Biologicals Distribution: A Tough Nut To Crack
It wasn’t so long ago that you could sum up how the distribution chain felt about biologicals in a word: Distrust.
Long tainted by being behind the times, the channel was slow with uptake, uncertain how to make them understood to the grower, and often, simply out of product.
Now, propelled by tougher regulatory standards worldwide and soaring demand for a broader variety of active ingredients on the back of pest resistance and various bans on synthetics, the biologicals market is beating nearly every other category in ag with a formidable 17% compounded annual growth rate.
It’s said that a rising tide raises all ships, and retailers and distributors acclimating to the increasingly sophisticated biologicals market are no exception.
“If you want to compete in biorationals, you better bring your A-game. You’d better have products that work and products that are available, and that are consistent,” Rick Melnick, Valent BioSciences’ global marketing and brand manager, tells CropLife®. “When you have Bayer and BASF and Syngenta getting in the game, they aren’t getting in just for fun,” he adds. “Growers are gaining confidence in these products, which creates more opportunity in the market, and more R&D dollars with the multinationals are being brought to bear in the biorational space.”
Yet the challenges were — and remain — real, says Melnick. They are living organisms, after all, and they take different handling.
“Distribution is still the toughest nut to crack for small biopesticide companies,” says Pam Marrone, CEO and Founder of Marrone Bio Innovations. Such small companies, including Marrone’s, simply do not have the large volumes of chemicals to bundle with biologicals, and without a full product line, getting their attention is difficult.
For that reason, her company is focusing on offering products across all categories, including insecticides, fungicides, nematicides, and herbicides. “That said, what we continue to hear that the key in getting biologicals adopted is to educate, educate, educate.”
The best scenario, she says, is when a biopesticide company can partner with distribution for demand creation at the grower level. Offering detailed use instructions and modes of action information is a must.
Ramon Georgis, Director of International Business with Brandt, says distributors have become increasingly attuned to biopesticide companies’ products that have grown leaps and bounds in quality, consistency, and formulation ease and application.
“All of it makes sense for distributors to promote reliable (biological) product along with (synthetic pesticides),” Georgis says.
To show how far the sector has come, Georgis recalled start-ups that were active in the early 1980s, when EPA was just beginning to pressure chemical pesticide companies to develop safer chemistries and asking for more data to maintain product registrations. There was Biosys, which developed nematodes for insect control; Mycotec, which developed fungi for insect control; and Ecogen and Mycogen – which both worked with transgenic Bt for insect control.
All were unable to deliver on the vastly overstated sales volume potential of biologicals they touted to their financial backers. Their assumption that the products could — and would — replace chemical pesticides entirely, of course, was proven wrong.
Since the multinationals entered the space and campaigned for using biologicals alongside chemicals, confidence and trust from the distribution channel has jumped dramatically. “It is a natural evolution,” Georgis says.
Warren Shafer, Vice President, Global R&D and Regulatory Affairs with Valent, says that greater expectations from customers have come into play, in no small part due to the wave of acquisitions and alliances with the multinationals, which have funneled added resources and capabilities for formulation technology to deal with shelf life issues and product usage features.
If a distributor is gaining market share because, for example, they have a two-year shelf life guarantee or are offering a different formulation that resonates with growers, the competition is quickly faced with a few choices, says Shafer. They can continue to slug along and lose market share, or they can invest in their own internal capabilities, cut deals with other parties or outsource their needs to contract research groups.
“The answer is definitely, yes, (distributors) have upped their games,” he says, but ongoing education is critical if they hope to continue their success.
“To me, the education process is constant; you can’t let up,” says Shafer. As new technologies and new formulations with greater stability, ease of use, or other attributes are brought forth, distributors use that to differentiate themselves, he says.