Alltech, the global animal feed and health supplement producer, has always been about growth – of animals and plants, of research and patents, of its product lines, of companies under its corporate umbrella, and revenues that go back into its operations.
So far so good. Revenues today are in excess of $2 billion annually, but leaders of the private Nicholasville-based company keep expanding the playing field and moving the goalposts in hopes of crossing $4 billion in about five years – then maybe aiming for $10 billion – if their vision for what the emerging agribusiness marketplace wants and needs is correct.
An indirect part of the plan is to make Central Kentucky the go-to hub for agtech startups. State Agriculture Commissioner Ryan Quarles, Lexington Mayor Linda Gorton and the Kentucky Cabinet for Economic Development are strongly behind the idea.
President/CEO Mark Lyons is growing the company’s research alliances. There are currently 20 globally with universities and government agencies. He is urging the agribusiness industry into better sustainability practices and food safety measures, and improving its relationship with consumers. Lyons expects to continue the merger and acquisition growth begun several years ago to give Alltech better communication channels with farmers and keep it competitive with agribusiness giants such as Cargill and Archer Daniels Midland. And, he has his company’s considerable R&D efforts aimed at creating products that not only activate the best genes in our food chain’s plants and animals but in the human consumers at the end of that chain.
The newest initiatives are collected into the Planet of Plenty concept announced in May at Alltech’s annual ONE conference in Lexington. ONE19 gathered several thousand attendees from around the world along with another thousand company team members from its operations around Kentucky, the U.S. and some 120-plus other nations.
The Planet of Plenty strategy arises in part from listening to Alltech team members at its sites around the world during a long round of Innovation Days, where employees were encouraged to offer ideas and to pass along feedback from customers as the company’s themes, products and messaging are pushed out into the marketplaces.
Big ideas and big success
Big concepts have always been part of Alltech’s company culture.
Founder Pearse Lyons of Ireland came to Central Kentucky in 1980 with $10,000 and big ideas to make a business of selling compounds derived from yeast fermentation to help farmers raise animals bigger, faster and more healthily. Lyons had multiple university degrees, including a doctorate, in biochemistry and brewing science plus work toward an MBA. Smart, industrious, tireless, a good salesman and charismatic leader, Lyons had $1 million in sales in less than a year.
Alltech’s products are mainly low-volume, high-profit additives that go into animal feed for dairy and beef cattle, swine, poultry, fish and more recently, plants, bees and humans. The first product, Yea-Sacc, helped dairy cows maintain optimal body pH levels for longer periods, which increases milk production. Most products target better digestion and other related animal systems.
Improving production outcomes by speeding growth or decreasing sickness even just a few percentage points means many millions of dollars to agribusiness. Anywhere in the world with farm animal operations was a market, and the founder developed sales and production operations steadily in his native Ireland and Europe, Brazil and the rest of South America, in China and the rest of Asia, in the U.S. and Canada, and Africa.
Lyons launched an Alltech brewery with craft beers and ales, and later a distillery with whiskeys.
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Since its inception, Alltech has generated roughly a patent a month and today protects about 450, said Karl Dawson, Ph.D, speaking just before he retired at the end of June as Alltech’s chief scientific officer and vice president of research after 21 years with the company.
There were 168 active projects in late June among the 45 researchers in Nicholasville, 15 scientists in Ireland and 30 others at Alltech sites around the world, the former University of Kentucky microbiology and pathogen control professor said.
The trend today, according to Dawson, is to file and protect fewer patents, which can be examined by competitors at the U.S. Patent Office. Rather, research findings and new products increasingly are kept as trade secrets within the company.
Alltech has more than 520 animal supplements and additives and finished feeds, he said.
The focus on animal production and well-being remains, but for 15 years the company also has conducted crop plant research. For 10-plus years it has made and sold compounds such as AgroMos to fortify plants and improve their resistance to environmental stresses and problems such as fungal disease, Dawson said.
Dawson’s successor is Ronan Power, most recently vice president of Alltech Life Sciences, a division dedicated to researching gut and brain health in humans. As European director of research, Power has been closely involved in the development of Alltech’s product portfolio, including its organic selenium, Sel-Plex, a supplement for animals and now for humans.
Power, of course, is a Ph.D, as was the founder, the current CEO and dozens of Alltech employees. Dawson will continue to chair the company’s scientific advisory board and help guide its core research areas.
Gene activation means growth
Alltech is the only private company with its own nutrigenomics lab, said Brian Lawless, brand manager for Alltech North America. Its scientists can sequence DNA samples to study gene expression produced by diet – evidence of how its supplements and feed formulations are influencing growth and wellness.
Agribusiness operations raise animals to market size quickly. A just-hatched chick grows into a market-ready broiler hen – Kentucky’s top “crop” by dollar value for the past decade – in only 42 days, Lawless said. With the first 72 hours a focus, Alltech scientists analyze chicken DNA for expression of the bird’s 15,000 to 17,000 genes at day 4 and day 10.
An important issue with fast-growing animals, he said, is good early oxygenation to prevent bad muscle myopathy outcomes such as “wooden breast” and “white striping.”
Meanwhile, much of Alltech’s research lab testing today is to assess if feed supplies, which might be stored for months with limited protection, have developed mold and thus mycotoxins that lower animal growth and wellness. A successful Alltech product is Mycosorb A+, which binds to mycotoxins to reduce their absorption by animals.
Alltech’s research-backed development and introduction of new products yielded 20% annual growth for decades, said Mark Lyons, who is in his second year leading the company after his father’s untimely passing due to complications following a routine medical procedure. Private company revenue figures are not reported, but a 2018 Harvard Business Review case study of Alltech’s acquisitions estimated them at around $2.5 billon. Company officials suggest the Harvard number wasn’t exactly right, but Lyons confirms that revenues are above $2 billion.
Its acquisition of several American and Canadian feed companies that Alltech already knew as customers for its products was partly about continuing to grow revenue, according to the Harvard case study, as well as improving lines of communication to farm operators long known to be reluctant to increase spending for inputs. The acquired feed companies now produce about 60% of revenue, Lyons said, and have increased Alltech’s influence in the marketplace.
He added, though, that feed is not as high a value-add product as Alltech’s additive business – past estimates sometimes put cash flow at 35% or more.
The “exciting” part about being a private company, Lyons said, is that Alltech is free to put those earnings back into its operations.
“We invest in our people,” he said. “Alltech is not for sale or operating on making quarterly numbers.”
The acquired companies “become beneficiaries of innovation Alltech can create,” Lyons said.
Making Kentucky an ag-tech hub
One significant Alltech innovation initiative is to promote and establish Lexington as an ag-tech startup business hub; there are a few aspirant locales but no such hub in North America currently. Alltech has had success with the Pearse Lyons Accelerator to support agriculture technology entrepreneurs in Dublin, Ireland. It selects 10 participants annually from among dozens of applicants around the world for a three-month program at the Dogpatch Labs startup hub in Dublin’s Docklands area.
Participants have presented “pitch” information about their disruptive startups at the 2018 and 2019 ONE conferences. Their business ideas include plans to use drones with specially calibrated cameras to detect vineyard diseases at earlier stages than the human eye can and far more efficiently; using ultrasound to “sex” (determine the gender of) chicken egg embryos so essentially every hatched chick is a laying hen or broiler; creating a system to raise grasshoppers in sanitary conditions that produce a sustainable, quality protein source; and wearables for animals to track behavior that indicate potential development of illness or that alert a farmer one hour before calving begins to better manage outcomes.
Alltech officials first proposed the opportunity of creating an ag-tech hub a few years ago. In the past year, Lexington and Kentucky elected and economic development officials have grown increasingly active in supporting the idea and engaging in discussions about how to bring it to fruition.
Alltech considers a Lexington ag-tech hub “a challenge given us by my father several years ago,” Lyons told The Lane Report in early July. But the company believes the best strategy to accomplish it is “to use the aspirations we have to achieve excitement,” he said. “Doing what the community wants … instead of us building what we think it should look like.”
Most of Kentucky’s agribusiness community members are just starting to learn about the idea via company, city and state events, forums, informational websites and more whose purpose is to create conversation.
“We want to create a snowballing effect,” Lyons said. “There are things that we can control. We will be creating our own accelerator. We have extraordinary resources” such as Alltech’s R&D operations and a company farm.
Creative settings support innovation
To better ride herd over its expanded operations and encourage further innovation, Alltech is growing its headquarters under the guidance of Deirdre Lyons, the company’s director of corporate image and design. Pearse Lyons’ wife and original business partner has an ongoing influence in the company.
She envisioned and brought into existence design elements such as how the headquarters building in Nicholasville has DNA helix-shaped stairways, uses the Monarch butterfly colors of its logo everywhere and subtly incorporates the microscope-within-the-letter-A logo into its carpet. She has also carefully designed and outfitted offices in nearly 100 countries.
“I can visualize things,” Mrs. Lyons said. Her husband couldn’t, she said, and “had no sense of direction. I always drove.”
Mrs. Lyons controls product branding and sees to bright, art-filled work spaces, in part because all the marketing and its creative content are done by staff at the headquarters, then pushed out to local offices for translation to dozens of languages. Today, from the seat of her desk on the second floor of the 58,000-s.f. headquarters in Nicholasville, she can see the $21 million, 73,000-s.f. addition that is nearing completion.
There will be room for managing recent and future company acquisitions. It will include no plastic.
“Light is the No. 1 thing,” she said. Light, artwork elements and how people move while conducting their jobs are all important factors in a workplace.
“If your environment is creative, you can be innovative,” she said when asked about the value of investing in upscale materials and décor. Offices and branding incorporate some of what Mrs. Lyons called a “flood of ideas” that regularly wake her at 3 a.m.
The center of the three-story Alltech headquarters expansion will have an atrium with a glass and stone-encased elevator that will rise from a waterfall. A grand piano is coming. Many interior walls will be glass to bring outside light into work areas. Common areas will have background music. Each floor will have at least three meeting rooms – major ones such as The Beijing Room themed to key Alltech sites – a lunch room, coffee stations in each department’s coat closet and 6-by-8 phone rooms to conduct private conversations.
“How we work has changed,” Mrs. Lyons said.
A 100-seat presentation auditorium has large teleprompter screens built into the back wall and is being wired to live-stream activities to all Alltech sites. A first-floor museum will tell the Alltech story in vignettes, have a coffee and wine bar for visitors and a dark ceiling that twinkles with a view of the night sky from Jan. 4, 1980, the day the Lyonses founded the company.
ONE Very Good Idea
Alltech offers solutions, promotes region at annual conference
More than 3,500 producers and industry experts from 68 countries gathered in May in Lexington at ONE: The Alltech Ideas Conference (ONE19) to explore solutions to some of today’s most pressing issues in agribusiness and related fields.
The bustling international conference, held at Rupp Arena, was in stark contrast to Alltech’s first conference 35 years ago, then called the Alltech Symposium. The late Pearse Lyons, Alltech’s founder, often joked that the first symposium was just 20 people sitting around a table, and most of them were related to him, recalled Suniti Mujumdar, ONE manager (and Alltech’s manager of educational engagement).
At early Alltech Symposiums, scientists and agricultural experts discussed topics that were of a technical nature, Mujumdar said. Since then, the conference has broadened its scope to include many different stakeholders linked to the food supply chain, she said. The symposium was rebranded in 2015 as ONE, an event where attendees from across the globe – Alltech does business in 120 countries – gather to search for inspiration, motivation and the “one idea” that might make a difference in the world.
The three-day conference makes a difference in Central Kentucky. The 2019 event had a local economic impact of $9.4 million and supported 2,138 jobs, according to data from VisitLex.
ONE19 was headlined by adventurer and survival expert Bear Grylls of “Man vs Wild” television fame and featured more over 100 speakers discussing a variety of topics, ranging from agri-tech business and health to wellness, crops and every major species in animal agriculture. In his address, Alltech CEO Mark Lyons shared the company’s new vision, “Working Together for a Planet of Plenty.”
“We envision a world of abundance, made possible through new technologies and management practices and the world’s most valuable infinite resource – human ingenuity,” Lyons said. “A Planet of Plenty is an invitation to work together, across industry sectors and geographical boundaries, to create a place where animals, plants and people thrive in harmony.”
ONE19 also shined the spotlight on Central Kentucky, offering participants the opportunity to experience the area. Options included a dinner at Keeneland racetrack, tours to iconic local destinations, and dining and shopping excursions.
Connecting the world with Kentucky is very important to Alltech, Mujumdar said, so it does not miss a chance to showcase the region.
Alltech plans the event all year – and it shows. From banners and signs to the exhibits and table talks, the atmosphere at ONE is designed to spark curiosity, inspire ideas and encourage learning.
At Alltech locations around the globe, employees promote the conference. Closer to home, Alltech’s core team members literally make it all happen. More than 1,000 Alltech staff members were onsite during ONE19. Almost every role, from greeting attendees to assisting them with tech connectivity and other needs, was filled by an Alltech employee, Mujumdar said.
Shortly after the closing plenary session, preparations for ONE20 began.
“A core group meets backstage and immediately starts planning for next year’s activities,” Mujumdar said. “In that moment, everything is so top of mind. It is the best time to have that type of conversation.”
The team always asks, “What can we do better?” she said.
The conference, like the company, is always evolving, and striving to be future forward.
Learn more at one.alltech.com. —Lorie Hailey
Mark Green is editorial director of The Lane Report. He can be reached at [email protected]