrick.
Yes. Taste and texture have always been in demand for our customers who are looking for solutions. What we have is we have the processed flavors, as you mentioned, we have the yeast extracts, we have the customized taste solutions. We don't have our own top notes as you allude to. However, what we see, there's a much bigger demand, actually, a changing demand of our customers to look more and more for the health solutions. We see much more of this spaced opportunity growing and adding the health space towards the offering and taste and texture can actually broaden the taste profile. Yes, what I said also before is that we look at innovation and we look at M&A of expanding both our product portfolio and our application depth.
We are open to looking at where and how can we expand, but what we see more and more is differentiating the addition of your health component towards your taste and texture offering more than a further deepening of the taste profile.
Yeah. Thank you, Patrick. To the question on HMOs, I think back to you, Philip.
I can take that.
Yeah, thanks for the question. First of all, I think if we want to develop this market, it's good to have competition also. Incredible and professional competitors. This is a new ingredient, new market. Building new markets, I think it's better to do that with a few companies and not just one that generally doesn't work very well. That in the first place. I think what differentiates us is, one, the number of studies that Glycom has done on the topic, and that also has led to, I think, the largest number of regulatory approvals across the globe. That's the first element. Second element is the size of our plant. We have the largest integrated HMO plant in Denmark, and I think that gives us a big amount of credibility. The third one is the innovation pipeline.
I think by now we have six HMOs in the market, and there's a whole number of new HMOs still being worked on under development, being tested in the plant, et cetera. I think all in all, there are almost 200 HMOs in mother milk. Now, there's only a few ones that make the bulk of that, but still, it's important to further develop the science in that space and which ones really make a difference. There's still a lot of science to be developed in that space, and I think we're the furthest advanced in developing new HMOs and getting as close as possible to that gold standard that breast milk is.
Thank you, Philip. Actually, I would love, Chris, if you don't mind, if you could comment on, with a global product, local solution, and particularly different end segments, comment on the HMO example, because it's a great example of where we're seeing that by adding a global product category, we can actually influence several of our end markets. Maybe you would like to add a bit on that.
Yes, thank you. This is a very good point. Maha already alluded to it before. On the screen, you probably saw it with the dietary supplement version, i.e., going to irritable bowel syndrome, something that is closely connected to obesity, where actually this product has a big impact. That is the really fun part, the attractive part, that you can add a global product, then launch it in early life nutrition, as Philip just talked about, and then expand into dietary supplements. By the way, if you want to go a step further, it's a little bit further out, but maybe at some point in time, Ivo will be interested to put this product into piglets.
Thank you, Chris. Indeed, that will be a little further out, for sure, the pet space is interesting, and even the piglets. Back to our operator, Patricia.
Our next question is from Miss Virginie Boucher-Ferte of Deutsche Bank. Go ahead, please. Your line is open.
Good afternoon, everyone, and well done for putting all these presentations and the content together. It has been very useful. I will focus on one question related to animal nutrition. You briefly touched at the start of the nutrition presentation about how you have been able to reduce the volatility in the vitamin business. Can I ask a more specific question about your premix business? Could you tell us how your premix exposure has evolved, what it was 20 years ago, 10 years ago, what it is today, and where you see it going in 10 years? Specifically for vitamins, how much of this business is sold through premix? I am guessing it is a higher share than for the overall animal nutrition business. Are we talking about the same premix today as the premix of 10, 20 years ago? If not, what has changed?
I'm assuming the premixes today would be more complex and more sophisticated. Last but not least, can you maybe give us a feel for the margin markup of a premix versus a straight ingredient and a form to help us quantify the value add through the chain? Thank you.
Thank you for that great question. Let me first hand over to Chris to contextualize a little bit how that portfolio evolved over time. I think during the presentation, you get a bit of a feel that we moved from global product to local solutions, really coming with solutions and formulas and recipes where premix plays a key role, by the way, not only in animal nutrition, but also human nutrition. Then maybe, Chris, you hand over back to me, and then we zoom into animal nutrition to have specific answer your questions on premix. Chris, you first.
First, I want to say congratulations to the person asking this question because it shows from all the points you mentioned that you understand it quite well yourself. Let me first say that when we were still 15 years ago in very much the product business, we had the feeling that premix was a way to put our products forward to customers. I think in the last 10 years, we noticed that actually, it's much better to think about what the customer wants and put into this premix what we produce, but also what others produce more tuned to the needs of the customer. In total, as you suggested, the number of ingredients have clearly increased in the number of years since then, and therefore, it's much more complex premix.
As you can imagine, also linking a bit to my story that I told about one hour ago, our premix percentage of sales in Animal Nutrition has certainly been growing also in Human Nutrition. In Animal Nutrition, this led to increased purchase of vitamins because we couldn't invest in all vitamins with the pace we had in the premix growth. There's quite a change there also. To your last point, when you think about margins in premix, I know that you always look towards our competitors who have only premix business and not also the global products. You need to put these two margins together. We have a good margin, obviously, on our ingredients. Because we bring innovation to the customer. Our premix margins tend to be higher than what our competition has.
You put these two together, you get this quite nice margin that we have in these businesses, also in Animal Nutrition & Health. Back to you, Dimitri.
Thanks, Chris. To bring that holistic picture to it, we're not looking at specific margin per component, but we look at the margin from that whole solution complex. Bringing that back to animal nutrition, because the question was specifically around animal nutrition. Ivo, how important is that premix part in the development of your growth in Animal Nutrition & Health?
Yeah. Thanks, for the question. I don't know, of course, what it was like 10 years ago, so apologies for not having these data. I wasn't around then. I can tell you that indeed, to what Chris already mentioned, that actually has been steadily growing and becomes actually more and more important. To give you actually a straight answer, actually it's around 75% right now of our sales, which is actually premix related. That proportion is growing. Recently, and just to make that point a little bit stronger because there I can talk, of course, and add more comments. We made an acquisition about two, three years ago, and that was with Twilmij, that was in Holland. There we actually added again to the capacity. We did actually recently, of course, with the Erber acquisition, we talked about it earlier.
We also actually right now in the midst of starting up a plant in
Back on air.
Back on air. Sorry about this. This is the fun of being broadcasting live. It seems we lost the satellite connection for a little moment there. Hope maybe it gave you a chance to grab a coffee. Having said that, we were going through a really nice explanation from Ivo. Ivo, back to you, I hope now. Let's see if it works.
All right. I hope that you indeed can hear me. I will just give a complete answer again, where I don't know where I got cut off. Apologies for that. I'd like to comment indeed on the importance of premix in animal nutrition. In animal nutrition, to give a straight answer, it's about 75% of the total sales we actually do right now, and I think that's actually gone up. I don't have the data from 10 years ago, I wasn't around, to be quite honest. I can comment on what's been happening over the last two or three years. We had acquisitions like Twilmij, where we expanded our portfolio in terms of a premix plant. Of course, the recent acquisition with Erber. There we also actually filling in a white spot in Central Europe.
Recently, and that will be opening soon, we will actually be opening up our plant in China as well. These are just recent additions. Over the times actually, we've been expanding our premix operations by adding lines. Not necessarily whole new plants, but just a new line in that plant. Coming back to the other question, it was really about the quality. The quality is indeed changing. Where we used to have what we call concentrates, simple blends of a few vitamins. We make more complete blends now. Complete blends, which really act as a solution towards the customers. There we also actually seen a shift in terms of the solution play, and also therefore the quality of the solution we actually provide. Hopefully that answers the question. Back to you, Dimitri.
That basically goes back to Patricia to see if people are still online. I hope so. There is a next question.
Yes, they are. Our next question is from Mr. Tom Wrigglesworth of Citi. Go ahead please, sir.
Thanks very much for the opportunity. Just you flashed up your targets, which look pretty unchanged both out from innovation in terms of EUR 350 million of sales by 2021 and EUR 1 billion for 2025, and yet you've clearly added some new projects to that. I was wondering, is that specifically on the '21 target, have you had to take anything out from materials given the sale of Niaga to Covestro? Would you consider changing those targets in the light of the new innovation that you're bringing through? The second question, somewhat separately. Just in terms of trying to interpret your comments around technology and innovation. When you think about those combinations, how much of that is to come from internal R&D versus external R&D, and how do you think about the balance between those two sides of the equation to drive growth? Thank you.
Thank you very much, Tom, for this question. Indeed, let me maybe help a little bit with the bridges here. The numbers that you're familiar with in terms of our ambition, in terms of the contribution of our innovation platforms, is indeed EUR 350 million by 2021 in top lines, going to EUR 1 billion by 2025. With a contribution to EBITDA, which is higher margin when it's moving, that is about EUR 100 million for next year and leading to about EUR 400 million in 2025. Firstly, I would like to really clarify that this is for the platforms of innovation. Sometimes we're hearing this is the top three big tickets or something like that. No, no, this is for all of it. On that basis, where are we in terms of the EUR 350 million?
We're pretty much on track to deliver by 2021 this 350 compared to the base year 2018. The mix is going to be different. When we set that ambition, we were at about one-third materials and two-thirds nutrition. With the changes of the group, as you can imagine, there's been a bit of a reshuffle, and you should think now at about 85% nutrition and about 15% materials. In terms of the EUR 100 million of EBITDA, we're going to be getting close to that if we compare to our starting point of 2018. This is something where, while the margins are structurally higher than the average for the company, sometimes there is a bit of a lag as you are ramping up. We are actually very satisfied, very proud that a lot of our big tickets have gone to commercial phase.
You will have heard quite a lot if you had a chance to go to our virtual venue, how Veramaris is doing, how Avansya is doing. These were very key big tickets for sure in this point in time to say, is commercialization happening? Yes, it is. The other thing is, of course, the potential and the pull of the market has been very much confirmed, and that is very helpful. If I project to the 2025 and the EUR 1 billion. Here it's easier to actually talk in terms of contribution to our growth. In terms of top line, what we are estimating is that our innovation drive will bring about 1.5% growth within particularly our nutrition business. That is what keeps us comfortably in that mid-single digit growth that we want to make sure that we deliver.
As for the contribution to the EBITDA line, here, think more around 2.5% because there is always, both on top line and bottom line, a certain amount of netting because there's some replacement going on as well. In short, while it's a different mix, we are on track and we are actually very excited that this is the kind of innovation power that we have in the company. That's really to help you with the numbers on that bigger innovation set of platforms. Hopefully, the four Ps are becoming a little more familiar after what you have heard today. Actually, that could be a good bridge to Trish to talk about how are we going to drive our R&D, how much is under our own steam, how much is it about partnering. Trish, do you want to comment about that?
Yeah. I think it's really important to think about how we innovate in terms of as a whole portfolio, a pipeline. You'll see with the richness of our pipeline, it takes a lot of capability that we have in-house and that we're further building. If you think about our biotech capability today alongside our chemistry, we're actually further building that out, and we use capabilities in the broader biosciences, whether it's regulatory, toxicology, formulation, IP. We have a broad range of capabilities in-house, but we complement that. We have to complement that with out of house as well. Even in the biotech space, there's a lot of capabilities that there's things to do cheaper out of house that we used to do.
We're constantly looking at where can we do things in-house that are truly differentiating and competitive versus the things that we can buy externally as well. We constantly look at that, monitor it, and make sure that we are accessing this ecosystem of technology that exists outside. A moving part and a moving analysis, and we have to do it as a pipeline and as a portfolio, looking at what we want to deliver to gain growth, how we ensure our competencies are built towards those.
Thank you very much, Trish. Back to our friendly operator. Patricia, are you still there? We've lost Patricia. I mean, we could come up with our own questions, that would be cheating.
Sorry about that. I put myself on hold. Our next question is from Mr. Chetan Udeshi of JP Morgan. Go ahead please, sir.
Yeah, hi. Thanks. I just had three questions, actually. Just first on, you talked about the plant-based protein market. Is it possible for you to give us a sense of what is the value proposition or content, let's put it that way, for DSM in plant-based protein versus the animal meat protein market? Let's say in the next 10 years, if there's a transition from animal meat to plant-based meat, how should we think about the net impact of that on DSM? Second question was, you talked about a lot of growth platforms, and it's interesting, but at the same time, it feels like, or maybe just wanted to hear it, is there any market or are there any market products where you think structurally things are softening, weakening, and in animal?
Infant nutrition market comes on mind given what some of your customers have been talking about in terms of structural slowdown because of lower birth rates, et cetera. Last question was just on M&A fees. This year has been quite busy. Do we expect some sort of a pause over the next year or two to integrate these acquisitions, or will you still be looking for any opportunities as they arise? Thanks.
Thanks a lot for those questions. The interesting is that on your first question about plant-based versus all the alternatives, I think for us as DSM, we want to play in the whole complex. We're not saying, here we want to play, there we want to play. We basically want to play in the animal space as well in the plant-based space. I think we also have announced some developments in the plant-based space. I will hand over to Patrick to respond on that. Then depending on the answer and looking at the face of Ivo, I will hand over to Animal Nutrition & Health to see whether he likes the answer of Patrick. That's the beauty about the company we are, that we have people who compete for developments. Maybe they could even help each other in growing the pie.
First, go back to Patrick.
Yeah. Thank you, Geraldine. Ultimately, it's not us making the decision. It's ultimately the consumer making decision, what or how does he prefer? It's up to us to deliver a product that is as authentic as possible towards the product we would like to offer an alternative for. That market is growing rapidly. It's in the whole alternative space, it's about alternative protein space now including dairy, moves in consumers towards the 2 billions. We see that growing rapidly, but that's on the consumer level. What we see is that we as an ingredient business, I think we're seeing only the beginning of it. We supply the ingredients, as I shared earlier, the texturizers, taste profile, but also nutrition, which is more and more important. We see that today, the focus is still very much for alternative proteins.
Alternative meats is very much focused on creating that taste and that juiciness, that texture. What you see more and more consumers starting to look at, okay, what's on the label? What's really in there? The health component is coming up very rapidly. We noticed that from our customers. We're uniquely positioned as DSM to address that. Our task at Food Specialties is to make sure that we can give the authentic taste, same taste with the right nutritional profile, and let the consumer ultimately decide, what and how he actually wants to consume. With that, I give it to Ivo.
Thank you. Thank you, Patrick. I can only actually agree with what you said, that actually at the end, of course, ultimately it's what the consumer, of course, is going to choose for. Very clear. You see, at this point in time, the plant-based or alternative proteins, they are being really just taken quite a bit of an interest from consumers based on the agenda of sustainability. I do believe that animal protein, the real protein, I mean, the real meat, can actually be made more sustainable. That's why I also said what I said earlier. Making animal farming truly sustainable is going to be one of the initiatives we will undertake to make sure that poultry, swine, pork, beef, et cetera, is going to be acceptable to consume indeed. It's still acceptable today, absolutely not an issue, but also to remain as such.
This is what we're working on, and that's where we also provide solutions. That's number one. The second one, as I already actually alluded to earlier, we should not just only think from a Western perspective, where there's sometimes indeed overconsumption. There's also parts in the world where there's actually underconsumption. That part of the world, there is going to be a further drive for animal protein. As I mentioned earlier, 7 billion people today, 9.7 people by 2050. That will drive quite a bit of demand for animal protein in itself. There's quite a few drivers there which are going to support still a healthy market also for the animal protein value chain. I'm not concerned. I think at the end of the day, I would like to conclude there what Patrick also mentioned. It will be down to the consumer to decide.
I do believe that we can actually make animal protein, keep it really as attractive as it is today, also from a sustainability perspective, but also from a health and nutrition perspective. Back to you, Dimitri.
Thank you, Ivo, putting that into context. I like how you both phrase it. At the end of the day, the consumer decides, right? We need to listen to what our customer, and therefore our consumer, wants from us. To your second question, more about what do we see in the market. Some softening. Before I go into specifically what you mentioned, early life nutrition, but overall what we see in the market is that there is quite some market pull for our innovations, for the products we deliver. I think in the businesses we've highlighted, in animal nutrition, to help reduce emissions and to go to more sustainable. In human nutrition, more into the immunity space. Also, in terms of our big-ticket innovation, we're seeing more market pull than when we started a couple of years ago.
For instance, the algae-based fish oil, our Veramaris innovation, is having commercial sales this year. Avansya, also been talked in the virtual event room. Double-digit sales this year. Clean Cow, absolutely a pull from the market, but we need to wait for registration. In fact, we're pretty much confident that the market pull is there. We need to either ramp it up and make sure that we get the registration for all of these innovations upcoming. Let me also explain a little bit early life nutrition. Early life nutrition, we've seen indeed birth rates coming down. We're seeing a bit of short-term pressure on that market. We also see that these players are looking for a value-adding game. This is not a volume game. This is infant nutrition, early life nutrition, where we play. You don't take a risk on credibility, on quality.
It's a value game. Therefore, we are well positioned. Now with ARA and DHA, and also with the HMO platform as being part of Glycom, we are part of that game to be part of that game fundamentally, which is fantastic because the babies will continue to be part of the planet, at least we hope. Quality is to be undisputed. Therefore, we are a key player to add value to it. A little bit on Glycom, our latest acquisition. We have said that in quarter two and in quarter three, in total, we had EUR 6 million plus EUR 8 million EBITDA, EUR 14 million, of about EUR 27 turnover. Still the quality business, about 50%.
I also indicated that we are on an improvement scale, a ramp-up. The integration has started, will last till about Q2 2021. We expect about EUR 9 million for quarter four, and this will go into 2021. Obviously, we also have HMOs. I think Maha, in the presentation together with Philip, alluded to, it's not only in early life nutrition, we also see very interesting opportunities outside. Just during this Q&A session, we heard that pet food is also an interesting one, and we took note of that. Overall, I think we are on our way to execute our business case. However, the early life nutrition space is still to be evolved, and it's a bit difficult to say how that will spell out for 2021. Those are short-term things.
I think longer term, the fundamentals are still absolutely there. We are a key value ingredient player in that market. With that, I think we have one question left on M&A. I think M&A needs money. Therefore, we always look at Geraldine.
Thank you, Dimitri. We had a question on M&A yesterday in the earnings call, and someone made the comment, "Were the three acquisitions a little bit like the London buses? You wait, you're patient, and then suddenly three great buses come along." There is a certain element of that when it comes to M&A. For sure, the next 12, 18 months, we're going to be focusing on integrating them, making sure that we do that very well, that we get the synergies, that we get the growth, and that's going to keep us certainly very busy. Of course, we have to remember, have to execute the carve-out of Resins & Functional Materials. We have our hands pretty much full. Having said that, I may also bridge that to the money part of the equation.
If you have a look at our leverage, we closed Q3 at about EUR 2 billion net debt. If you add the day after the Erber acquisition, if I round things, that takes us to EUR 3 billion. If you project to closing the divestment, we will have EUR 1.4 billion of cash proceeds coming in. Just taking those moving parts, we're about at the EUR 1.6 billion of leverage. You know that our policy or our ambition is to be 1.5x-2.5x leverage. We are really wanting to be a high investment grade credit rating, particularly in this economic environment. It doesn't mean that for the right opportunity, we wouldn't go beyond that. It's not something that we're going to seek to achieve just on its own.
We will continue to keep our eyes open on great opportunities for M&A. I have to say, I heard a couple of times the question on how are we going to fund the digital, the bioscience, can we do it on our own? Is it partnerships? We also do things like venturing. For example, when it comes to precision nutrition, we've already done a number of ventures, from Mixfit to Panaceutics, and things like that. When we think investment, we don't think only big chunky M&A, but we also think supplementing our innovation platforms with some very targeted investments as well. That's broadly how we look at the M&A picture.
Maybe also the question too, are we organizational-wise capable in doing the integration? Maybe, Chris, you can say a few words on the Animal Nutrition, Erber, Pete, and Glycom with Human Nutrition. Are we capable, and are we set up to do a very good organized integration?
Yeah, that's a very good point. If we look back a long time, we had quite a lot of acquisitions at the same time coming towards us in Human Nutrition, North America, and that's what some of you investors still recall. This time around with CSK, with Glycom, and with Erber, we actually go to three different businesses, as you have seen over the course of this Capital Markets Days. They're also heavy in different parts of the world. We think that we are now set up much better to deal with, yeah, clearly an additional workload that comes from integration on top of running a good business. I think, yes, the answer is we're in a much better state than at that time.
Okay, I think that brings us to Patricia again.
Our next question is from Mr. Martin Rödiger of Kepler Cheuvreux. Go ahead please, sir.
Yes. Thanks for taking my question. It is regarding alternative proteins. Ivo mentioned in his speech a market size of EUR 2 billion. Is that the available market for DSM? If so, what is the current market share in plant-based protein ingredients today for DSM? What do you target for the next couple of years? Second question is on personalized nutrition. You mentioned several times the market could be EUR 60 billion by the year 2040. Just to clarify, is that also an available market or is that just a retail figure and your available market is much lower? Thanks.
Yes. Thank you very much, Martin, for your questions. I actually think the reference was from Patrick on alternative protein, so we will go back to you, Patrick, for that question. Then I think in terms of the potential of precision human nutrition, which indeed was mentioned both by myself but also by Philip. There, I think we'll go back to you, Philip. Patrick, first you go.
Yeah. Thank you for the question. The EUR 2 billion relates to the consumer market for alternative proteins, specifically targeted for the alternative meat segment. It's more of a consumer market. Today's position we have is not really there because the plant-based proteins, we're entering with our CanolaPRO, which comes online in beginning 2022 when the plant will start up. We're building now a portfolio around that also with solution providing capabilities for our proteins. What you have to realize is that ultimately we'll not be selling a pure canola protein, but we'll be selling blends with a more specified protein profile and more dedicated towards the needs of the customer.
What we're adding to that, as I tried to explain, is also the texturizers package and the taste profile to it, so that ultimately you can hand over to your customer a ready-made burger, for instance, to really be able to show them the taste profile and the texturizing profile, and also provide the nutritional information, because that's more and more what the customers are asking for. We talked about the burger, next phase will be building up also products, for instance, alternatives for fish. Also that market is growing rapidly. We're building that position today. We are doing that through our Olatein manufacturing joint venture, where we're going to add the canola protein to the market. Today that business is at the startup, at its infancies. 2022 will be the year of launch.
Thank you very much, Patrick. Now over to you, Philip, for the EUR 60 billion by 2040.
No, indeed. What I said in the interview is that the EUR 60 billion is clearly retail value, and that the share that I think we could capture from that as ingredients player is significantly smaller. That being said, I think we can play in different ways in this market. We can play with mass personalized or personalized products, be it pouches or other formats. That's one, in a traditional B2B way. We could also, through the concepts that we develop and that we pass on to our customers, get certain royalty income. Thirdly, we could also participate with i-Health in this market and participate in that retail value. I think there's many ways that DSM could participate in that EUR 60 billion.
If it is just the ingredient value, be it in the format of a solution like a pouch or a gummy, et cetera, would already be a bit more than just the ingredient. It could even be more than that. Royalty income from concepts that we sell and really participate in the retail market through i-Health. Many ways to participate for us in that market and capture parts of it.
Thank you, Philip. Indeed, many routes, and this is why figuring out the right business models will be one of the big new capabilities that we will be developing in that space. That was from Martin. Back to our operator, Patricia.
Our next question is from Ms. Katy Hutchinson of Davy. Go ahead, please. Your line is open. Ms. Hutchinson, please unmute your line. Ms. Hutchinson, can you hear us? We will go on to the next person. The next person is Mr. Matthew Waite of Bank of America. Go ahead, please, sir.
Hi. Good afternoon, everyone. Three questions, if I can. The first one is around your i-Health business, which has been a phenomenal success. Part of that arguably relies on the sourcing of the LGG strain from Chr. Hansen. I appreciate some of the terms of that agreement may be confidential, can you comment on whether there's any business risk of that exclusive relationship changing, and would you have a mitigation plan? The second one is just a short-term one on Veramaris. The salmon industry is going through a very tough time at the moment with all the restaurant closures, I read your competitor, Corbion, recently adopted a new commercial strategy, which I think is just a way of saying that they've cut prices. Can you talk about the ramp-up of the plant and how that's been going relative to the original business plan?
To squeeze in a third one, is for Dimitri on the Materials business. On yesterday's earnings call, you said that the resins market needed to consolidate and DSM didn't want to participate in that. Can we have the same consolidation argument and strategy for the nylon industry? Thank you.
Okay. Yeah. Thanks for that question. Let me start indeed with i-Health and ask Philip. Obviously, we'll not say anything about commercial agreements, et cetera, but your risk question obviously is a fair one. Philip, could you take that one?
Yeah, maybe first about i-Health. i-Health offers us a fantastic window on the world of dietary supplements where we can test things. You've seen that with the immunity concepts that we've developed under the Culturelle line, also the HMOs that we're now introducing there, et cetera. It's a fantastic business that, in addition to being a fantastic business in itself, offers a window on the world and a bit of a testing field for new concepts. For what comes to the LGG, indeed, we have a good relationship there with Chr. Hansen for years. I don't see immediately any risk there. By the way, we are a probiotics producer ourselves. Really I don't see any risk there.
Thanks for that, Philip. Let's go to Veramaris. I would like to hand this over to Chris, also to put into context with Corbion. I also remember, Chris, you were one of the Well, difficult to say founders, but I'm pretty sure that you were in initial phase of it. I still remember our discussions in the executive committee. May I ask you to shape that context and also with the Corbion formula, and I know the answer, and you shouldn't compare, and we are premium and quality product, et cetera, but it sounds better if it comes from you.
Thank you, Dimitri. Thank you for the question. Obviously, you know quite a bit about it, Matthew. First, on the tough times for the salmon industry. That's true, given food service is a big taker of salmon in general. You have to see that most of these fish still need to be fed while they're waiting to be consumed. Yes, it is a bit tough times, but when you think about the feed consumption, it is less tough than on the other side, given that they stay in their habitat. The second point is about Corbion. Yeah, that's a very different game. We always said our game is not a pricing game versus fish oil.
Our game is to bring true sustainability to this not sustainable situation, where a lot of fish are captured out of the market, out of the sea, and basically put to get again at work in the sea for higher level fish. When you think about our proposal, we want to be able to replace the full fish oil in salmon feed and, in the Corbion situation, given they have only part of the omega-3 components in their product, that is a bit of a different story. All in all, we see actually quite a good situation. We did not see that all of a sudden everything went the other way, that made us change our commercial strategy. Whilst you said Corbion did, and we noticed that, but that's normally a sign that you need to adapt. We don't see that sign.
Again, we have a different value proposition. We go for full sustainable fish in the salmon place, and we obviously see also a lot of traction from the retail market, seeing their end consumers being very much interested to have a fully sustainable fish. As they sometimes say that, the fish in, fish out ratio, which they normally use as an example, is much more beneficial one to one or even less. At the moment, when you capture fish oil out of the sea and you fit into the diet of salmon, it's actually two to one. You need about two times fish in quantity to feed one time salmon, to then get to the consumer. Back to you, Dimitri.
Thanks, Chris. Indeed, I think many of our big tickets are linked to an economic incentive. It does make sense. In this sense, getting fish oil from the ocean with reduced supply over time, and it's unsustainable, basically, will have an impact on the price. Secondly, as Chris said, we bring indeed, as a sustainability proposition. That's something which is appreciated by retailers and by consumers. Coming back to, at the end of the day, the consumers decide. On Veramaris. The question on materials. Let me be brief here. I think nylon is already in consolidation. One of the reasons why in 2010 and 2013, we exited the bulk chemicals, caprolactam, as an example. The polymer space is consolidating. We have Hardly there, very small. Where we do polymers, we are in compounds.
If you look at the materials where we are today, it is a quality of materials of about 20% normalized. These are specialty markets, their consolidation is not name of the game. Name of the game is application expertise and add solutions to our customers. In that sense, Resins & Functional Materials is not to be compared with Protective Materials, formerly known as Dyneema, or the specialty materials in the engineering materials area. That doesn't go one on one. With that, I still have time for questions, I think. Patricia.
Our final question is from Mr. Sebastian Satz of Barclays. Go ahead, please, sir. Your line is open.
Great. Good afternoon, everyone. Thanks for taking the question. I'd have two, please. The first one is on early life nutrition. Could you please comment a little bit on your positioning with local Chinese producers, and specifically who has been gaining a lot of share over the last few years? Also, to what extent do you think that the addition of HMOs to your portfolio might potentially improve that positioning? The second question would be on Clean Cow. We've talked in the past about a market potential of about EUR 1 billion to EUR 2 billion, and you just mentioned the strong demand pool as well. In the breakout session in the interview, I think you talked about a revenue projection of about EUR 100 million by 2025. Why are you not a little bit more optimistic here if the demand pool is so strong there?
Yes. Thank you very much, Sebastian, let me maybe start with the Clean Cow myself. As you can imagine, when you are the owner and the manager of such an initiative, you tend to be a little more cautious, particularly when you're addressing the capital markets. On top of that, of course, we are still by the way, Clean Cow is now Bovaer. We're still in the registration phase. We expect registration with EFSA to come in the second half of 2021. It is, of course, early days as well. A bit of caution. The market, by the way, potential is indeed EUR 2 billion. There we have seen a lot of pull. What I mean by that is, if you refer to the European Green Deal, for example, whether it be the Climate Law, whether it be the Farm to Fork Strategy.
The backdrop for Bovaer and the reduction of methane from animals is really much, much stronger than actually when we started this journey a while back. We're very confident. Here, it was just a little bit of caution from our colleague. Now, to your question on early life nutrition. I think here it's probably best to hand back to Philip. Philip, over to you.
Yeah. If I look at the key ELN players in China, of course, these people generally don't do just ELN, but also are very active in dairy and other products. We do have relationships with those companies. In many instances, stronger in some of the other segments than in ELN, although we sell also vitamins and premixes to those people, et cetera. We clearly see that through the acquisition of Glycom, we're getting some increased traction with them to be further developed in the coming months and years. Because as you know, HMOs are not yet approved in China. We can bring them into China through the cross-border e-commerce, which is a channel that we're exploiting for that through our existing customers and also new to be developed customers. Certainly, the HMOs will help us ramp up also our position in the Chinese market.
Thank you very much, Philip. I am getting the sign here that we have actually run out of time. Of course, with a bit of satellite interruption, that's cut a little bit of time. On the other hand, I think we did get a chance to cover a lot. Thank you again very much for your time and for your attention for DSM over the last two days. I also want to thank our operator, Patricia. Thank you for opening the line. I think now we will close that off in terms of the questions. That leaves us with two messages. One is a big thank you to our colleagues who have indeed put a lot of their passion and energy into preparing this first, for us, fully virtual investor event, and to showcase and to really share our passion for the business.
With that, I would really like to also close with a wish. That is that I truly hope that you, after today, understand why both Dimitri and myself are just so passionate about this company, about what we do today, but also about what we can be doing into the future. With this, I wish you all a very good day, and please stay safe