In its hometown, Alltech may be better known for a few humble lines of beer than the products that have made it a worldwide force in animal nutrition. Even with a brand new, 56,000-sq.-ft. headquarters in Nicholasville that’s been visited by Gov. Ernie Fletcher and representatives from nearly every continent, some locals don’t know where the company is or what it does.

“We’re not hidden here, we’re buried here,” joked Alltech President Dr. Pearse Lyons.

The fame attached to the beers made at Alltech’s Lexington brewery like Kentucky Ale is mainly local, and alcohol is only a fraction of Alltech’s business. Billy Frey, a company spokesperson, calls the beer Alltech’s way of “giving back” to the community.

So while Lyons doesn’t mind being known for his beer – you can find it on tap at an Irish pub tucked into a corner of Alltech’s headquarters – it’s a safe bet the company is not America’s next great brewery. But it may be well on its way to becoming the Budweiser of animal nutrition. And, ironically, it is doing so with one of the core ingredients of the beer business – yeast.

It all happened when Lyons, an Irish biochemist who once worked for Guinness and came to Kentucky to learn about bourbon, switched gears in the mid-1980s from mixing drinks for people to making nutrients for animals.

“I knew a little bit about it,” Lyons recalled. “And the customers were geographically in the same area as those distilleries.”

Today, Alltech’s animal-feed additives – most of them derived from yeast – are shipped worldwide. These nutrients are added to animal feed to make cattle, chickens, horses, dogs, cats, and other species stronger, healthier and better able to reproduce. “They are getting more birds per chick, more eggs per bird and more piglets per sow,” Lyons explained. “The horses are getting more stamina. They are getting less colic and the ability to overcome toxins.” All of the entrants in this year’s Kentucky Derby, for instance, consumed some of Alltech’s products, Lyons said.

The company even manufactures an additive called De-Odorase, which it claims removes some of the odor from pig waste by improving the animal’s digestion.

Alltech’s clients include such well-known brand names as Purina and Iams. The company operates in 85 countries and has 1,500 employees worldwide, including 300 in Nicholasville, about 10 miles south of Lexington. It moves more than 200 tons a day of its products from its Nicholasville warehouse facility, an odorous maze of color-coded bags and crates stacked two stories high.

Better feed, at a price
Developing food additives takes a delicate balance of experimentation and, well, guts. Once enzymes and other nutrients are developed in a laboratory, Alltech monitors how they’re processed through an animal’s digestive tract. To do that, the company works with pigs, horses, chickens and other livestock around the world.

In Kentucky it boasts a herd of bison and some cattle, the latter with small “access ports” installed in their stomachs so researchers can test samples of partially digested food.

The science can be expensive and labor-intensive. Alltech’s researchers have already outgrown the facilities in Nicholasville, where the company employs nearly 100 scientists and is always recruiting more. Frey said plans are in the works to add a 30,000-sq.-ft. research building – roughly three times the size of its existing labs.

Alltech is growing so quickly that it plans to add 18 buildings in North America in the next five years. Lyons openly talks about reaching $1 billion in sales in five to 10 years – triple what Alltech is doing right now.

“Our target is a 20 percent-plus (annual) increase,” Lyons said. “And we get it. We grow by 27 percent and we have done that year in and year out.” He predicts that if the company grows into a $1 billion-a-year business, it will be exporting more than both the equine and tobacco industries in Kentucky. “The economic impact is really phenomenal when you get down to it.”

The company’s strategy for growth – and part of the reason for its success – is simple: The world’s population is growing rapidly. As more hungry mouths place enormous demands on the global food supply, food will have to be grown more efficiently on shrinking areas of land. Alltech boasts that its products help do just that, enabling producers to get more beef from cattle, for example, or better eggs and meats from chickens.

To help meet worldwide demands, the company has become one of the most globally diversified companies in Kentucky. Its business is more or less evenly divided between North America, Latin America, Europe and the Asia Pacific Region. “Our products go anywhere there is an animal,” Lyons said.

Jason Groth, of Kentucky Performance Products in Versailles and formerly of Alltech, traveled many of those places on the company’s behalf. “Dr. Lyons gave me an excellent opportunity to meet people and to travel all around the world,” he said. “You say the word and he’ll ship you off. People don’t know what a hidden gem they are.”

Each overseas office has characteristics unique to its location. But Deirdre Lyons, Pearse’s wife and the company’s official corporate designer, has made sure they each have a little bit of Kentucky in them, too. Many of them feature the black plank-board fences familiar to Kentuckians. “We do everything globally and locally,” Pearse Lyons said. Groth remembers traveling to Dunboyne, Ireland – which has a bioscience center similar to the one in Nicholasville – and feeling immediately “at home” with the fencing and woodworking. “It’s really something neat they’ve done with their brand,” he said.

Alltech’s $15 million headquarters is a cross-section of the company’s diversity. Conference rooms scattered throughout the building each bear the name of a country or region where Alltech operates. Deirdre’s touch has shaped all of them – from the African carvings and the regional photographs adorning the walls, to the custom-built, regionally appropriate conference table in each room.

“It costs more” to decorate, Frey said. “But it’s nice.”

A global presence
Alltech’s marketing materials read like a Rosetta Stone of sorts for the modern animal feed industry. They’re translated into as many as 14 different languages, including Chinese, Japanese and Arabic.

The company employs a full-time travel agent and staffs an in-house media studio that cranks out dozens of videos and promotional packages. It showcases the countries where it does business by hiring a photographer to shoot images around the world, which are then printed in the company’s annual calendar. The 2005 calendar features Hungary, home to Alltech’s Eastern Europe headquarters.

Alltech’s research on animal nutrition is among the most recognized in the world. When the company held its annual industry symposium in May, more than 1,500 people from 69 countries attended to discuss the latest technologies in animal nutrition.

“Dr. Lyons has kind of been a marvel in the animal industry for his scientific developments that have led to some of the technology breakthroughs that are now being incorporated into animal nutrition worldwide,” said David Williams, founder and president of Burkmann Feeds in Danville that helps Alltech test some of its products.

“We have the technical resources in our company to evaluate technologies beneficial to the animal owner and it’s been a privilege to have Alltech as our neighbor developing wonderful technologies we get to incorporate into our nutritional supplements,” Williams said.

Though speculation exists, it’s not clear how much of Alltech’s work is transferable to humans. The company already has a small human nutrients division that offers several over-the-counter supplements. It makes beer in Lexington and provides yeast to bakeries in Serbia. And it was an Alltech scientist who developed the process that resulted in Dippin’ Dots – the Paducah-based company that sells bowls of pellet-sized ice cream at malls and amusement parks around the country.

“What we’re doing for animals obviously can be done for humans,” Lyons said. “We’re struggling with how to do that right now. It’s a different business. Maybe we’ll make Alltech II to focus on that. Something like that probably has to happen.”

It’s an ambitious agenda for an ambitious man, and there will surely be obstacles along the way. Lyons, however, said animal disease scares like Mad Cow or Avian Flu should not pose any threat to business. On the contrary, he sees those things as opportunities for more additives like his. “People will still need to be fed,” he said.

For now, Lyons is more concerned about hiring enough staff to keep up with his company’s growth.

After more than two decades at Alltech’s helm, Lyons has been doing some secession planning. He said he has a number of talented executives in the wings, though leadership could also fall to his son, Mark, currently Alltech’s Director of International Projects.

“There are some strong people in Alltech,” Lyons said. “It’s not a one-man show, even though it started as a one-man show. We’ve got seven or eight directors who are very, very strong and would be as fine an executive as you would find in Lexington. They speak different languages, they have education and they have good people and management skills.”

Others like Frey, however, think Lyons is having too much fun to contemplate stepping down. He travels widely on a corporate jet. Some years he has been able to spend only a handful of days in Kentucky. The hectic pace doesn’t seem to faze him.

He is willing to do whatever it takes to grow Alltech. One thing he won’t ever do, however, is take the company public. “It’s not in the cards,” said Lyons, who is also the company’s majority owner. “We don’t need the capital and we don’t want to have the regulatory restrictions and reporting obligations. Everything we make goes back into the business, and we like it that way.”

Doug Bennett Jr. is a staff writer for The Lane Report.

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