Tag Archives: Unilever

Integrated Daylighting Systems Go Mainstream in 2013

2013 proved to be a banner year for integrated daylighting and artificial lighting systems. These systems became widely available across multiple geographies, exhibited low payback periods and attractive financial returns, and the technology developers saw their revenues and profit margins rise. A combination of technology, policy, and financing developments have led to this success.

The basic idea behind an integrated lighting system is simple – to let daylight in, without the glare, so as to reduce artificial lighting consumption. There are benefits – lower electricity consumption, enhanced user comfort, and, in some instances, a measurable uptick in the retail business or employee/student productivity. Our conversations with architects lead us to conclude that to realize the full benefits, relying on users to turn off the lights is not a reliable strategy. Therefore, there is the need for integrated solutions combining daylighting skylights or glazings with backup light-emitting diode (LED) or compact fluorescent light (CFL) lighting systems. The integrated systems necessitate use of daylight and occupancy sensors, so that when a room is occupied and the daylight falls below a set level (e.g. 500 lux for retail or 150 lux for industrial storage), the backup lights turn on.

Lux’s analysis indicates that a state-of-the-art daylighting skylight installed in southern California will have a payback period of three years, translating to a return on investment (ROI) of 31% (client registration required), assuming system lifetime of 10 years and cost of capital at 7%. Using backup LED lights with daylighting and occupancy sensors will increase the upfront cost somewhat (e.g. currently at $1/ft2 for Skyshade in India, translating into $0.04/lumen), but the ROI increases to 50% or higher depending on what kind of lighting system is replaced.

On the technology front, many materials developers, such as Skyshade and Econation, announced an entry into developing proprietary sensors and offer integrated systems. 2012 saw value chain integration (client registration required) from the opposite end with Acuity Brands – a lighting hardware company acquiring SunOptics. Along similar lines, lighting hardware company Cool Lumens and daylighting materials manufacturer Bristolite released a jointly developed product in August (client registration required). The CEO of Sundlier told us that the company is working with Abrisa coatings to apply an inorganic coating to its prismatic daylighting skylights, to reduce the solar heat gain coefficient (SHGC). So far, commercial daylighting systems have not offered any SHGC reduction benefits, so this is the first product of its kind. At the GreenBuild conference in Philadelphia, integrated lighting was predominant, with many firms, such as Autodesk, announcing building integrated modeling (BIM) solutions specifically for daylighting as part of their EnergyPlus platforms.

On the policy front, International Energy Conservation Code (IECC) announced: a requirement that daylighting locations be shown in floor plans; a U-value and solar heat gain control (SHGC) requirement for all fenestration replacements; and a reduction in the minimum size for mandating a daylighting skylight, from 10,000 ft2 to 2,500 ft2. American Society for Heating, Refrigerating, and Air Conditioning Engineers (ASHRAE) announced changes in its 90.1 code, requiring double-glazed fenestrations, daylighting sensors in combination with low-lighting power density (LPD) bulbs, and a maximum specification for visual transmission (VT) / SHGC ratio.

On the market development side, daylighting solution providers continued to acquire credible customers, e.g. Skyshade completing a 100,000 m2 installation for Indian Railways, and Econation acquiring Total, Kellogg, Unilever, and Sita.

These favorable policy and market adoption trends have translated into attractive financial results for daylighting companies. On January 9, Acuity brands reported a 20% rise in revenues and a 39% rise in profit margins for Q4 2013 over Q4 2012. Econation CEO Maarten told us that the company has experienced 300% revenue growth in 2013 and an after-tax profit margin of €450,000.

Unilever and Solazyme double down as “green” consumer spending wilts

California-based biotechnology firm Solazyme recently extended its commercial agreement with consumer care giant, Unilever. The two companies have been working together since 2009 to leverage Solazyme’s tailored algal oils* for use in Unilever’s soap and personal care products.*

Upon completion of the development agreement, the two parties will enter a multi-year supply agreement that calls for Solazyme to supply Unilever with commercial quantities of renewable oil. That will help Unilever further lay the groundwork for its Sustainable Living Plan, under which it aims to derive 100% of its agricultural raw materials from sustainable sources by 2020. The extension of the partnership between Solazyme and Unilever underscores* the convergence* of synthetic biology and the personal care industry.

Although some personal care manufacturers have successfully charged a premium for their products, most green product manufacturers have not fared as well. During the recession, green products have experienced a higher drop in sales compared to conventional products, suggesting that although consumers want to appease their eco-conscience, they aren’t willing to sacrifice performance or price. Despite the growing number of green formulations, they still represent a small percentage of the overall market. Most manufacturers are focusing instead on bio-based packaging to position themselves as environmentally conscious, even going as far as to absorb the premium themselves. The trend is also* evident* in the food and beverage industry, and more recently the telecommunications industry.* As the recession tightens consumer spending, bio-based products must offer increased performance to incentivize consumers to make the switch.

* Client registration required.

Materials suppliers follow consumer brand owners into synthetic biology

Consumer goods material suppliers continue to turn to synthetic biology for advanced products and delivery systems. A few months ago at the Metabolic Design summit, Steve He, who is responsible for acquisition of sustainability technologies at Henkel, said the company is collaborating with Arizona State University to see whether CO2-fed algae could synthesize high-value, renewable oils, and surfactants.

Elsewhere, Evolva’s Pascal Longchamps described the company’s synthetic biology platform, and how it’s applied for partners like Roche (cancer drugs), BASF, and the U.S. Army (antimicrobials). The company creates yeast artificial chromosomes (eYACs) that combine genes from “trees, from coral, from the brain” – apparently not meant as casual examples – into one new organism. For example, Evolva has developed a pathway for producing Stevia (a sweetener found in certain plants) in yeast. The company was collaborating with Abunda*, which it acquired in April.

We also spoke with Marcus Wyss of DSM Nutritional Products, which aims to become the cosmetic industry’s leading supplier by building a product portfolio with designed metabolic processes. The company is a sponsor of the BioFAB consortium based at SynBERC, and it is also contemplating agricultural waste as a feedstock for bio-based chemicals and materials. Also, Wyss specifically said DSM’s recent acquisition of Martek will bring “significant improvement” to its algal biotechnology abilities.

Lastly, we noted that Roquette’s partnership with Solazyme* has deepened into a JV, as successful partnerships often do (see the report: “Green Materials’ Social Networks”)*.

These examples of how bio-based materials and chemicals suppliers are supporting brand owners only appear cutting-edge. In reality, brand owners are leading the suppliers. Procter and Gamble has been using genomics and proteomics technology since the 1990s, even publishing papers on the subject. In the last twelve months, it struck a supply deal with Amyris, invested in personal genomics company Navigenics *, and opened a collaboration with the Institute for Systems Biology to study skin conditions ranging from aging to cancer. Similarly, Unilever has been acting like a drug company* for several years*. It is now using controlled-release biopolymers to deliver encapsulated lipids,* and investing* in its partner Solazyme*.

We expect to see more companies use biotechnology to improve food and cosmetics by blazing new routes to known and new substances, applying delivery technologies to improve substance benefits, and using their products as delivery technologies in and of themselves. These strategies are part of the broader trend of convergence of food, cosmetics, chemicals, and medicine, driven aggressively by BASF* and DSM*. Clients should note that these technologies are maturing at an opportune moment for companies looking to enter pharmaceuticals, as the collapse of drug majors clears the way for new entrants from delivery,* consumer products, and even the electronics industries*.

* Client registration required.

Solazyme files for IPO

As we mentioned in an earlier post, Solazyme recently filed for an initial public offering (IPO) targeting $100 million. This wasn’t a surprise: Just as we had seen Amyris form multiple strong partnerships in the months leading up to its IPO (see the July 6, 2010 LRBJ*), Solazyme’s been revving up its own stable of new partnerships. It’s been forging partnerships in fuels and chemicals more intensely in recent months than it has throughout its lifetime. Since September, the company has inked deals with Bunge, Unilever, and Roquette (see the September 14, 2010 LRBJ* and the November 9, 2010 LRBJ*) on top of existing relationships with companies like Chevron, Honeywell, Abengoa, and Virgin (see the August 17, 2010 LRBJ*), and a joint development agreement with Dow announced last week.

Some highlights from the company’s S-1 include the company’s claims that it has already achieved “attractive margins when utilizing partner and contract manufacturing for the nutrition and skin and personal care markets,” and that it believes it can undercut fuels “when we commence production in larger-scale, built-for-purpose commercial manufacturing facilities utilizing sugarcane feedstock,” citing oils at a cost below $1,000 per metric ton, $3.44 per gallon, or $0.91 per liter.

Solazyme also notes that its Roquette JV will fund an approximately 50,000 metric-ton-per-year facility for nutrition products, which would be the first serious challenge to DSM-owned Martek (see the January 13, 2011 LRMCJ*). The company also mentioned a deal with Colombia’s national oil company (NOC), Ecopetrol, and a Brazilian letter of intent to form a JV that would add capacity of 400,000 metric tons of oil per year – nearly a thousandfold increase over the 455 metric tons the company produced in 2010.

But for all its strengths, Solazyme still lost $16 million last year on $39 million in revenue. By comparison, Amyris brought in $65 million in 2009, the year before its IPO.

While there are always reasons to be cautious when a loss-making company files for an IPO, one of the biggest challenges Solazyme will face is the public market’s mistaken association of its technology with older technologies like corn ethanol or dodgy algae developers. Solazyme is indeed an algae company. But it is wholly different from certain competitors, whose reliance on hype rather than commercially viable technologies poison the pond (pun intended) for legitimate players like Solazyme, Phycal, and Algenol (see the November 13, 2010 LRBJ*, the August 17, 2010 LRBJ*, and the March 10, 2009 LRBJ*). Gevo and Amyris represent better comparisons for Solazyme, and both had relatively successful IPOs (see the October 12, 2010 LRBJ* and the February 10, 2011 LRMCJ*). 

* Client registration required.

Kraft, GSK, and BASF announcements illustrate convergence of food, cosmetics, chemicals, and medicine

The distance between food, cosmetics, chemicals, and medicine keeps shrinking, as evidenced by several recent commercial announcements. In May, food giant Kraft and its partner Medisyn, which specializes in discovery of novel active ingredients, announced an expansion of their collaboration. Specifically, in addition to developing health and wellness actives, they’ll be developing additional compounds aimed at improving food quality, food safety, and product performance. Delivering functional actives in food products is meant to keep the company growing in the face of a general stagnation in conventional food and beverages.

Meanwhile, BASF recently said it would spend $3.8 billion to acquire Cognis, which supplies raw materials for pharmaceuticals, food and beverages, dietary supplements, and cosmetics – new markets that the chemicals firm wants to enter. Now comes word that GlaxoSmithKline’s (GSK’s) consumer products division is close to launching sports nutrition drink Lucozade in the U.S. The company’s consumer business offers a more predictable revenue stream than the larger but more volatile pharmaceutical unit.

What’s behind the convergence of these ostensibly separate industries? It’s the growing understanding that chronic, lifestyle-associated diseases like obesity and diabetes (and their opposites of lifelong health and wellness) require lifestyle products – not simply medicines, procedures, or healthy habits, but a combination of them all.

DSM’s CEO recently bemoaned the pharma-grade scrutiny that European regulators are applying to foods. But foods are increasingly part of a larger strategy (among individuals as well as corporations) for addressing aging, increasing affluence, and chronic conditions (see the November 18, 2008 LRBJ*). Specifically, that strategy combines food with over-the-counter medicines, nutritional supplements, oral care, and skin care. Moreover, established players in these fields are looking to escape competition from generic drugmakers like Teva and lower-cost petrochemicals from rising Middle East rivals (see the January 5, 2010 LRBJ*). As such, these aren’t opportunistic moves by GSK, BASF, and Kraft – they’re a harbinger of the companies’ and the industries’ futures. Rivals like Pfizer, Bayer, DSM, and Unilever should take note.

*Client registration required.