After the first few years in which they supplied the ingredient to
cosmetic and biomedical companies based in western Europe or North
America, they became supplier of the medical and cosmetic formulations
widely used in China and across the world as dermal
fillers.15 In this shift (Figure 1), the “vertically
integrated” company will earn the huge difference in revenues existing
between active ingredients and the final functional products sold on the
rich healthcare, cosmetic, nutraceutical and pharmaceutical markets.
2.3 Lean production in small, flexible plants
The key technologies that will enable economically convenient and
actually highly profitable bioeconomy productions are similar to those
that are eventually enabling a major shift in the global chemical
industry.16 An in-depth knowledge and understanding of
these technologies and their possibilities is therefore required for
biobased productions to thrive. The aforementioned productions can be
based on chemical synthesis, and thus rely on heterogeneously catalytic
processes taking place in small, high-throughput flow
reactors;17 or can be based on new, waste-free
extraction routes of natural products.18
In both cases, the new continuous high-throughput productions are
conducted in digitally controlled small, modular plants rather than in
huge plants requiring both large capital expense and large operational
costs. This, inter alia , allows to flexibly adapt productions to
customer demand in various regions of the world.19Besides cutting the cost of shipping, this will end the reliance on
foreign suppliers for substances that can be of vital importance for
entire countries, as shown by the prolonged shortage of active
pharmaceutical ingredients (APIs) not only in low-income countries but
also in industrially developed countries such as the USA, European and
Oceania countries.20
2.4 From suppliers to business partners
In bioeconomy productions, suppliers necessarily turn into business
partners. The fact that value chains of the agri-food and industrial
products converge “due to the shift to bio-based raw materials leading
to a mutual dependence and triggering new material flows and food
processing technologies” was identified in the early studies on
technology and innovation management in the
bioeconomy.21 In practice, learning that their
by-products supplied at low cost are used for the production of high
value substances and materials, farming, forestry or fishing companies
will increase prices with the risk to undermine the economic convenience
of said bioproductions.
Rather than trying to fix prices with easily broken long-term supply
contracts, successful bioeconomy companies have two management options.
They will either enter into partnership with their suppliers by
establishing jointly owned production plants, thereby sharing revenues
and profits, or they will become owners of plantations, forests or
fishing companies.
Italy’s Indena, for instance, owns several hectares of olive orchard
plantations in southern Italy from which it sources the olives used to
produce phenolic extracts rich in hydroxytyrosol and verbascoside to be
turned into valued cosmetic applications (skin protection and skin
antiaging topical and oral formulations). This way, a specific olive
variety was selected amid more than 300 existing varieties, while
botanists chose the best harvesting period to ensure high levels of
verbascoside and other biophenols.22
Relying on seasonally dependent biological resources used as raw
materials, the manufacturing of biobased products requires establishing
mutually beneficial relationships with the suppliers of the raw
materials, which generally are agriculture, agrifood, forestry or
fishing companies. Gone are the days in which plants or flowers grown by
poor farmers were collected in African regions with “most of the
benefits captured by the retailers”.23
The scale of biobased productions and the need to assure the quality of
the biological resources supplied requires the development, often from
scratch, of a complete supply chain starting from harvest, followed by
appropriate handling, storage and delivery of the required biological
raw materials. For example, facing a huge increase in demand and
production in the last decade (2010-2020), the pectin industry could not
rely any longer on slow and highly variable supply of dried lemon peel
chiefly sourced from Argentina. Hence, large pectin manufacturers opted
to build new production plants in Brazil next to plantations of orange,
lemon and lime.24
Among other benefits, the immediate supply of waste citrus peel after
fruit squeezing allowed preventing microbial spoilage of the fresh
peels, which could be readily processed to extract the valued
hydrocolloid.
The natural products industry, which originally supplied costly flavour
and fragrance ingredients such as vanillin to the food and perfume
industries, currently supplies a huge variety of ingredients to the so
called “natural and organic industry”, namely a sector comprising food
supplements, natural organic food and beverage, functional food and
beverage, and natural living (personal care, household cleaning and pet
products). In 2020, only in the USA such industry enjoyed $259 billion
revenues (Figure 2) increasing at 12.7% annual growth
rate.25