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    Features

    A Welcome Assist

    Distributors do much more than deliver ingredients whenever and wherever needed.

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    Tom Branna, Editorial Director08.01.17
    Enzymes, surfactants, whitening agents, conditioning agents…the ingredient listing in today’s premium laundry detergent formulas reads like, well, a laundry list of ingredients. And the number of raw materials that find their way into today’s anti-aging serums and lotions? That’s even more complex! No multinational raw material supplier can effectively manage these disparate supply chains on their own. That’s why they partner with distributors to make sure that formulators get the materials they need when they need them. At the same time, finished product companies are leaning on their distributors for a variety of services that go far beyond on-time delivery.


    If that’s not enough, multinational marketers are pursuing smaller, independent brands and as a result, stepping up their use of contract manufacturers, which adds a whole new facet to distribution.


    Brenntag Specialties, Inc., has served multinationals and independent brands for years, explained Rich Joyce, business director, personal care group, Brenntag Specialties, Inc.


    “The contract manufacturer segment has started to see consolidation. Larger contract manufacturers are beginning to acquire smaller to midsize contract manufacturers,” he told Happi. “This trend will likely impact the number of companies Brenntag services in the future. In addition, we have noticed an increase in smaller and newer manufacturers requesting technical assistance, relying on their suppliers for formulation and regulatory help.”


    Consolidation and acquisitions continue, agreed David K. Hoff, VP-regional operations, Coast Southwest.


    “Smaller regional distributors are being absorbed into larger entities. Suppliers and customers in the West, due especially to the longer supply chains, are becoming more reliant on distribution.”


    Executives at Vantage Specialty Ingredients know how acquisitions can improve a company’s capabilities. More than a year ago, Vantage acquired Resources of Nature and Curcylic and Curoxyl Technologies.


    “With these two additions, we have complemented our portfolio focusing on high performance products for skin care,” explained Rafael Belline, marketing manager, LATAM, Vantage Specialty Ingredients. “This has helped us continue our focus to maintain our position as a key supplier and distributor to our customers. These new lines helped improve our capacity to work with different types of customers in different market segments where we saw a small gap in our portfolio.”


    For example, in Europe and Asia, the two lines helped Vantage improve its product offering and gain new customers. In Latin America, where Vantage already had a strong footprint, the lines complemented Vantage’s distribution portfolio, putting the company in a solid position in the market, according to Belline.


    For Coast Southwest, distribution, sales, and service capabilities combined bring value above what the manufacturers can offer, according to Hoff.


    “In the West, we are seeing less full truckload and tanker bulk businesses; the less-than-truckload model works well out here,” he added.


    Growing demand for customer support services is impacting nearly all of the categories where Centerchem participates, according to Tom Kovats, vice president. This includes formulation assistance, prototypes, regulatory, customization/exclusivity and marketing data, not just sales and basic technical support.


    “It has become more of a collaboration with many of our customers to work more closely with their R&D and marketing to address new demands and trends in the marketplace faster than in the past as ‘speed to market’ has become paramount,” he explained.


    What’s Moving?


    From naturally-derived actives to petroleum-free chemistries, every distributor agrees that the demand for natural personal care ingredients has grown over the last year. 


    “Consumers perceive natural ingredients as a more sustainable, healthy choice,” said Joyce. “Ingredients having animal ‘cruelty-free’ claims also are on the rise.  At the same time, we have seen a decline in interest for petroleum-based products.”


    According to Belline, more Vantage customers are searching for natural solutions with high performance as well as a good sustainability story.


    “Jojoba is one of our core businesses where we are committed to investing every year,” he said. “Vantage is one of the largest jojoba oil and derivatives producers in the world. What sets Vantage apart in the jojoba market is that we are the only vertically-integrated supplier owning every step in the supply chain, from farming to oil extraction to derivatives manufacturing.”


    For Centerchem, active cosmetic ingredients is the most important category and the company has enjoyed a solid increase in sales of all types, according to Ray Sourial, VP-sales.


    “The actives in a formula, while usually the most expensive ingredients, play a major role due to efficacy and possible recognition by educated consumers,” he said. “More consumers than ever before are willing to pay a premium for products that perform to their expectations.”


    Sales of natural and botanically-derived actives are growing even faster, he added. On the flip side, there’s been a decline in sales of certain products that are considered synthetically derived.


    “Consumer values and perceptions can have an impact on future products and what they contain or not contain,” said Sourial. “This can result in a dilemma for our customers and a possible loss in sales for the distributor.”


    How these materials are moving is changing, too. According to Angela Weeks, Acme-Hardesty, customers who require mixed truckload or less-than-truckload (LTL) are utilizing the capabilities of distributors to combine cargo.


    “In some cases, larger customers are compelled to buy direct from the manufacturers for security of supply,” she explained. “Distributors can offer more than one source for any given product and provide improved security of supply.”


    More than Distribution


    Don’t call it added value. Blending, repackaging, formulating and other services are all part of the job for successful distributors.


    In the past 12 months, Brenntag has significantly increased its cosmetic ingredient blending, surface treatment and repackaging capabilities.


    “We have accomplished this via acquisition and through our internal network.  This allows us to meet our customer’s unique requirements with quality products and shorter lead times,” explained Joyce. “Furthermore, we are investing in our technical services by expanding our regulatory department and hiring additional ‘seasoned’ formulation chemists for our application laboratories.”


    The acquisition of Resources of Nature gave Vantage a trend-setting boutique style of product offerings and formulations that has enhanced the company’s personal care business unit, according to Belline.


    “We have eight laboratories around the world working closely with one another to keep the focus on customer needs with a high level of technical service,” he explained.


    Tier II-IV customers continue to utilize distributors for on-time deliveries, special supply chain services that include regulatory, special packaging and safety stock inventory (security of supply), noted Weeks of Acme-Hardesty.


    “Distributors can typically provide better service than the manufacturers because we have more sales people and customer service people to take care of the customer’s needs,” she added.


    To maintain and enhance that level of service, Acme-Hardesty continues to expand outside sales team and inside sales team. 


    “We have also increased staff in our customer service department, added more resources to our regulatory group to keep up with the high demand for audits, quality studies, GHS SDS for imported products, and other related regulatory requirements,” said Weeks. “We continue to add to our technical service group and lab capabilities to assist customers in formulations, finding solutions to application issues and developing new products and blends.”


    Things to Come


    Sustainability is top of mind for consumers, marketers, raw material suppliers and distributors, too.


    Last year, Brenntag became a full member of the industry initiative called Together for Sustainability (TfS), which shows its commitment to support the development of sustainable procurement standards and toward more sustainability within the supply chain of the chemical and ingredient industry, according to Joyce.


    “Worldwide, Brenntag supports its customers with sustainable solutions and endeavors to continuously add new products to its portfolio which increase efficiency, reduce consumption or decrease environmental impact when applied, thereby providing sustainable alternatives to conventional products,” he said.


    More than one distributor told Happi that the increasingly complex regulatory climate is impacting their business, as most companies require global approval for ingredients.


    “China approval is the most challenging for us and our suppliers. Our customers want new and novel actives but also want China approval,” explained Kovats of Centerchem. “Not being able to provide both could result in lost opportunities even with the investment of much time and resources.”


    At the same time, there is an increasing number of companies that now have “cannot contain” and “must be” lists, which can limit options to offer or result in the need for multiple versions of the same active ingredient.


    “This impacts costs such as additional inventory for distributors and additional screening and testing by our principals,” he added.


    Of course, no matter what trend is driving growth, a focus on fundamentals is critical to running a successful distribution company, explained Hoff.


    “Our continued review and commitment to the fundamentals that work—customer focus, extensive product offerings, employee engagement, technical sales and problem-solving support—set us apart,” he told Happi. “Innovation and new product development also have contributed to our growth.”


    Products and services, and more of both. Customers are depending on distributors for assistance in regulatory, supply chain, formulations, problem solving, right size safety stock and ideas how to drive cost out of their system, according to Weeks.


    “Distributors are an extension of the customer,” she explained.  In a win-win relationship both the customer and distributor come out ahead as partners in profit.” 
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