Segments
Marel is focused on four key business segments: Poultry, Meat, Fish and the recently added segment of Plant, Pet and Feed, which was established through the acquisition of Wenger in 2022.
The increasing world population, urbanization and a growing middle class are creating positive long-term prospects in the production of all proteins. Processors continue to call for highly automated and digitalized solutions that provide them with the flexibility needed to meet the challenges of shifting markets, labor shortages and stringent regulatory requirements. We support our customers by offering advanced solutions that optimize yield, throughput and efficiency, and provide end-to-end traceability for greater food safety.
Plant, Pet and Feed: Entering new growth markets with Wenger
Throughout the years, Marel has gradually expanded its playing field into adjacent market segments. The acquisition of Wenger, a global leader in extrusion technology, provides an entry point to the attractive growth markets of pet food, aqua feed and plant-based proteins. Wenger excels in these industries, and with its best-in-class extrusion technology positioned at the center of the value chain, the company continues to develop the plant-based protein formats of the future. We see immediate opportunities for growth and value creation by leveraging Marel’s global reach and digital platforms in Wenger’s sizeable addressable markets.
Attractive and high-growth markets
In partnership with our customers, Marel is constantly setting new benchmarks for sustainable growth in the food processing industry. Marel’s focus markets, which include the poultry, meat, fish, pet food, aqua feed and plant-based protein processing industries, have an estimated commercial value of EUR 1,500 billion and are expected to grow around 3% annually in the long term.
Our addressable market for solutions and services in these markets is estimated at EUR 15 billion and is expected to grow by 4-6% in the long term. We aim to grow organically faster than the market, driven by innovation and growing market penetration. Due to a catch-up effect and a tailwind in the market, we expect market growth to be 6-8% until 2026.
Favorable secular trends, focused on automation, robotics and digital solutions that support sustainable food processing, will continue to support Marel’s organic growth outlook in the long term. In the short term, the current macroeconomic backdrop is resulting in elevated uncertainty. As such, organic growth is not expected to be linear but instead based on opportunities and economic fluctuations. We expect growth to favor value-for-money products, efficient producers and processors, and agile companies that can produce safe and affordable food in a sustainable way.
A year of reconnection after COVID restrictions
Marel celebrated 2022 with a big return to trade exhibitions and in-house events like ShowHows and KnowHows across much of the world. We reconnected with customers and colleagues, showcasing our technological leadership at industry events including IFFA, VIV Europe, TecnoCarne and Anuga FoodTec and hosted our first Tilapia ShowHow in Latin America.
We recognize that in-person connections are vital to building strong relationships, and we were pleased to be able to return to face-to-face meetings throughout the year. We visited more customers onsite, and our dedicated field service engineers increased their customer-facing time by 24% compared to 2021. At the same time, we continued to utilize and enhance our remote customer support capabilities, providing swift assistance on service calls and installations.
Diffusing the disruption of 2022
In 2022, the food value chain continued adapting as the world progressed toward a new normal. The ripple effects of the pandemic, geopolitics, sanctions and the resulting logistics and supply chain disruptions have put our industry’s capabilities to the test. In addition, ongoing labor scarcity, inflation and rising interest rates are directly impacting food production.
Prolonged inflation, rising interest rates and global recessions have historically shifted consumer demand as well as investments in the food industry from large projects toward standardized solutions, aftermarket and less capital-intensive projects.
In response to these trends, we have continued to work in partnership with our customers, developing connected equipment and software solutions that can navigate these challenges and capitalize on opportunities arising from market shifts. Amid these challenges, food processors can secure an advantage by investing in advanced technology such as robotics and digitalization.
Pandemic and labor shortage accelerate need for intelligent automation
Challenges such as market volatility, capacity constraints and labor limitations have increased processors’ need for flexibility in serving the end consumer. This has accelerated the demand for fully integrated line solutions built from advanced, digitally connected technologies such as robotic solutions and artificial intelligence (AI). During the year, we continued to develop our automation capabilities in primary, secondary and further processing across all four business segments, with an emphasis on AI and advanced vision technology in several development programs.
Impact of inflation on processors and consumer landscapes
Food processors faced growing production costs and rapid changes in consumer behavior due to dramatic global inflation in 2022. This looming recessionary environment has impacted consumers, with high prices motivating increased purchases at discounters, reduced restaurant visits and trading down, for example, to smaller portions, lower-value proteins and private labels.
Inflation is a significant hindrance for food processors, however, this brings real momentum and highlights Marel’s strengths as a business. Our solutions enhance customers’ responsiveness to market shifts and enable more efficient use of raw materials, water and energy, helping customers improve their profitability and fulfill their sustainability commitments.
Reducing energy usage and costs
The halt in trade flows for feed and increased energy costs for processors reliant on fossil fuels have led to the inflation of food prices, reducing or creating negative margins at several stages of food production.
Even though the short-term impact may be negative, it is predicted that this pressure will hasten the transition to more resource-efficient food systems, shifting away from fossil fuels and finite resources and toward reducing food waste.
As energy prices continue to rise and inflationary pressures persist, we are actively collaborating with our customers to explore cost-saving measures for energy inputs. One potential solution is the implementation of energy recovery systems. Our engineers are evaluating this option, recognizing the time-sensitive nature of the issue. We are committed to finding effective solutions to mitigate the impact of high energy costs on our customers’ operations, as well as our own.
Smarter factories ready for lights-out
Marel continues to develop digitalized and connected offerings. Connectivity is the cornerstone of our digital journey, meaning that we are developing a digital ecosystem that seamlessly connects processing data throughout all levels of production. By providing cloud-based computing solutions, we ensure that our customers have the flexibility to scale their software package to their business needs, and consistently receive the latest updates and most advanced security measures.
Developing advanced connectivity is a crucial step toward lights-out manufacturing (also known as a ‘dark factory’), a production method that requires little to no human interaction—essentially running on its own, even in a dark and otherwise empty factory. To achieve this, every step of the manufacturing process must be automated and use digital solutions to optimize production.
Adapting to demand for product variety and convenience
With the exponential growth in e-commerce, processing lines require adaptability and automation to cater to rising demand for product diversity.The pandemic has increased consumer demand for a variety of high-quality, safe, and convenient products that can be easily cooked at home.With our digital solutions at the forefront, we continue to develop automated and flexible solutions that help processors remain agile, enabling them to compete in a volatile and highly competitive marketplace.
Ensuring traceability and efficiency with real-time data
Integrating advanced software into full-line processing solutions enables real-time data collection for accurate source-to-supermarket tracing. It also helps processors reduce the risk of large-scale recalls. User-friendly dashboards provide real-time data visualization and production control from any approved device, empowering operators to optimize yield, throughput and labor efficiency. Processors can also collate and retrieve historical data to ensure effective monitoring and reporting, while reporting and labeling are simplified to meet stringent regulatory requirements.
Digitalized service and machine health
In 2022, we continued the rollout of SmartBase, Marel’s software solution for monitoring machine health and performance. By utilizing cloud connectivity and sharing real-time data, SmartBase enables our service teams to assess equipment remotely, enhancing maintenance capabilities and reducing the need for onsite service visits.
Supporting sustainability in our industry
We provide solutions, equipment and software that enable our customers to meet their sustainability targets and make progress on their decarbonization journeys. Using our digital solutions, customers can collect data through multiple channels to drive their environmental, social and governance (ESG) transparency and green financing.
We design highly advanced equipment to harvest every gram possible of useful protein, improve product quality and safety, increase water and energy efficiency, and reduce CO₂ emissions. We incorporate circular design principles into all new product innovation, building solutions that are durable, adaptative and repairable.
As part of these efforts, in 2022 we expanded our modular systems portfolio, further enabling processing lines to adapt and grow with process needs. We also implemented equipment, digital and service solutions designed to improve equipment performance and lifespan. This is becoming especially important in the current market environment. By ensuring the longevity of our solutions, we provide the best value for our customers while minimizing environmental impact.
