What’s Hot in the Chemicals, Materials & Food

Industry

May 2012

Trends, Opportunities, and Challenges through the Eyes of

Key Players in the Sector

2

• Frost & Sullivan takes no responsibility for any incorrect information supplied to us by manufacturers or users.

• Quantitative market information is based primarily on interviews and, therefore, is subject to fluctuation.

• Frost & Sullivan research services are limited publications containing valuable market information provided to a select

group of customers in response to orders.

• Our customers acknowledge, when ordering, that Frost & Sullivan research services are for their internal use and not for

general publication or disclosure to third parties.

• No part of this research service may be given, lent, resold or disclosed to non-customers without written permission.

• Furthermore, no part may be reproduced, stored in a retrieval system or transmitted in any form or by any means,

electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher.

• For information regarding permission, write to:

Frost & Sullivan

4 Grosvenor Gardens,

London SW1W 0DH

The United Kingdom

© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.

No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Disclaimer

3

Certification

• We hereby certify that the views expressed in this research service accurately reflect our views based on primary and

secondary research with industry participants, industry experts, end users, regulatory organisations, financial and

investment community and other related sources.

• In addition to the above, our robust in-house forecast and benchmarking models, along with the Frost & Sullivan decision

support databases, have been instrumental in the completion and publishing of this research service.

• We also certify that no part of our analyst compensation was, is or will be, directly or indirectly, related to the specific

recommendations or views expressed in this service.

4

Table of Contents

What’s Hot in 2012 8-16

9

10

11

12

14

15

16

Ø Key Perspectives on Growth in the Chemicals, Materials & Food Industry in 2012

Ø Market Highlights for 2012

Ø What Participants see as Hot Topics in 2012

Ø Convergence with other Industries

Ø Global Hot Spots in the Chemicals, Materials, & Food Industry

Ø Four Big Predictions for 2012

Ø Chemicals, Materials and Food – The “Link” to all Sectors

About Frost & Sullivan 17-22

Ø About this Market Insight

Ø Hot Topic Thought Leader

Introduction 5-7

6

7

5

Introduction

6

About this Market Insight

Based on a survey of several hundred key companies conducted across Europe in December 2011, this

Market Insight highlights the hot topics for growth that have been identified in the chemicals, materials

and food sector for 2012 and beyond.

Data and opinions of key stakeholders, combined with analysis and commentary from Frost & Sullivan

industry experts, have been used to present key market highlights, hot growth topics, global and regional

hot spots, areas of market convergence, and bold predictions for 2012.

In this study, a summary of the highest growth areas for the chemicals, materials & food industry is

presented.

7

Functional Expertise

12 years of materials and chemicals research experience, which include 4 years of strategy consulting

experience. Particular expertise in:

– Green Building Materials, Composite Materials, Biolubricants, Cosmetics

Industry Expertise

Experience in covering broad range of sectors, leveraging long-standing working relationships with leading

industry participants’ Senior Executives

- Chemicals & Petrochemicals

- Infrastructure (Water treatment, Photovoltaic Systems, Wind energy)

- Construction (Chemicals, Green materials, Advanced Glazing Systems)

- Ingredients (Cosmetics)

What I bring to the Team

Expert research and analytical skills providing strategic input to business growth models

Forecasting model development, Competitive environment analysis and benchmarking

Strategic thinking

Career Highlights

Extensive business knowledge of the petrochemical, materials and FDC sectors. Selected consulting projects

for several leading firms:

- Clariant, Switzerland, DuPont, US, Huntsman, Switzerland, L’Oreal, France, Mitsui Sumitomo Insurance,

UK, Merck, Germany, BASF, Germany Aditya Birla, Thailand

Education

Post Doctorate Diploma in NDET of Materials from University of Southampton, Southampton, UK

Post Doctorate Diploma in Smart Materials from University of Southampton, Southampton, UK

PhD in Materials Science from University of Southampton, Southampton, UK

MSc in Advanced Manufacturing Technologies & Systems Management from U.M.I.S.T., Manchester, UK

BEng (Hons) in Mechanical Engineering from University of Salford, Manchester, UK

Dr Leonidas Dokos – Hot Topic Thought Leader

Dr Leonidas Dokos Global Programme Manager

Frost & Sullivan

Europe

Oxford, UK

Place photo here

Shadow Background

for effect

8

What’s Hot in 2012

9

Key Perspectives on Growth in the Chemicals, Materials

& Food Industry in 2012

2

In terms of emerging markets China, Brazil and Russia are the top priority for construction and utilities players, while for transportation players the focus is on China, India and Brazil.

3

Green chemicals, trends in the bioplastics market, and the emerging trends in Personal Care (multifunctional, botanical) are the top priority opportunities for Food, Drug & Cosmetics providers.

4

The Food & Beverage suppliers are looking at the following 3 emerging markets – China, India and Brazil while in Europe the focus is on bakery ingredients.

5

The 5 key industries tracked by Chemicals, Materials and Food practice are Construction & Utilities, Transportation, Foods & Beverage, Personal Protective Equipment, and Food Drug & Cosmetics.

1

The Western European market remains the priority for EU based manufacturers over other regions. North America and Eastern Europe represent the next priority.

Source: Frost & Sullivan analysis

10

Market Highlights for 2012

• The four mega trends of low carbon economy, health and wellness, functionality and performance, and

globalisation define the developments in the chemicals, materials and food industry

• The food, mobility and construction markets remain core developments for 2012 exhibiting growth overall and

driven by the emerging economies

• Renewable energy applications, such as photovoltaics, wind turbines and solar thermal continue to present

healthy growth opportunities in developed markets such as Europe and the USA but investors are apprehensive

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

number of closed deals will be smaller due to widespread lack of cash availability

• The continuing debt crises in the eurozone and the high US government debt continues to undermine the speed

of the macroeconomic recovery of markets and the level of investment available

• The uptrend in oil prices is affecting the raw materials prices and profit margins once more

• Indian demand for chemicals will grow on the back of massive growth in end-user industries such as automotive

production

• China's development of green technology will draw in strong chemicals investment, even for technologies such as

electric vehicles

• Brazil continues to become a major centre of supply for biobased feedstocks

• Massive developments in crops used as biofeedstock for the production of fuels, chemicals and materials - algae

will be a critical area of development

Key Market Highlights

11

Chemicals, Materials & Food

What Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Functional Foods: Mega trends 56%

2 The Impact of Globalisation Megatrend on the Automotive Materials 49%

3 Construction Chemicals Market 48%

4 High Performance Plastics in Automotive 43%

5 Protective Clothing Markets 43%

6 Green Chemicals in FDC 42%

7 Water and Wastewater Treatment Chemicals Market 39%

8 Bioplastics Market Trends in FDC 38%

9 Function foods & beverages: industry outlook 36%

10 The Impact of Low Carbon Economy Megatrend on Feedstock Oriented Markets 35%

11 Bioplastics Market and Trends in Transportation 35%

12 Strategic Analysis of the Chemicals and Materials Market for Solar Thermal 33%

13 Function food & beverages: Trend watch 33%

14 PPE Markets 32%

15 Market for Decorative & Protective Paints and Coatings 30%

Chemicals, Materials & Food: Identification of Hot Topics (Europe), 2012

N=112

Filter: Respondents who are planning to track Chemicals, Materials & Food

Further filter on market segment tracked (Chemicals & Materials in Food, Drugs and Cosmetics, Chemicals & Materials in

Construction & Utilities, Chemicals & Materials in Transportation, Food & Beverage Ingredients) Source: Frost & Sullivan analysis

12

Chemicals, Materials & Food

Convergence with other Industries

Source: Frost & Sullivan analysis

Key Industries Tracked in Addition to Company’s Core Markets (Europe), 2012

Core Market Cross-interest 1 Cross-interest 2 Cross-interest 3 n

A&D Security 50% ICT 29% Electronics 24% 42

A&T Electronics 24% ICT 19% EPS 12% 86

CMF A&T 40% EBT 36% EPS 30% 53

Electronics M&I 53% EPS 47% IPC 47% 15

EPS EBT 32% IPC 21% A&T 15% 73

EBT EPS 58% ICT 15% M&I 15% 26

HC CMF 18% ICT 14% M&I 8% 90

IPC EPS 74% A&T 41% EBT 26% 27

ICT A&T 30% EPS 24% HC 21% 66

M&I EPS 25% EBT 25% IPC 25% 8

PPE A&D 17% CMF 17% EPS 17% 12

Security ICT 39% A&D 33% EBT 33% 18

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

PPE = Personal Protective Equipment

13

Chemicals, Materials & Food

Convergence with other Industries (Contd ...)

Source: Frost & Sullivan analysis

Construction

& Utilities

Transportation

Food, Drug

& Cosmetics

Food &

Beverage

Automotive & Transportation Aerospace & Defence Healthcare Environment, Building

Technologies, Power

Systems

Chemicals and Materials PPE

Lightweight Materials, Composite Materials, Coatings, Functional Fluids, Fuel & Lubricant Additives, Adhesives, Elastomers, Electric Vehicles , Catalysts

High Speed Rail Infrastructure

Low Carbon Economy

Smart Grid, Photovoltaic/Solar

thermal , Wind Energy, Water,

Green Materials

Materials & Batteries for EV Infrastructure

Bioplastics for Packaging

Personal Wellbeing

Antimicrobial coatings, Biocides

for Water Treatment

Excipients, Plastics for

Medical Devices Nutricosmetics &

Nutraceuticals, Multifunctional &

Natural Active Ingredients,

Functional Foods

Key Areas of Technology Convergence

14

Global Hot Spots in the Chemicals, Materials, & Food

Industry

Chemicals, Materials and Food Markets: Global Hot Spots (World), 2012

• EPA’s Existing Chemicals Programme Strategy identified 7 chemicals out of a list of 83 for risk assessment in 2012

• Industry consolidation to continue • Restarting of the “rare earth

materials” industry

Source: Frost & Sullivan

The Middle

East

Russia

Europe

Africa

Latin America

North America

APAC India

China

• Emerging Oil & 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 • Increasing focus in oil and gas exploration • Restructure in the state petrochemicals

companies • Brazil is construction hot spot until 2016

(Football 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

• Need for prevention and better general health drives the functional F&B products

• Increasing private healthcare expenditure • Poland and Czech Republic present healthy

growth market and R&D opportunities • Economic contraction continues affecting the

Southern European countries

• Russia presents significant opportunities across sectors, especially in construction, water treatment, transportation 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

• Large population base and low costs

• Growing economies with increasing per capita spending power

• Vast supply of feedstock • Strategic alliances with American

and European companies • Construction growth resumed • Geopolitical challenges

15

Four Big Predictions for 2012

2 “Mass Customisation“ will impact a wide range of manufactured products,

as experienced in the automotive sector, and will result in high demands

for innovative chemicals and materials

3 Industry consolidation to continue with a mega acquisition of a Top 100

global chemicals company headquartered in Europe to be the headline

news

1 2012 will be the year of “green” technology routes and products, and

especially bioplastics

Source: Frost & Sullivan analysis

4 Weight management, heart health, and digestive health will be the high

growth sectors in Food and Beverages

16

Chemicals, Materials and Food – The “Link” to all

Sectors

17

About Frost & Sullivan

18

The Frost & Sullivan Story

18

Pioneered Emerging Market

& Technology Research

•Global Footprint Begins

•Country Economic Research

•Market & Technical Research

•Best Practice Career Training

•MindXChange Events

Partnership Relationship

with Clients

• Growth Partnership Services

• GIL Global Events

• GIL University

• Growth Team Membership™

• Growth Consulting

Visionary Innovation

• Mega Trends Research

• CEO 360 Visionary Perspective

• GIL Think Tanks

• GIL Global Community

• Communities of Practice

19

What Makes Us Unique

19

All services aligned on growth to help clients develop and implement

innovative growth strategies

Continuous monitoring of industries and their convergence, giving

clients first mover advantage in emerging opportunities

More than 40 global offices ensure that clients gain global perspective

to mitigate risk and sustain long term growth

Proprietary Team Methodology integrates 7 critical research

perspectives to optimise growth investments

Career research and case studies for the CEOs’ Growth Team to ensure

growth strategy implementation at best practice levels

Close collaboration with clients in developing their research based

visionary perspective to drive GIL

Focused on Growth

Industry Coverage

Global Footprint

Career Best Practices

360 Degree Perspective

Visionary Innovation Partner

20

Our Global Client Base 40+ Offices Provide Perspective, Coverage & Service

20

Others, 40.0%

By Region

250,000 SME & Global Companies, 2 million executives

North America, 95,000 Companies Europe

80,000 Companies

Latin America 9,000 Companies

South Asia 11,000 Companies

Africa /Middle East 8,000 Companies

Asia Pacific 47,000 Companies

21

Our Industry Coverage

21

Automotive &

Transportation

Aerospace & Defence Measurement &

Instrumentation

Information &

Communication Technologies

Healthcare Environment & Building

Technologies

Energy & Power

Systems

Chemicals, Materials

& Food

Electronics &

Security

Industrial Automation

& Process Control

Automotive

Transportation & Logistics

Consumer

Technologies

Minerals & Mining

22

GIL Global Community: Growth, Innovation and Leadership

22

• CEO Roundtables

• Best Practice Research

• Mega Trends

• Analyst Briefings

• Webinars

• GIL Events

• Newsletters

• Growth Workshops

• Networking

• Community Forums

• Blogs and Wikis

• Visionary Scenarios

• Think Tanks

• Solution Wheels

• Industry Thought Leaders

• Career Tracks

• Benchmarking

GIL Event Schedule

GIL APAC, APRIL

GIL Europe, MAY

GIL Italy, MAY

GIL Russia, MAY

GIL Japan, JUNE

GIL Korea, JUNE

GIL Continental Europe, JULY

GIL South Africa, AUGUST

GIL Silicon Valley, SEPTEMBER

GIL India, OCTOBER

GIL Indonesia, OCTOBER

GIL China, NOVEMBER

GIL Australia, NOVEMBER

GIL Latin America, DECEMBER