What’s Hot in the Chemicals, Materials & Food Industry

What’s Hot in the Chemicals, Materials & Food

Industry

Trends, Opportunities, and Challenges Through the Eyes of the Key Trends, Opportunities, and Challenges Through the Eyes of the Key Participants in the Chemicals, Materials & Food IndustryParticipants in the Chemicals, Materials & Food Industry

Dear Sir/Madam,

Thank you for taking the time to complete Frost & Sullivan’s inaugural ‘2013 Search for Growth’ survey. We received 1,835 completes from executives in more than 40 countries who selected, in total, more than 20,000 hot topics.

Frost & Sullivan’s research team used the findings, and your open text feedback, to select and prioritisethe topics that were deemed to be poised for the greatest growth and have since conducted (or have in the pipeline) primary research on over 70% of the topics that you selected. As a token of our thanks, we have put together some insights for you from the survey on each vertical market. We also teamed up with the design consultancy Orb to create an infographic that highlights the top 3 growth areas by vertical market and provides estimated aggregate growth rates for the hot spots in

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top 3 growth areas by vertical market and provides estimated aggregate growth rates for the hot spots in those markets. If you would like to speak with our analysts about the findings, or any of the markets forecast to grow at the highest rates, please send me an email and I will arrange it for you.

We also had 5 iPad winners and sent copies of the Mega Trends book to the first 100 respondents—thanks to you all also, we trust you liked the prizes.

After the excellent feedback we received on the last survey, we are going to repeat it in October 2013 to provide you with benchmarks on how the market sees growth in 2014. We will also benchmark your estimates of the growth rates with those of our research team, which we are particularly excited about.So thanks again for your time, and if you have any questions, please do get in touch.

Kind regards,

[email protected] Vice President Growth Partnership Services

Chemicals, Materials and FoodWhat Participants see as Hot Topics and why?

• With buildings representing one of the biggest energy consumers, governments around the world have started

focusing on more energy efficient buildings in order to achieve their respective carbon emissions reduction andenergy efficiency goals. For example buildings account for 42% of the EU’s final energy consumption and forabout 35% of all greenhouse gas emissions. The growth of “green” and “net-zero energy” buildings will drive theneed for sustainable insulation systems and materials. The massive growth in emerging markets, buildingrenovation in Europe and the evolving standards in the U.S will be amongst the major driving forces behind the

growth of materials for energy efficient buildings.

• As energy performance requirements increases in each country, systems incorporating high performanceinsulation materials will manifest more growth. Manufacturers providing end-to-end solutions will offer maximumvalue to the customers when compared to suppliers providing stand alone solutions for these markets.

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• Even amidst the current mixed global economic landscape construction chemicals remain in the top of the agendafor emerging as well as developed markets driven by the urbanisation megatrend and a massive infrastructure

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for emerging as well as developed markets driven by the urbanisation megatrend and a massive infrastructuredevelopment. Although differentiation is a difficult task for the construction chemicals sector, as the products aremostly commodities and the construction sector traditionally has been quite conservative, key producers are tryingto reach a higher level of differentiation by closely working with customers in order to understand needs anddevelop customer-focused solutions for specific applications.

• Construction chemical suppliers are focusing on strengthening their relationships with contractors and architects,working in tandem with them to identify cost-effective options within their portfolio rather than pushing theirproducts uni-directionally into the market.

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• Growth in end applications such as food, medical, pharmaceuticals, and consumer packaged goods will drive thegrowth of the flexible packaging market. The development of new packaging technologies and products will alsoaid the growth of these applications.

• The increased focus on sustainability will continue to be a major trend in the packaging industry, which supportsthe adoption of materials from renewable sources. Changing consumer lifestyles and increasing dependency onprocessed, packed, and pre-cooked food are the major drivers for flexible packaging in food and beverage

applications, which is the largest end segment application.

Contents

Section Slide Number

What’s Hot in 2013 5

• Key Perspectives on Growth in the Chemicals, Materials & Food Industry in 2013 6

• Market Highlights for 2013 7

• Chemicals, Materials & Food—What Participants See as Hot Topics in 2013 8

• Chemicals, Materials & Food—Convergence with Other Industries 13

• Global Hot Spots in the Chemicals, Materials & Food Industry 14

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14

• Four Big Predictions for 2013 15

• Chemicals, Materials & Food—The Link to All Sectors 16

The Frost & Sullivan Story 18

What’s Hot in 2013

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Key Perspectives on Growth in the Chemicals, Materials & Food Industry for 2013

2Food-related markets including processing, packaging, logistics, and antimicrobial additives represent the key growth drivers in this industry.

3

Materials and chemicals that support and promote clean and sustainable energy technologies and energy efficiency are on the

1

Shale gas is already having a significant impact

intensify in 2013.

Shale gas is already having a significant impact on a number of industries as an energy source, fuel, and potential feedstock and this will intensify in 2013.

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4

as production and consumption hot spots.

In terms of emerging markets, BRIC is leading the developments, but Turkey and Southeast Asia countries such as Vietnam, Indonesia, and Malaysia are strengthening their global position as production and consumption hot spots.

3 technologies and energy efficiency are on the top of the agenda of stakeholders across the value chain.

5

The 5 key industries tracked by chemicals, materials & food are construction & utilities, transportation, foods and beverage, personal protective equipment, and food, drug, and cosmetics.

Source: Frost & Sullivan

Market Highlights for 2013

• The food, mobility, and construction markets were in the core of developments for 2012, exhibiting growth overall and driven

by the emerging economies. The pattern in 2013 is not so different from last year.

• Renewable energy applications, especially offshore wind turbines and photovoltaics, continue to present healthy growth

opportunities in developed markets such as Europe and the United States. In addition, materials for energy efficient

buildings in the form of complete solutions, such as exterior insulating finishing systems (EIFS) and structural insulated

panels (SIPs), will also present significant growth.

• Targeted consolidation in the chemicals and materials industry continues as the theme of recent years but the number of

closed deals will be smaller due to the continued widespread lack of available cash. The continuing uncertain economic

situation in the eurozone and the high US government debt continues to undermine the speed of the macroeconomic

Key Market Highlights

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recovery of markets and the level of investment available.

• Shale gas, primarily in the United States, has consolidated its role as the industry game changer and the lift of the ban on

shale gas fracking from the UK government signifies a change, in general, in the European political volition about further

exploring the dynamics of this market.

• Indian demand for active pharmaceutical ingredients and personal care products reflects the improvement in healthcare and

the growing spending power of an affluent middle-class. End-user industries, such as automotive production and

construction, will also exhibit growth.

• China's development of green technology will continue to draw in strong chemicals investment in photovoltaics and even for

technologies such as electric vehicles. Brazil continues to become a major centre of supply for biobased feedstocks and

market opportunities including crop protection chemicals, plant health improvement agents, and nutricosmetics.

• Massive developments in crops used as biofeedstock for the production of fuels, chemicals, and materials. Lignin will

become a critical area of development.


Chemicals, Materials & Food—What Participants See as Hot Topics in 2013

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Food Processing Sector Growth Opportunities 60%

2 Materials Market for Energy-efficient Buildings 46%

3 Construction Chemicals 46%

4The Impact of Globalisation Mega Trend on the Automotive Materials Sector

46%

5 Flexible Packaging 42%

6 Mega Trends for Agrochemicals and FDC 40%

Chemicals, Materials & Food: Identification of Hot Topics, Europe, 2013

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6 Mega Trends for Agrochemicals and FDC 40%

7 Engineering Plastics Market 36%

8 Lighweighting 36%

9 Antimicrobial Additives for Food and Beverage vs. Packaging Solutions 36%

10 Explosive Growth in the Animal Feed Market 36%

11 Changing Dynamics in the Food and Beverage Logistics 35%

12 Food and Beverage Processing Equipment 35%

13 Photovoltaic Chemicals and Materials 34%

14 PPE Distribution 33%

15 Battery Materials Markets for Electric Vehicles (EV) 32%

. Source: Frost & Sullivan

Chemicals, Materials & Food—What Participants See as Hot Technology Topics in 2013

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Clean and Green Environment Technology Cluster 41%

2 Sustainable Energy Technology Cluster 36%

3 Sensors and Controls Technology Cluster 31%

4 ICT Technology Cluster 24%

5 Materials and Coatings Technology Cluster 22%

6 Advanced Manufacturing and Automation Technology Cluster 22%

Technical Insights: Identification of Chemicals, Materials & Food Hot Topics, Europe, 2013

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7 Health and Wellness Technology Cluster 20%

8 Medical Devices and Imaging Technology Cluster 18%

9 Microelectronics Technology Cluster 13%

The highlighted clusters illustrate the direct relationship to the chemicals, materials and food sectors and the high ranking each received from respondents across the industries. Renewable systems are still high in the technology agenda of the stakeholders followed by a rejuvenation in the various coatings application markets


Chemicals, Materials & Food—Convergence with Other Industries

Key Industries Tracked in Addition to Company’s Core Markets, Europe, 2013

Industry Cross-interest 1 Cross-interest 2 Cross-interest 3 n

A&D ICT 39% A&T 26% EPS 20% 111

A&T EPS 25% ICT 24% EBT 9% 282

CMF EPS 37% A&T 36% EBT 27% 167

EPS EBT 24% A&T 20% IPC 18% 180

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A&D = Aerospace & Defence

A&T = Automotive & Transportation

CMF = Chemicals, Materials & Food

EPS = Energy & Power Supplies

EBT = Environment & Building Technologies

HC = Healthcare

IPC = Industry & Process Control

ICT = Information & Communication Technology

M&I = Measurement & Instrumentation

EPS EBT 24% A&T 20% IPC 18%

EBT EPS 44% ICT 26% CMF 21% 57

HC ICT 18% CMF 15% M&I 8% 238

IPC EPS 42% A&T 26% CMF 26% 78

ICT HC 23% A&T 19% EPS 19% 371

M&I A&T 42% EPS 38% IPC 38% 26


Interest in Mega Trends

73%

66%

73%

81%

76%

77%

22%

23%

23%

17%

19%

23%

5%

11%

4%

2%

4%

Overall (n=1820)

A&D

A&T

CMF

EPS

EBT

Interested Undecided Not interested

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67%

64%

75%

77%

27%

31%

20%

12%

6%

5%

4%

12%

HC

IPC

ICT

M&I






HC = Healthcare




Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

The strongest interest can be identified in CMF with 81%, 8% above the overall average.

Ranking of Mega Trends—Variation by Industry

New Business Models: Value

for Many

Future of Mobility

Social Trends

Beyond BRIC: The Next Game

Changers

Connectivity and Convergence

Future Infrastructure

Development

53%

51%

44%

43%

42%

40%

51%

51%

37%

62%

44%

38%

45%

73%

45%

45%

45%

42%

47%

37%

37%

50%

18%

40%

50%

34%

31%

43%

33%

60%

46%

24%

41%

39%

44%

44%

60%

38%

52%

43%

39%

23%

48%

50%

24%

43%

43%

36%

62%

74%

54%

30%

70%

40%

43%

29%

14%

57%

21%

43%

Overall A&D A&T CMF EPS EBT HC IPC ICT M&I

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Development

Smart is the New Green

Health, Wellness, and Well-

Being

Urbanization: City as a

Customer

Innovating to Zero

Bricks and Clicks

38%

31%

29%

27%

11%

37%

15%

30%

30%

10%

35%

18%

38%

25%

10%

53%

38%

37%

42%

10%

55%

12%

33%

26%

14%

59%

27%

49%

32%

12%

18%

81%

14%

23%

8%

38%

22%

33%

26%

9%

25%

19%

20%

19%

10%

29%

21%

7%

21%

7%






HC = Healthcare




Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan

Chemicals, Materials & Food—Convergence with other Industries

Key Areas of Technology Convergence

Construction& Utilities

Transportation

Lightweight Materials, Composite

Materials, Advanced

Coatings, Functional Fluids, Fuel &

Lubricant

Additives, Adhesives, Electric

High Speed Rail

Infrastructure

Low Carbon

Economy

Water &

Wastewater

Treatment,

Green Materials,

Geotextiles

Personal Well-

being

Antimicrobial

Coatings, Bioci

des for Water

Treatment

Materials &

Batteries for

EV

Smart

Grid, Photovoltai

c, Oilfield

Chemicals

Solar

Thermal, Wind

Energy, Shale

Gas

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Food, Drug & Cosmetics

Food &Beverage

Automotive &Transportation

Aerospace &Defence

Healthcare Environment & Building Technologies

Chemicals and Materials

PPE

Additives, Adhesives, Electric

Vehicles, Catalysts

Bioplastics for

Packaging

Excipients, Plasti

cs for Medical

Devices

Nutricosmetics &

Nutraceuticals, M

ultifunctional &

Natural Active

Ingredients, Func

tional Foods

Energy & Power Supplies


Chemicals, Materials & Food Industry—Global Hot Spots

Chemicals, Materials and Food Markets: Global Hot Spots & Hot Markets, Global, 2013

• Shale gas is on the top of the

agenda as an energy

source, fuel, and feedstock, but also

as an outlet market for relevant

chemicals.

• Industry consolidation to continue.

• Other hot markets include materials

for energy efficient

buildings, materials for

automotive, adhesives and sealants

in healthcare, and eye health

solutions.

Russia

EuropeNorth America

China

• Russia presents significant

opportunities across

sectors, especially in crop

protection, construction, water

treatment, public transport, and

PPE.

• Manufacturing and consuming hub

• Continuous increase per capita

usage of chemicals

• Increasing competency in R&D and

high-value added products

• Growth opportunities driven by new

infrastructure, Mega Cities and

mobility.• Vast supply of feedstock and strategic alliances with American

• Need for prevention and better general health drives the

nutricosmetics market and increasing private healthcare.

,expenditure drives the market for plastics in medical devices

• Materials for energy efficient buildings and the smart grid

infrastructure will exhibit growth.

• Lightweight materials and composites in transportation are

key markets with high speed rail in the epicentre.

• Economic contraction continues affecting the Southern

European countries.

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The Middle East

AfricaLatin America

APACIndia

China

• Emerging oil and gas market

opportunities

• Infrastructure development

and construction

• Chemicals & materials for

water & agriculture

• Latin American hub for bioethanol and exports

to neighbouring nations

• Hot spot for biobased feedstocks, and

biofertilisers and biopesticides key growing

markets

• Increasing focus in mining and oil and gas

exploration, as well on engineering plastics

• Brazil is construction hot spot until 2016

(World Cup and Olympic Games).

• High population and development needs across all

sectors: transportation, construction, infrastructure,

sanitation, healthcare, food

• Highly skilled labour and low costs – attractive

market for partnerships

• Growing affluent middle-class with spending power

for personal care

mobility.

• Large population base and low

costs with increasing per capita

spending power

• Hot markets include high speed

rail, public transport, crop

protection chemicals, personal

care, mining, and construction.

• Vast supply of feedstock and strategic alliances with American

and European companies

• Construction growth resumes with opportunities for concrete

admixtures, hot melts, and geotextiles.

• Military coatings, materials for public transport, and plant health

improvement agents complete the diverse hot markets.


Four Big Predictions for 2013

2

Lightweight materials and specifically composites continue to strengthen

their presence and uptake in the transportation sector, including

automotive, aviation, marine, and high speed rail and will result in high

demands for innovative chemicals and materials.

12013 will continue to be the year of “green” technology routes and

products, especially lignin and bio-feedstock.

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3Industry consolidation to continue with mega acquisitions, 8 companies

from the top 120 global chemicals companies headquartered in US and

Europe are potential targets.

4Eye health solutions, brain and cognitive health food, women’s health

ingredients, and bone and joint health will be the high growth sectors in

Food and Beverages together with processing equipment.


Chemicals, Materials & Food—The Link to All Sectors

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